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Seattle Times – An official appointed to recover the assets of a prominent Manhattan lawyer accused of defrauding hedge funds of at least $400 million says he has safeguarded more than $100 million in assets, including an $18.5 million yacht.
The court-appointed receiver, Mark Pomerantz, outlined his findings about lawyer Marc Dreier and his 150-lawyer firm, Dreier LLP, in a report made public Wednesday in U.S. District Court in Manhattan.
Dreier, 58, was arrested in December on securities fraud charges. He remains under house arrest while his lawyer, Gerald Shargel, prepares what he says is likely to be a guilty plea for his client.
New York (Hedgeco.Net) – Bernard Madoff was finally promoted from house arrest to maximum security prison, after pleading guilty to the largest Ponzi scheme in history. Madoff, who swindled an estimated $65 billion out of the most elite investors, could face up to 150 years of prison.
“I operated a Ponzi scheme through the investment advisory side of my business,” Madoff admitted to U.S. Judge Denny Chin at the hearing, referring to Bernard L. Madoff Investment Securities LLC. He did contend that his U.K.-based affiliate, Madoff Securities International along with the units run by his two sons were all legitimate entities.
“I am actually grateful for this opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed,” Madoff confessed in the Manhattan courtroom. “I knew what I was doing was wrong, indeed criminal.”
Madoff spent years building up a stellar reputation with the rich and famous, many of whom invested their life savings with him. Madoff told the judge he started feeling pressure in the early 90’s to deliver the consistent returns that his investors expected. This jump started the staple Ponzi scheme action of using new capital coming in to pay returns to existing investors.
Instead of investing in securities like he promised his clients, Madoff instead deposited their cash into an account at Chase Manhattan Bank, where he would withdraw funds as needed for investor redemptions.
“I believed it would end shortly, and I would be able to extricate myself,” he said of the scheme. “As the years went by, I realized that my arrest and this day would inevitably come.”
Madoff’s sons have not been charged with any wrongdoing, nor have any employees at his New York City headquarters although investigations are still in the works. Attorneys for Madoff’s wife, Ruth, state that she was the sole owner of their Manhattan apartment, along with $17 million in cash and $45 million in bonds.
Madoff’s attorney, Ira Sorkin said he would appeal the jailing before his sentencing hearing on June 16.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Reuters – Top former Merrill Lynch executives, including two former CEOs, invested in hedge funds that lost money with alleged fraudster Bernard Madoff, becoming the highest-level Wall Street victims of the scandal to date, the Wall Street Journal reported on Thursday.
Former chief executives Daniel Tully and David Komansky and former investment-banking chief Barry Friedberg personally invested in the funds, set up by former Merrill brokerage chief John Steffens, the paper said, citing people familiar with the matter.
Bernard L. Madoff Investment Securities LLC collapsed after the 70-year-old Wall Street trader was arrested and charged on December 11 last year with securities fraud.
Madoff, a former chairman of the Nasdaq stock market, is under house arrest and 24-hour surveillance in his luxury Manhattan penthouse apartment as criminal and civil investigators probe his global operations that purportedly lost $50 billion.
The firm comprised a brokerage and an investment division that Madoff ran separately in the same New York building.
Reuters – A hedge fund manager overstated values by hundreds of millions of dollars, set up a phony accounting firm and showed uniformly positive returns for nine years to defraud investors, U.S. authorities said on Wednesday.
James Nicholson, 42, founder of Westgate Capital Management LLC of New York, was arrested and criminally charged with securities fraud and bank fraud in causing losses of as much as $100 million since 2004, prosecutors and the FBI said.
He appeared in U.S. Magistrate’s Court in Manhattan where a judge set bail of $10 million secured by five co-signors and three properties. The judge ordered Nicholson released when he meets those conditions, but he would be under house arrest with electronic monitoring.
Prosecutor Joshua Klein told the court the purported fraud could effect 372 investors. "There is a potential additional hundreds of millions of dollars involved and we have no idea where that money is," Klein said.
Nicholson’s attorney Ira Sorkin said in court that his client was not a risk of flight and that home detention was sufficient to ensure court appearances.
Sorkin, a veteran securities attorney, represents Bernard Madoff, the once-respected Wall Street trader and investment manager arrested and charged in December with a purported $50 billion global fraud.
Investigators say they have uncovered several frauds across the United States in recent months following the market meltdown.
New York (HedgeCo.Net) – Bernard Madoff will continue his house arrest at his swanky Manhattan apartment, after a judge refused to send him to prison on Monday.
Madoff’s lawyers have pointed out that he has cooperated fully with officials and investigators since allegedly confessing his $50 billion Ponzi-scheme to his sons last month.
“Aside from the bare assertion that there remains some risk of flight, the government has failed to articulate any flaw in the current conditions of release,” said Judge Ronald Ellis of U.S. District Court in Manhattan, speaking of the government’s original push to incarcerate Madoff.
Prosecutors have tried to convince the court that Madoff is a flight risk after forging alliances with individuals all across the globe. They also said he violated a court order that froze his assets after he dispersed more than $1 million worth of valuables via mail to friends and family.
Right now, Madoff is under 24 hour surveillance at his Manhattan home. His incoming and outgoing mail is also under investigation and he must provide a list to the U.S. government that outlines his portable valuables.
If convicted, Madoff faces up to 20 years in prison in what has proved to be the largest Wall Street scam in history. Dozens of wealthy individuals, banks, hedge funds and financial institutions have lost billions in investments tied to Madoff.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
