Articles Posted in Theft Crimes

It’s been awhile since we checked in on the Bernie Madoff, the latest superstar of the Boston-created ponzi scheme. Once a larger-than-life society figure, he is now reduced to spending his time in his larger-than-life New York apartment, talking to his attorneys and hoping to avoid a smaller-than-life jail cell. As predicted by this daily blog many times, however, the finger of suspicion and blame in this case is too large for just one man.

For example, we have already explored in earlier postings (look under the blog’s White Collar Crimes section to review) the pressures brought upon out-of-state Madoff associates to come up to Boston to answer questions by regulators. We have also witnessed how the regulators themselves have been on and off the hot seat. Then, there have been questions about Madoff’s wife and her habits with the United States Postal service.

Now, as sensitivities to this kind of thing have grown, a Massachusetts man has been accused of stealing $57 million from the descendants of a 19th century industrialist and using the money on personal extravagances, including three private jets.
John D. , 60, of Topsfield (hereinafter, “New Defendant”) was charged in a federal indictment Wednesday of assessing millions in phony fees, transferring company funds to himself and hiding the theft with various schemes, including false financial statements. New Defendant faces up to 20 years in prison, if convicted for the Massachusetts white collar crimes.

The U.S. Attorney’s office said in the indictment that New Defendant had stolen “more than $20 million” from Tenens Corporation, which was created to manage trusts for more than 100 descendants of the late Frederick Ayer Jr., who owned textile mills in Lowell. In a May 2008 lawsuit by Tenens against its auditors, the company estimated the theft at $57 million. Tenens attorney said New Defendant “looted” the family and “joins the likes of disgraced money manager Madoff…The family is heartbroken by [New Defendant’s] personal betrayal, and stunned by the scope and audacity of his criminal acts”.
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As the “Madoff Wars”, fought by investigators, attorneys and accountants, rage, score one for lawyers of the Commonwealth. They finally got Robert Jaffe, a crucial witness to Madoff’s operation, to the Hub where he finally spoke to regulators. The result? Boston regulators are ramping up a probe into Bernard Madoff’s alleged $50 billion Ponzi scheme.

As any loyal reader to this daily blog knows, we have been “checking in” with the Madoff Nightmare since the beginning. In our last episode, January 27ths Boston Secretary Of State Tells Madoff Associate To Visit; Attorney Says “Nope”., the Commonwealth and the court were telling him to come up from Florida to talk. Through counsel, his response had been in the negative.
Apparently, he has changed his mind. Yesterday, he met with state investigators. It is not clear whether Jaffe, who went to court last month in a failed bid to block the state’s subpoena, told regulators anything of value, however.

Jaffe, a vice president at Madoff’s Cohmad Securities unit, introduced many alleged Massachusetts scam victims to Madoff. However, the 64-year-old has denied any knowledge of the reputed Ponzi scheme. Rather, Jaffe – the son-in-law of Hub philanthropist Carl Shapiro, who allegedly lost some $300 million in the scam – has said that he and his family are among Madoff’s victims.

“The responsiveness of Mr. Jaffe to (our) subpoena is presently being evaluated,” said State Secretary Galvin, whose office regulates Massachusetts securities sales. However, Galvin did say that his probe has expanded to include other “feeder firms” – companies that lined up Madoff investors.
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Let the games begin! As local as Boston and as distant as the globe will reach! The adventure of pointing fingers and looking for bodies to blame, as expected, has begun. Defense Attorneys for everybody! Everybody pays!

Bernard Madoff (hereinafter, the “Defendant”), talking in 2001 about what fed the Internet bubble said “You had a lot of novice investors who got into the market looking for easy money, without any regard to the fundamentals. These stocks were running on fumes.”

You would almost think that the Defendant did not have a lot of faith in investors, regulatory agencies such as the Security Exchange Commission and the market in general, wouldn’t you?

Well, I guess now we know why. He, himself, was apparently engaged in a huge fraud and getting away with it.

Unless you have been living under a rock for the past couple of weeks, you have heard that the Defendant is accused of devestated the international economic world, when it was already reeling, through what is alleged to be a fifty billion dollar scam, the largest such fraud in history. For more background information, you may want to check out Tuesday’s blog, entitled, Boston Is Hit, Along With The Rest Of The Country, By Financial Guru And His Use Of A Boston-Originated Method Of Fraud (The Madoff Nightmare Part One.

The question of what to do next appears to be a nasty little thing for which there is no clear answer. Therefore, filling that vacuum, we move to other, and perhaps more lucrative, questions. The questions include such topics as how any scam of this size could remain a secret for so long, who was involved, who else is out there doing similar things and, of course, who got off easy.

In short, the questions are “Who else can we blame?” and perhaps more importantly, “Who else can help finance the cleanup?”

Hey, it’s what we do.
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This holiday season, so many religions and traditions call for gift-giving. Sometimes, those gifts are a big surprise. One gentleman from out of state has been given a surprise gift from the government because of the gifts he has given throughout the country, including the Boston area, big time. The gift he received is the need of a criminal defense attorney. The wide-spread gift he gave? Well, that would be the gift of financial ruin.

You already know his name. It is Bernard Madoff (hereinafter, the “Defendant”). He is a 70-year-old former chairman of the Nasdaq Stock Market, who has now been awarded the country’s bracelets of shame. Last Thursday, he taken out of his house by United States marshals and charged with securities fraud by federal authorities.

Ironically, the Defendant’s gift of restraints and forced government housing was connected to charity and gift work throughout the nation. His actions have apparently brought about the destruction and near-destruction of various charities and philanthropies throughout the country. That’s right….that means fewer gifts for the under-privileged. It also means the same thing for victims of every financial level because they all have one thing in common now. They have been victims of white collar crime in a big way to the tune of approximately fifty billion dollars.

Such a loss is kind of hard to swallow, especially in such difficult economic times. Actually, it was the market’s recent crash that finally brought the Defendant’s alleged $50 billion Ponzi scheme to light. The Defendant himself is said to have “come clean”. He has admitted that his money management operations were “all just one big lie” and “a giant Ponzi scheme.” .

You may be unfamilier with the term “Ponzi scheme”. For those so uninitiated, it is a fraudulent investment operation that involves paying abnormally high profits to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. It is named after Charles Ponzi who apparently introduced the scheme to the United States in the early 1900’s from…of all places…Boston. Because the invested capital is not earning a sufficient return on its own, Ponzi schemes usually eventually collapse under their own weight.

So much for a “I never thought it could happen…” , or, perhaps more formally, “Whodathunkit” defense.
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