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Friday
Dec122008

Bernie Madoff...We Trusted You So Long

One of the best movies of the year is a french movie, starring Kristen Scott Thomas, entitled, "I Loved You So Long." It is a sad and tragic movie, about a love so deep for a child...and how that love, and the mother's assisting her son die peacefully from cancer, haunts her upon her release from prison. Why it reminds me of Bernard L. Madoff is hard to say...but clearly their are parallels. The investors who have approached us have told us of decades old trust...a love so long...and now they are facing a death of their own...and they too are haunted, and some may be for the rest of their lives. And of course there is prison....

Often times securities fraud class actions felt like aiding a gambler who got cheated at the pool table. No tears were felt, but their were rules to be enforced and money returned. Today....it is not the same...in the Madoff matter and others. Today those who fled the tough and tumble of the public markets, and sought safety and security...investing in money market funds, cash, and trusted advisors, are telling us of having lost their entire savings and in too many cases, the funds needed to pay their medical bills and retirement. It is hard not to want to cry.

One of our clients had invested with a partnership pool almost 40 years ago, and that is where his money stayed and grew. Today he got the call where the caller revealed the "worst nightmare" ...all of the money had been invested with Madoff. 75% or his retirement gone! Shock does not describe his feelings...if any are left.

The SEC has now shut down Madoff's operations, including Bernard L Maddoff Investment Securities LLC, or BMIS. The freeze order can be found here. The SEC's complaint used to obtain the order can be found here.

But who else was involved, and where will investors be able to seek recovery?

Our investigation...in its early stages...leads use to believe that many were involved...and many knew or suspected. The investors we know invested in partnerships who invested with partnerships... who invested with Bernie M. And Bernie M. and some of the General Partners of these partnerships seem to have close relationships. We are trying to learn more about those partnerships and relationships...many of the partnerships seem to have less of a real presence than the 3 auditors of Bernie M's fund. At least they had a 12 by 18 foot office and showed up for 15 minutes a day in their tie dye T-shirts. We know that there was a group of funds or partnerships funneling money to Bernie M. But the pciture needs paint.

You can help us with our investigation. Help us define the web that allowed this Ponzi scheme to hurt so many. A description of our investigation is available here.

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Reader Comments (1)

"People who've dealt with Marc Dreier professionally, describe him as a brilliant litigator, quick and witty, with a ferocious work ethic". Yet, he considered himself above the law. Read on.

Fast Living, Bold Ambitions Drove Lawyer's Rise and FallWSJ.com by Nathan Koppel and Steve Stecklow

Marc Dreier had four dazzling homes on two coasts, drove an Aston Martin and sailed a 123-foot yacht. The law firm he owned displayed artwork worth at least $30 million. And he gave many of its 250 attorneys huge guaranteed compensation, no matter how much business they generated. His colleagues couldn't figure out how he afforded it all.

An answer began to trickle out in October, when a hedge fund that was considering buying some promissory notes was puzzled by the documents' fine print. Seeking more detail, the fund, Whippoorwill Associates Inc., got in touch with the auditor whose name ...(continued at wsj.com 12/19/08 issue)

Here is some more from DAILY NEWS http://www.nydailynews.com/ 12/8/08

A Park Avenue lawyer who repped Michael Strahan, Jon Bon Jovi and Jay Leno was busted Monday for a "brazen fraud" that swindled two top hedge funds of $100 million.

Marc Dreier's, 58, arrest on wire and securities fraud charges was the latest in a series of bizarre episodes in the life of the Yale grad and Harvard Law School alum who ran the 250-member firm Dreier LLP.

He was busted in Toronto last week on impersonation charges in another multimillion-dollar deal.

"This is a very complicated matter, and the facts are beyond reach of a sound bite," said his lawyer, Gerald Shargel.

Shargel asked Magistrate Judge Douglas Eaton to move his client to a federal lockup in Brooklyn from a special housing unit in Manhattan that has held terrorists and other high-profile clients.

Also on 12/9/08, the Securities and Exchange Commission accused Dreier of scheming to raise some $113 million from the sale of bogus promissory notes.

"Our complaint alleges a stunning, brazen fraud that targeted some very sophisticated institutional investors," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement.

"Investors big and small should take heed, especially in these difficult economic times, that con artists are out there and may go to elaborate lengths to commit fraud."

A cooperating witness taped Dreier saying he knew the financial statements he gave to hedge funds were phony, prosecutors charged in a criminal complaint.

My two cents: One half greed and one half arrogance. A career driven divorced litigator, who happened to be a graduate of Yale and Harvard,winds up charged in a fraud case that seems hard to believe he could even think of getting away with. What a miserable way toward the end of one's life.







December 22, 2008 | Unregistered Commentergrasshopper

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