The Coalition of the Swilling

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December 15, 2008

Greed. It's A Sin We All Can Partake Off

But some of us more than others

New potential victims emerged of Wall Street veteran Bernard Madoff's alleged giant Ponzi scheme, with international banks, hedge funds and wealthy private investors among those sorting out what could amount to tens of billions of dollars in losses.

New York Mets owner Fred Wilpon, GMAC LLC Chairman J. Ezra Merkin and former Philadelphia Eagles owner Norman Braman were among the dozens of seemingly sophisticated investors who placed money on what could prove to be history's largest financial scam.

Giant French bank BNP Paribas, Tokyo-based Nomura Holdings Inc. and Neue Privat Bank in Zurich are also exposed, according to people familiar with the matter.

...The alleged fraud has "swept up some of the most prominent and wealthy Americans, along with many people who thought they were embarking on a comfortable retirement and have now been left destitute," says Brad Friedman, a lawyer at Milberg LLP, which with Seeger Weiss LLP represents more than 30 investors with losses they believe could total more than $1 billion.

And the overseas folks are no smarter

Royal Bank of Scotland and Man Group on Monday outlined potential exposures of £400m and $360m, respectively, to Wall Street trader Bernard Madoff’s alleged $50bn fraud.

HSBC is also facing a potential loss of about $1bn because of Mr Madoff’s “giant Ponzi scheme”, where old investors were paid with money raised from new ones.

...HSBC’s exposure is believed to be about $1bn in loans provided to clients, mainly funds of funds, which invested some $500m of their own funds in Mr Madoff’s venture.

On Sunday, France’s BNP Paribas said its maximum potential loss on Mr Madoff’s funds was about €350m. Spain’s Banco Santander said it had exposure of €17m, while clients of its hedge funds had €2.3bn at risk in Mr Madoff’s funds.

Japan’s Nomura said on Monday it had Y27.5bn of exposure but that the impact on its capital would be limited and BBVA, Spain’s second biggest bank, said it had no direct exposure but its clients face a loss of up to €300m and its international operations were facing a €30m loss.

Nicola Horlick’s Bramdean Alternatives has $25m invested with Mr Madoff’s venture.

Here's a more complete list based on what we know at this point.

And of course there are some nice ties to NJ politicians

“Senator Lautenberg was an investor in Bernard Madoff’s investment fund, primarily in the form of his family’s charitable foundation,” Lautenberg spokesman Scott Mulhauser said.

...“I'm hesitant to make any bold statements, because there may be some current accounts in the hands of others, but the bulk of the foundation money was in the hands of Madoff,” said Michael Griffinger, the Newark attorney asked to look into the matter for Lautenberg.

And shockingly lots of that money has made its way back into the hands of...NJ politicians!

Since 1986, Madoff and family members connected with the firm also made at least $419,000 in contributions to federal candidates in New Jersey, including the Senate campaigns of Lautenberg and Jon Corzine, and the presidential campaign of former Sen. Bill Bradley, according to CQMoneyline.com.

Madoff, a former chairman of the Nasdaq stock exchange, was among the first contributors when Corzine entered the 2000 U.S. Senate campaign.

Madoff and Ruth Madoff, who has the same address on Federal Election Commission reports, provided $2,000 of the first $31,000 Corzine raised in August 1999, according to commission reports.

Corzine, a millionaire and former Goldman Sachs chairman who is now governor, eventually raised $2.7 million from contributors and put $60.2 million of his own money into that campaign.

A spokesman for Corzine said Friday that the governor did not have any personal investments with Madoff.

Madoff and relatives also gave $8,000 in 1999 to Bradley's campaign for president, and $13,600 to Lautenberg’s 2008 reelection campaign, according to FEC reports.

Bradley did not return a call seeking comment.

Mulhauser said Lautenberg would dispose of the contributions, but exactly how would be determined later. Typically, campaigns donate questionable contributions to charity.

The biggest recipient of Madoff’s contributions was the Democratic Senatorial Campaign Committee, which received $100,000 in the past four years. The DSCC chairman during that time was Sen. Charles Schumer, D-N.Y., who also got $39,000 for his own campaign account from Madoffs since 1998, according to reports filed with the FEC.

The current chairman of the DSCC is Sen. Bob Menendez, D-N.J.

Greed, greed, greed. You've got a guy promising 8-12% per year, guaranteed, no questions asked; in fact, if you ask questions you don't get invited to "play." So some very smart people prove to us once again that high intelligence is not indicative of any semblance of wisdom.

Greed.

Avarice.

Oh, and political payoffs.

And these people want us to re-elect them?

Posted by Mr. Bingley at December 15, 2008 07:18 AM

Comments

Posted by: yojimbo at December 16, 2008 12:45 AM