Friday, January 9, 2009

Where Has Bernie Madoff Buried His Loot?

By Robert Chew

Bernard Madoff walks out of Federal Court after a bail hearing in Manhattan
Bernard Madoff walks out of Federal Court after a bail hearing in Manhattan

There's a new number in the Great Madoff Rip-Off saga, and it's $850 million. That's the estimated amount of liquid assets left from Bernard Madoff's private sandbox of billions, according to Stephan Harbeck, president of the Securities Investors Protection Corp., speaking at Monday's House Financial Services Committee hearing on the $50-billion Madoff scandal.

Madoff was supposed to come clean with his list of assets last week — it certainly should add up to more than $850 million — but so far there has been nary a public peep of the list. When, during the hearing, Representative Gary Ackerman, a New York Democrat, asked David Kotz, the Securities and Exchange Commission's inspector general, what Madoff's assets were, Kotz answered meekly, "We don't have that information." Ackerman finally badgered Kotz to agree to supply the total asset list publicly within a week. We'll see. (See the top 10 scandals of 2008.)

Or maybe we won't. To anyone familiar with the world of numbered accounts, it's hard to believe that the Pirate of Third Avenue will fess up entirely to SEC investigators digging for the remaining $49.15 billion in vanished loot. Maybe the money total is as inflated and false as his victims' accounts; maybe large chunks were taken out by depositors. Either way, outside experts say it stretches credulity to think a clever sociopath and long-term bandit would not take special, even basic steps to protect his extended family from the ugly shame of poverty, particularly since this alleged bandit knew he was headed for the brig.

Sure, experts say, he'll cough up the obvious brokerage accounts, client names, and offshore and numbered accounts that dealt directly with his investment company, Bernard L. Madoff Investment Securities LLC. And he'll begrudgingly concede the $7 million Park Avenue pad, the Palm Beach digs, the yachts, the French villa and the Montauk getaway. But no one believes he'll tell authorities where all the booty is stashed — not a chance, unless it saves him from walking the plank. It's the equivalent of the British government asking the infamous pirate Captain Kidd if he wouldn't mind handing over some of his treasure maps, pretty please.

"Do you think a man who deceived so many friends, associates, charities, and lied to them openly for so long, has a problem being a little bit deceitful in surrendering his books and records?" asks a former Los Angeles–based Treasury Department special agent who for decades specialized in white-collar fraud. "Of course he's hidden money; we're talking $50 or $100 million. It's a pittance to a guy like Madoff. Hiding money is a game for criminal minds, and there is no way Madoff's ever going to provide 100% of the information unless it exonerates him."

The modern way of burying a treasure chest of cash, banking experts say, is to have your own bank that is funded by nameless wire transfers to Switzerland, the Caymans, Liechtenstein. It's still unclear as to whether Madoff had his own bank, but there is always the ever popular method of hidden safes and multiple, anonymously managed safety-deposit boxes loaded with cash, or even better, "bearer bonds," an old-fashioned but effective tool that is as good as cash and can be presented to banks by anyone bearing them — no questions asked. Today they are used frequently in Central America. Typically, bearer bonds pop up years later in the hands of family members, after the institutional memory of the crime has faded. The beauty of bearer bonds is that they can be made out for any amount and there's no record of purchase.

Over the course of 20 years, a person like Madoff could have stashed away a lot of bearer bonds, for a lot of money, in a lot of places. But what about the money trail? Couldn't transaction records lead investigators to these caches? "You'll likely see an amazing loss of memory and material in the months ahead," says the Treasury Department expert. "Computers will be lost, fires will be started, records and books destroyed. It always happens."

A guilty conscience, billions to play with and oodles of time is the perfect recipe for massive deception, according to Christopher Reich, best-selling author of financial thrillers such as Number Account and the recent Rules of Deception. "Madoff had decades to prepare for this day, and it's likely he's hidden considerable assets," says Reich. "Numbered accounts in Swiss banks are no good today; the Swiss cooperate too much." Instead, a white-collar fraudster like Madoff could create multiple phony investment-advisory businesses in foreign countries, similar to legitimate businesses he's actually working with. Says Reich: "All he has to do is create fake invoices over the years and pay in to those fake companies, then create new phony businesses in other countries, have the monies transferred to them, and then close down the original fake businesses. It's how the mob does it; the money trail is wiped clean."

There is no way investigators will ever find all the Madoff money, the author says. Remember, Enron used some 900 foreign accounts to manage its money. "There just isn't enough manpower to go through all the legal hurdles to track it down," Reich says. The money is there, hidden away, he says, maybe $40 to $80 million, and you can bet some family member is in on it too.

Of course, plain old-fashioned "gifting" on a massive scale over the years from Madoff to his children could also keep his unjailed clan in the lush life for a long while.

Perhaps investigators can take note from Captain Kidd, who in the late 1600s — and not far from Madoff's Montauk estate — roamed northern Long Island and Gardiners and Block islands, burying his stolen treasure. Maybe SEC investigators and Madoff's many thousands of victims should bring shovels and start digging, fast.

Robert Chew is a former investor with Madoff via a feeder fund. He lives in Colorado.

Original here

Posting Negative Reviews Could Get You Sued

A San Francisco doctor is suing a patient for posting a negative review of his office on I'd like to officially give that lawsuit a negative review.

The Yelp Negative Review Lawsuit

First, a little background: The patient, Christopher Norberg, went to see the doctor -- Dr. Steven Biegel, a chiropractor -- following a car crash in 2006. Norberg felt he was billed unfairly. He posted a review stating such on Yelp, a Web site designed specifically for user-submitted opinions.

So where's the problem, you might ask? Dr. Biegel suggests Norberg's review was libelous and caused him to suffer "loss of reputation, shame, mortification, and hurt feelings," as well as "injury to his business and profession," according to a copy of the complaint posted on the San Francisco Supreme Court Web site. Biegel further suggests that the Yelp review "invaded [his] right to privacy."

My Thumbs Down

Here's why I'm giving this negative review lawsuit a negative review, then: There's a clear difference between libel and opinion. Stating your opinion is a protected constitutional right. Biegel's assertion is that the Yelp review could be interpreted as fact rather than opinion. I disagree.

First, Yelp makes it clear that the reviews contained within its site are just that -- reviews. Opinions. Personal experiences.

"Yelp is the ultimate city guide that taps into the community's voice and reveals honest and current insights on local businesses and services," the site's description explains.

That distinction aside, let's take a look at a couple of the specific phrases from the review listed in the doctor's complaint:

• "A friend told me to stop going, cause Dr. Biegel billed his insurance company funny awhile before."

Biegel's complaint says this phrase "suggests [he] is dishonest." I'd suggest that the beginning of the sentence, "a friend told me," makes it abundantly clear that the statement is someone's personal opinion.

• "I saw the guy for two visits, expected a bill for about 125 bucks... So ends up, Biegel billed me for over $500. I called to pay, and he couldn't give me a straight answer as to why the jump in price."

Biegel's complaint: The words "'he couldn't give me a straight answer' suggest [Biegel] was billing in a fraudulent and dishonest manner." Once again, is there really any question we're looking at one person's opinion based on his perspective of his experience?

There are a handful of other similar examples, but you get the gist. Each excerpt appears to me to be quite clear, especially in this context, that it's part of a personal review and one man's personal opinion -- and thus protected speech.

Would You Like a Lawsuit With That Comment?

Ryan Jacobson, an attorney and cochair of the Entertainment Media and Privacy Law Group at Chicago-based SmithAmundsen, says he comes across plenty of these cases, particularly as Yelp-style review sites become more common.

Indeed, a similar case cropped up just this past October when an eBay seller sued a buyer for leaving a negative review on his page. Like in the Yelp instance, the review was posted in an area of the site clearly designated for opinions. The seller just didn't like what it said.

In these sorts of scenarios, Jacobson says the judge is forced to speculate what the writer meant, then consider how an average reader would interpret it within the site's context.

"Courts generally apply a number of factors in evaluating the speech," Jacobson explains. "Opinions are never actionable, but factual assertions that impugn one's reputation, morality, integrity or even ability to competently perform their job can expose the speaker or writer to liability."

These lawsuits, Jacobson believes, can have serious implications when it comes to the practical notion of freedom of speech in the modern world.

"[They] can have the undesired effect of chilling consumers from expressing their opinions online for fear for retaliation in the courts," he says.

Suing Over Opinions: An Opinion

That leads me to my final conclusion: This "I don't like that review" argument is becoming all too common in our engagement-enabling Information Age. Countless companies and individuals are turning to the law when an unfavorable opinion shows up somewhere on the Net, and that's a dangerous door to open.

If a court decides the chiropractor's patient or our eBay feedback fellow were in the wrong, what will that mean for the future of Internet-based community forums? Will we have to eliminate all review-based services and sites? Surely there are many negative opinions out there. If describing an unpleasant experience could get you sued, can these services continue to exist?

Of course, this is all just my opinion. If you disagree, that's fine. Just don't post your negative comments here, or I will sue your pants off.

Original here

Bad Things (or Layoffs) Happen to Other People

Om Malik

Americans, by nature, are an optimistic bunch. Even in tough times, there is something to be optimistic about. Where others see the glass half empty, we see it as half full. That is probably the only reasonable explanation for the findings of this survey conducted by Glassdoor, a Sausalito, Calif.-based startup that ranks employers by taking anonymous feedback from their employees.

Despite the dismal global economy, widespread layoffs and rising unemployment, 61 percent of surveyed employees would not be willing to take a pay cut if they discovered their job was in jeopardy. A whopping 40 percent expect a pay raise in the next 12 months, despite job cuts at their employer. Of those eligible for an annual bonus, 57 percent expect a bonus and 40 percent do not expect a bonus

The most amusing part? Four out of five employed adults say they are not concerned about being laid off from their job in the next six months. Just one in five employees are concerned they will be laid off during the same period. Perhaps the pessimistic 20 percent are reading the news.


Today, a report put out by ADP, a payroll services company, showed that 693,000 jobs were lost in December — 220,000 more than ADP was expecting based on a previous survey of economists. Of course, when it comes to others, job cuts are fair game. Forty-two percent of employees say they are concerned their company will lay off other employees in the next six months. As they say, bad things (and layoffs) happen to other people.

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Rockets hit Israel from Lebanon

Aftermath of rocket strike from Lebanon into northern Israel

At least three rockets have been fired into northern Israel from Lebanon, raising fears the Israeli offensive against militants in Gaza may spread.

Israel replied with artillery, but called the attack an "isolated event".

The incident followed Israel's heaviest bombardment so far on Gaza, with 60 air strikes targeting Hamas facilities.

Meanwhile, Israel has begun a three-hour pause in fighting to allow humanitarian aid into Gaza.

The first of what is promised to be a daily ceasefire - on Wednesday - allowed aid agencies into the territory for the first time in days.

The International Committee of the Red Cross accused Israel of failing in its international obligations after its staff were met with "shocking" scenes.

One medical team found 12 bodies in a shelled house, and alongside them four very young children, too weak to stand, waiting by their dead mothers, the ICRC said.

Nursing home

At least three Katyusha rockets were fired from southern Lebanon into the northern Israeli area of Nahariya early on Thursday.

One of the rockets hit a nursing home were some 25 elderly residents were eating breakfast in a nearby dining hall, the Jerusalem Post reports.

At least two people were slightly wounded and a number of others were suffering from shock, Israeli officials said.


Israel immediately responded with five artillery shells into Lebanon, calling it a "pinpoint response at the source of fire".

Correspondents say this is a dangerous moment in the current conflict.

The rocket attacks from Lebanon have raised concerns about a wider war in the region, says the BBC's Middle East Editor Jeremy Bowen.

But the Lebanese Prime Minister Fouad Siniora was swift to condemn the attack, and called for the army and the UN to investigate.

Information Minister Tarek Mitri told the AFP news agency he had been "assured" by the militant group Hezbollah they were not involved in the rocket attacks.

Israeli cabinet minister Raif Eitan said he believed Palestinians in Lebanon, not Hezbollah, were behind the attack.

On Wednesday, Hezbollah leader Hassan Nasrallah spoke openly about the possibility of a renewed conflict with Israel, saying its fighters were on high alert along the Lebanese-Israeli border.

Northern Israel came under attack from rockets fired by Hezbollah during the brief war with Lebanon in the summer of 2006.

Air attacks

In Gaza, Israel continued its offensive overnight with 60 airstrikes targeting police sites, 10 Hamas tunnels, weapons storage facilities, launching pads "and a number of armed gunmen", the Israeli army said.

Naval and artillery units "continued to support the ground forces" with one soldier lightly wounded, the army added.


Shopping for 'basic needs' in Gaza market

The bombardment followed a three-hour pause in fighting on Wednesday to allow vital humanitarian aid into Gaza.

Aid agencies report that Gazans rushed into the streets to buy essential supplies and visit relatives in hospital during the lull.

But the traditionally neutral ICRC accused Israel of failing to honour its obligations under international law to treat and evacuate the wounded in Gaza.

It said the Israeli military was in the neighbourhood and must have been aware of the incident involving the four starving children but did nothing to help.

"Neither did they make it possible for us or the Palestinian Red Crescent to assist the wounded," the ICRC's Pierre Wettach said.

About 700 Palestinian and 11 Israeli lives are said to have been lost since the offensive began 12 days ago.

Casualty claims in Gaza have been difficult to independently verify.

While the BBC has had Palestinian producers reporting from Gaza, Israel only allowed Western TV crews to enter on Wednesday, embedded with its army.

Efforts have continued to broker a ceasefire, as a senior Israeli official travelled to Cairo to hear details of a plan put forward by Egypt and France.

A Hamas delegation is expected in the Egyptian capital at some stage for parallel "technical" talks, Egyptian diplomats said.

Original here

Barack Obama vows to keep Blackberry despite hacking fears

Barack Obama vows to keep Blackberry despite hacking fears
Barack Obama is hanging onto his Blackberry, which is his main contact to the outside world Photo: AP

George W Bush was forced to give up email when he was sworn in as President in case hackers broke into his system and worries all documents would have to be kept as presidential records.

But Obama told CBNC he is struggling to keep the Blackberry so he can maintain contact with the outside world.

"They're going to pry it out of my hands," he said, "This is a concern, I should add, not just of Secret Service, but also lawyers."

Obama said keeping in touch by email was a way of escaping the trappings of power and staying in touch with the electorate.

"I've got to look for every opportunity to do that – ways that aren't scripted, ways that aren't controlled, ways where, you know, people aren't just complimenting you or standing up when you enter into a room, ways of staying grounded," he said.

During the interview, he described his frustration at being trapped in the White House bubble, citing examples from a recent holiday in Hawaii where he said he was discouraged from going bodysurfing.

He said his wife, Michelle, was amused at the hubbub over photographs showing him on the beach without wearing a shirt.

"It was silly, but, you know, silliness goes with this job," he said.

The President-elect also promised a substantial overhaul of US financial market regulations as a result of the global economic crisis and said he expected to unveil plans to fight home foreclosures in the next month or two.

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