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Business Week - USA - Ponzi Nation
An excellent post by Matthew Goldstein at Business Week
Wall Street trader Bernard Madoff allegedly defrauds the rich and famous out of tens of billions of dollars. Minnesota businessman Tom Petters allegedly fleeces hedge funds out of $3.5 billion. And socialite New York lawyer Marc Dreier may have duped some hedge funds into giving him hundreds of millions of dollars for an apparently bogus real estate scheme.
All of these scams are a big and all appear to be some kind of Ponzi scheme, designed to take in money from new investors to pay-off earlier investors. A Ponzi scheme is one of the oldest financial frauds around. And many are referring to the Madoff caper as the biggest Wall Street fraud ever.
But derivatives consultant Janet Tavakoli may be onto something. In a note to her clients, she says the biggest Ponzi scheme of all may be the one that brought the world financial markets to its knees. And that’s the scheme that united Wall Street bankers with mortgage lenders in a bid to funnel more and more money into the market for supbrime homes loans. She says the packaging of iffy home loans into securitized bonds that could be sold to insitutional investors—many of them relying on borrowed money—was a system born to fail.
Read the post in it’s entirety here
Bloomberg - Madoff Confessed $50 Billion Fraud Before FBI Arrest
Madoff Confessed $50 Billion Fraud Before FBI Arrest
Dec. 12 (Bloomberg) — Bernard Madoff confessed to two sons this week that his investment advisory business was “a giant Ponzi scheme” that cost clients $50 billion before two FBI agents showed up yesterday morning at his Manhattan apartment.
“We’re here to find out if there’s an innocent explanation,” Agent Theodore Cacioppi told Madoff, who founded Bernard L. Madoff Investment Securities LLC and was once chairman of the Nasdaq Stock Market.
“There is no innocent explanation,” Madoff, 70, told the agents, saying he traded and lost money for institutional clients. He said he “paid investors with money that wasn’t there” and expected to go to jail. With that, agents arrested Madoff, according to an FBI complaint that provided a timeline.
Read the complete story on Bloomberg here
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3uKf5P1lFmg&refer=home
New York lawyer charged with stealing millions from hedge funds
A prominent New York lawyer has been charged in a $100 million (£75 million) hedge fund fraud scheme in which he allegedly tricked his way into businesses so he could hold meetings in their boardrooms.
By Tom Leonard in New York
Last Updated: 12:27AM GMT 10 Dec 2008
Marc Dreier, 58, whose clients have included the rock star Jon Bon Jovi, took advantage of the financial crisis by selling fake debt to hedge fund managers looking for investment opportunities, say prosecutors.
In what the Securities and Exchange Commission called a “stunning, brazen fraud that targeted some very sophisticated institutional investors”, he is charged with stealing $113 million since October, including $100 million from two hedge funds.
He allegedly hoodwinked hedge fund executives by meeting them in the offices of various businesses, including a property company and a pension fund, where he had no right to be.
Mr Dreier also provided the hedge funds with fake financial statements, audits and letters on the stationery of the New York property company that was supposedly issuing the debt.
Offshore privacy protection and offshore banking
In certain countries when you own certain amounts of money, you are placed under the radar of financial and regulatory authorities at every instance of the way. It doesn’t matter whether this money was accumulated through legal means or not, you can get harassed and asked questions for spending money that you have earned and accumulated through very hard work. If you made a mistake in filling out your tax forms and you omitted a cent or one penny, the government will come after you with all its power and ask you to declare what you own and pay what you owe.
The whole purpose of having money is to be able to enjoy your money without being asked unnecessary questions as to how, when and why. Sometimes it’s not even the government that’s after you but people who are after your financial information to deprive you of your wealth. Credit card, financial fraud, identity theft are all common words in our vocabulary these days. Protecting your funds and wealth through private banks offshore may seem like paranoia and overkill until someone accesses your financial information and runs your local bank account dry.
At other you get annoying requests to contribute to this or pay for that just because your bank account falls in a certain financial range or because you have a huge limit on one of your credit cards.
Offshore banking gives you the privacy to protect yourself and your finances; you can easily operate your offshore numbered bank account and benefit from privacy instantly. With an ATM card that bears no name you can easily have access to your funds from halfway around the world and save yourself questions from your local bank and tax agents.
Offshore banking and privacy protection are synonymous ideals, if you value what you own you should by default consider privacy protection as a means of protecting your finances at all times. Practicing prevention as they say is always better than looking for a cure
Offshore Privacy Protection & Litigation
Any number of people going through the Forbes list of the world’s richest people will see a number of people who accumulated fortunes through litigation related cases like divorce suits. In the world we live in we stand in the constant threat of being sued for what we own especially when we have accumulated certain financial wealth for ourselves. If you live in a foreign country, own assets there and you happen to run foul of the government one day, you can be rest assured they will go after you and what you own in their country with all the legal might possible. Why suffer when you can safeguard your privacy through means such as offshore privacy protection?
Offshore privacy protection works through various means but essentially what it involves is the transfer of the ownership of your assets to an offshore corporate entity. This offshore corporate entity is in effect owned by you but cannot be directly linked to you. The directors of such companies are legally paid to stand in your stead and do your bidding but they have no legal control over the company and are bound by secrecy laws.
That way if you may be British and own a piece of property in Canada under the shield of a company incorporated in Costa Rica. If something happens say a wife sues you for divorce or the government decides to liquidate you and your businesses, your property will be legally and financially shielded from such repercussions because no one will know you own it. All manner of assets should always be shielded by effective means privacy protection, it is one thing to own a large amount of money, but you don’t keep gold bars in your house and announce to the whole world where you keep your money. Anyone who has the wisdom and prudence to accumulate assets should show equal wisdom in protecting such assets from people who are not after your best interests.
