Madoff Victims: Gov't Missed Red Flags
Victims of the Bernard Madoff Ponzi scheme have turned their ire from the primary source of their financial losses to the SEC, IRS and Madoff family members and employees who may have been involved the massive fraud.
Speaking with CBS News anchor Katie Couric, several victims expressed their emotions on the day that the 70-year-old Madoff pled guilty and was sent to jail, most likely for the remainder of his life. Their emotions ranged from hopeful to frustrated, with much of the frustration now aimed at the U.S. Government.
Two school teachers invested $100,000 of their life savings to Madoff's scheme. "He seemed to be on the cutting edge of a lot of things," said Louis Kelsch, a retired high school math teacher, explaining why he chose to invest with Madoff.
"On paper he seemed to have good ideas.... If he was a legitimate brokerage he would have done pretty good." Kelsch speculated that Madoff needed accomplices to manufacture the false statements and transactions sent to his investors. "A lot of computer work goes into creation of the statements. I don't think that is his specialty and he probably hired some savvy people. He would have had to give them instructions to carry them out."
Sheryl Stein, a CPA who knew Madoff personally for 20 years, invested millions with his firm. She said she became an individual investor with Madoff after an extensive review by a financial advisory and some press in 1992 that gave him a thumbs-up. "Bernie didn't ask for money. His thing was to be asked," Stein said. She noted that he had an "aura," and that people were grateful to place their money with him.
Asked whether she felt embarrassed to have been swindled by Madoff, Stein said that there is a lot of Monday morning quarterbacking going on. "I didn't lose my money, somebody stole it," she said. Like other fairly sophisticated investors in Madoff's funds, she assumed that the stocks in the statements existed and that as the chairman of NASDAQ, he was beyond reproach. "There were no red flags," she concluded.
Nor did the Securities and Exchange Commission see any red flags around Madoff's business, despite the fact that SEC regulators examined Madoff's firm several times over the last 15 years, most recently in May 2006, and didn't uncover the fraud. During an interview with "60 Minutes" financial analyst Harry Markopolos said that he sent materials to the SEC questioning the integrity of Madoff's firm five times between May 2000 and April 2008.
According to Ron Stein and some of the other victims, Congress and President Obama need to step in and bring changes to the IRS, ERISA (Employee Retirement Security Act) and SIPC. "If the government doesn't step in, how can anyone feel comfortable and secure investing in American financial institutions?," Peskin asked.
"We need the government to step in and help the victims of the scandal. They owe us some assistance," Peskin said.
"We have the beginning of story with the SEC failure. The SEC knew about the red flags and did not act upon them since 1992," said Ronnie Sue Amvronsino, a retired computer analyst who lost $1.66 million with Madoff. She also said that the $500,000 fraud compensation limit from the Securities Investor Protection Corporation (SIPC) is inadequate and that the IRS has been a beneficiary of the Madoff fraud, collecting taxes for years on gains from phantom trades.
The victims have to submit their claims to the trustee in charge of Madoff's assets by July 2. If he uncovers any of the billions of missing dollars, they'll be eligible for a share.
They can also apply to the Securities Investor Protection Corporation for up to $500,000 -- though of course, some victims have lost much more than that.
By Dan Farber
?2009 CBS Interactive Inc. All rights reserved
Copyright 2009 CBS. All rights reserved. Speaking with CBS News anchor Katie Couric, several victims expressed their emotions on the day that the 70-year-old Madoff pled guilty and was sent to jail, most likely for the remainder of his life. Their emotions ranged from hopeful to frustrated, with much of the frustration now aimed at the U.S. Government.
Diane Peskin said she took "cold comfort" in Thursday's proceedings. Peskin and her husband invested $3.2 million with Madoff from the proceeds of selling their business, which published a guide to gallery exhibitions around the country. Peskin's husband has been severely depressed and not functioning well, which she said has been heart-wrenching for their 10- and 13-year-old children. "He's just not the same person," she said.
Two school teachers invested $100,000 of their life savings to Madoff's scheme. "He seemed to be on the cutting edge of a lot of things," said Louis Kelsch, a retired high school math teacher, explaining why he chose to invest with Madoff.
"On paper he seemed to have good ideas.... If he was a legitimate brokerage he would have done pretty good." Kelsch speculated that Madoff needed accomplices to manufacture the false statements and transactions sent to his investors. "A lot of computer work goes into creation of the statements. I don't think that is his specialty and he probably hired some savvy people. He would have had to give them instructions to carry them out."
Sheryl Stein, a CPA who knew Madoff personally for 20 years, invested millions with his firm. She said she became an individual investor with Madoff after an extensive review by a financial advisory and some press in 1992 that gave him a thumbs-up. "Bernie didn't ask for money. His thing was to be asked," Stein said. She noted that he had an "aura," and that people were grateful to place their money with him.
Asked whether she felt embarrassed to have been swindled by Madoff, Stein said that there is a lot of Monday morning quarterbacking going on. "I didn't lose my money, somebody stole it," she said. Like other fairly sophisticated investors in Madoff's funds, she assumed that the stocks in the statements existed and that as the chairman of NASDAQ, he was beyond reproach. "There were no red flags," she concluded.
Nor did the Securities and Exchange Commission see any red flags around Madoff's business, despite the fact that SEC regulators examined Madoff's firm several times over the last 15 years, most recently in May 2006, and didn't uncover the fraud. During an interview with "60 Minutes"
According to Ron Stein and some of the other victims, Congress and President Obama need to step in and bring changes to the IRS, ERISA (Employee Retirement Security Act) and SIPC. "If the government doesn't step in, how can anyone feel comfortable and secure investing in American financial institutions?," Peskin asked.
"We need the government to step in and help the victims of the scandal. They owe us some assistance," Peskin said.
"We have the beginning of story with the SEC failure. The SEC knew about the red flags and did not act upon them since 1992," said Ronnie Sue Amvronsino, a retired computer analyst who lost $1.66 million with Madoff. She also said that the $500,000 fraud compensation limit from the Securities Investor Protection Corporation (SIPC) is inadequate and that the IRS has been a beneficiary of the Madoff fraud, collecting taxes for years on gains from phantom trades.
The victims have to submit their claims to the trustee in charge of Madoff's assets by July 2. If he uncovers any of the billions of missing dollars, they'll be eligible for a share.
They can also apply to the Securities Investor Protection Corporation for up to $500,000 -- though of course, some victims have lost much more than that.
By Dan Farber
?2009 CBS Interactive Inc. All rights reserved
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Posted by pythoncharly at 7:58 AM : Mar 13, 2009
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You're right about that, but at some point there needs to be a clarification.
First of all which "government" or administration, where Madoff began his swindling spree?
--- Bush's Administration.
People are complaining, that the government did not do enough or FAILED to to catch red flags on Madoff's activities, and say, "it's government's fault"... do they have the right to complain?
--- yes they should,
Why?
Because the Bush Administration was so far off in their "DEREGULATION" and leaving these irresponsible son's of a ***** do whatever they want, they failed to monitor this. (But they didn't fail intercepting Al Qaida in the phone lines or possibly you having sexually explicit talk with your girlfriend on the phone... if you ever)
That's right. That's right. Let them complain about the government's failure with Madoff due to DEREGULATION. If these people are republicans, their issues always bites them back in the ass. As Always.
Money is the root of all evil.
J David Domin is living out his end of days a broken man, his family severly impacted, mentally and financially. Stealing from others will always catch up to you. Atleast those who have lost the money, have their health, dignity and family. Place value in this, as the money you lost is nothing but status quo and (in)security. I feel sorry for those that lost their life savings, but again, how much greed has led you to this place? Live comfortably and happily, do not be greedy, and most of all... do not expect my hard earned tax dollars to pay for your loss.
They disappeared already.
As it turned out, this was like "getting the police off the backs of bank robbers."
You don't blame bank robbers for robbing--they are criminals, just like the cheating Walstreeters, and it's their nature to be crooked.
You do blame Wyatt Earp for taking bribes from Ike Clanton, because Wyatt was sworn to uphold the law.
So was the SEC, but under the Raygunites / Bushits, the SEC "bosses" were as crooked as Al Capone's friends in the Chicago Police.
'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''The government does not assist the victims of burglary or armed robbery. Fire , flood etc......
Why do they owe you? The "they" in this case is , "us" , the taxpayer. Get over your once rich self and accept that your greed, and belief that you were so smart you found a financial magician to advance your financial aims, clouded your judgment. If it sounds too good to be true it probably is.