http://www.toomre.com/taxonomy/term/420 Visualization of Madoff Securities "Feeder Funds"Based upon the recent sharp increase in website visitors and both the public and private feedback, Toomre Capital Markets LLC ("TCM") appears to have become one of the better resources for information regarding the Bernard L. Madoff Investment Securities, LLC fraud scandal. TCM's two principals, Lars Toomre and Aldon Hynes, are geeks at heart and tend to be better with numbers and technology than names and social relationships. Of course, though, the Madoff fraud abounds with so many investors, organizations, charities, lawyers and other entities that have names and relationships that cumulatively quickly become overwhelming. Hence, Lars and Aldon thought that this website's readership might appreciate some visualization to assist in gaining a better understanding of some of the many principals and relationships that are a part of the Madoff fraud scandal. Most of the labels on the visualization below link back to other content on this website. This first graph (of what may become several) depicts what we acknowledge is incomplete information about the major "feeder funds" that contributed investor dollars to the Bernie Madoff's investment operation: Visualization of Madoff Securities "Feeder Funds": TCM would appreciate receiving comments in the section below about information that should be incorporated into the above graph. We will endeavor to update both this post and to produce additional social network graphs about other portions of the complex Madoff fraud social network map. Reader comments and thoughts are not only welcome, but also highly encouraged. Jan26Bob Jaffe Ordered To Testify The State of Massachusetts took an early lead in aggressively pursuing another of the "feeder funds" that deposited investment monies with Bernie Madoff's fraudulent scheme. This feeder fund apparently was run through an entity known as Cohmad Securities, a FINRA-licensed broker-dealer, which was jointly owned by Maurice "Sonny" Cohn and Bernie Madoff. Cohmad Securities apparently operated out of the same office space as Bernie Madoff's primary firm and paid rent to Madoff's broker-dealer operation.Mark and Andrew Madoff claim not to have known anything about their father's alleged fraud. "Mark and Andrew Madoff are economically and emotionally devastated by what their father has done, which among others things has destroyed the valuable market-making and proprietary trading businesses they spent 20 years building," their attorney, Martin Flumenbaum of Paul, Weiss, Rifkind, Wharton & Garrison, said in a statement. However, on their 19th trading floor, they
had to be aware that some employees of Cohmad Securities were working just a few feet away.
According to one news report, the pair of Madoff sons knew Cohmad only as a retail brokerage operation through which they would occasionally place trades to the floor of the New York Stock Exchange because the firm was not a NYSE member. While Mark and Andrew knew Cohmad was one of their father's ventures, "if they had a role with asset management it was not anything they knew about," the spokesman said.
Given how Bernard Madoff Investment Securities was very much a family-run business, many have been very skeptical about this explanation. Hence, both aggrieved investors and regulators have wanted to get a better explanation of just what business Cohmad Securities conducted, how it reimbursed individuals who referred business for investment in Bernie Madoff's asset management operation and what exactly its principals knew about Madoff's investment operation.
Robert M. Jaffe is/was both a broker with Cohmad Securities and the son-in-law of Carl Shapiro, the Boston philanthropist who allegedly lost $545 million that was invested with Bernie Madoff. As Toomre Capital Markets LLC ("TCM") wrote about in the post Bob Jaffe, Bernie Madoff's Man To See, Ducks Subpoena, Mr. Jaffe thus far has missed two schedule appearances to appear before
Massachusetts state security regulators. The original subpoena for his appearance and that of the Cohmad Securities' chief compliance officer, Marcia Beth Cohn, were issued shortly after Mr. Madoff's arrest. Neither has yet given any testimony that might assist prosecutors, regulators and investigators further understand who else might have been involved in Bernie Madoff's fraudulent activity. Jan23Investigators Work Backward On Madoff FraudThe Friday January 23rd 2009 edition of The Wall Street Journal included an article entitled Probers Work Backward on Madoff written by Kara Scannell and Amir Efrati. This article summarizes the unusual case in the Bernie Madoff scandal where the principal figure was the first to confess to his criminal behavior. Normally, prosecutors and investigators work their way
up the chain to the principle figure(s). In the Madoff case, they have been forced to work backwards to figure out who else could have helped Mr. Madoff, who said that he acted alone.
According to the article, the SEC recently issued subpoenas to a Madoff lieutenant, one JoAnn "Jodi" Crupi, and a brokerage firm affiliated with Mr. Madoff. Ms. Crupi is represented by lawyer Eric R. Breslin. Regulators are focused on documents about her compensation and her dealings with certain firm clients, including some charities. They also have asked for access to her personal computer. This last request makes Toomre Capital Markets LLC ("TCM") wonder whether regulators suspect that there
were communications with clients from private e-mail accounts (as reportedly happened earlier in the timeline of this scandal).
Also, apparently regulators are preparing to issue a second subpoena to another Madoff associate, Frank DiPascali. He is represented by lawyer Marc Mukasey of the firm Bracewell & Giuliani LLP in New York. Mr. DiPascali has been reported to be Mr. Madoff's senior assistant (or even chief financial officer) and, according to Bloomberg News, investors' "Go-To" guy
in the operation of the investment management business. According to investor Tim Murray of Minnesota, Mr. DiPascali was a “street-smart New Yorker” who fielded calls about the millions of dollars he entrusted to the firm. “To a Madoff customer with a discretionary account, he is the guy,” said Mr. Murray, 57, a real-estate developer. “There is nobody else.”
Ms. Crupi and Mr. DiPascali both worked on the now infamous 17th floor where the investment management portion of Bernie Madoff's business was kept separate from the broker/dealer market making operations. Like many who have learned of this fraud, authorities do not believe Mr. Madoff's assertion that he acted alone in pulling off such a large fraudulent scheme that seems to have stretched back at least three decades and involved literally thousands of investors. Those investors received monthly and quarterly account statements that are now believed to be fraudulent. One of the open questions is: Who helped Bernie Madoff prepare such detailed and ultimately fraudulent statements? Jan15Frank Avellino, Michael Bienes and Bernie Madoff Back in 1992, the United States Securities and Exchange Commission ("SEC") reached a settlement with Avellino & Bienes ("A&B"), a tiny New York accounting firm that was run by Frank Avellino and Michael Bienes. According to legal documents from that case, these two started raising money from clients, friends and relatives in the early 1960s and handed over that cash over to Bernie Madoff to invest. (This was about the same time that Bob Jaffe's future father-in-law, Boston philanthropist Carl Shapiro, gave Bernie Madoff his
first funds with which were used to start his investment business.) By 1984, apparently Avellino and Bienes had ceased their accounting practice to focus exclusively on finding additional investors for Madoff.In 1989, two other accountants Steven Mendelow and Edward Glantz and later Glantz's son Richard also began raising funds for Bernie Madoff. By the time that the S.E.C. ordered these three firms to return all funds to their investors for selling unregistered shares, some $454 million had been raised from more than thirty-two hundred investors. Apparently, the S.E.C investigation had been sparked by a confidential tip that one of the money managers was promising annual returns of up to twenty percent.
The regulators subsequently examined Madoff's books and it appears that they were satisfied when every penny was returned to the former accountant's investors. Bernie Madoff and his investment operation never were sued by the regulator and consequently never was subject to any operational restrictions. The former accountants were collectively ordered to pay $875,000 and to cease from further violations of securities laws.
Rather interestingly, Avellino & Barnes were then represented by Ira "Ike" Sorkin, the lawyer who currently represents Bernie Madoff in his criminal proceedings. In another connection between Avellino and Madoff, Lee Richards, who has been appointed by the SEC as the receiver of all Bernard Madoff Investment Securities assets, also served as the court-appointed trustee over Avellino & Bienes during its legal dispute with the federal agency, according to Bloomberg News.
What originally caught the attention of Toomre Capital Markets LLC ("TCM") about Frank Avellino and Michael Bienes was their relationship to Bernie Madoff's eventual father-in-law, Saul Alpern. Mr. Alpern was the lead partner of a Manhattan accounting firm back in the 1950's and 1960's then called Alpern & Heller. His colleague was Sherman Heller. Two of the junior
accountants at the firm were named Frank Avellino and Michael Bienes. Mr Heller apparently died in the mid-1960's at the age of 46 and then in the 1970's Avellino and Bienes took over that accounting business renaming it Avellino & Bienes. According to the blog mehtafiscal in their post The End of a Sure Things: Madoff's Long Bet, one early investor with A&B and Madoff claimed that "Madoff had worked at Alpern & Heller in the late 1950s, with Avellino and Bienes, and was friendly with them [this last statement could not be independently verified]."
TCM was previously unaware that Bernie Madoff had worked at an accounting firm. (Perhaps it was this accounting firm was the source of the original connection between Carl Shapiro and Bernie Madoff?) Carl Shapiro was Madoff's original investor and also one of his last when he supposedly contributed $250mm to Madoff in November 2008. Carl Shapiro also likely was the link that connected his son-in-law, Robert Jaffe, with Bernie Madoff and eventual employment at Cohmad Securities Corp.
Various charity filings with the SEC subsequent to 1992 suggest that both Frank Avellino and Michael Bienes continued to have at least some funds invested with Bernie Madoff. Whether they played a larger role after 1992 in Madoff's investment business remains to be disclosed. However, given that their personal relationships with Madoff that apparently were far deeper than the SEC disclosed back in 1992, one is left to wonder.
Two interesting pieces of news this month contribute to this state of wonder. On Monday January 12th, Mr. Bienes, "the fabulously wealthy Fort Lauderdale benefactor", abruptly resigned from the board of the prestigious Broward Center for the Performing Arts via a short one sentence letter of resignation. Why did he suddenly resign at this time? One might also wonder just how this formerly junior accountant became so wealthy. Did he really make his millions because "he got lucky on Wall Street"? Or perhaps some of his "wealth" came from his old buddy Bernie Madoff?
The other piece of intriguing news concerns his partner Frank Avellino. Mr. Avellino too has progressed far from his younger days as an accountant at Alpern & Heller. Today he apparently owns a $4 million home in Palm Beach, a residence in New York City and another $10 million summer residence on Nantucket. Also apparently, Mr. Avellino just recently put his Nantucket residence on the market. The timing of that move too is interesting and perhaps quite innocent, particularly in these difficult economic times.
However, when one learns that Mr. Avellino also has recently been accused of bilking his house-cleaner out of $124,000 life savings, one really begins to wonder. This article in Nantucket's Inquirer and Mirror has more details of the suit filed by one Nevena Ivanova against Mr. Avellino. Apparently a few years ago, Mr. Avellino accepted some funds from Ms. Ivanova for investment. Then recently he announced that all of her money had been lost. It is unclear how exactly Mr. Avellino was supposed to invest the householder's money. Perhaps he invested it with his good buddy Bernie? If so, how then did Mr. Avellino allegedly announce on December 1st that all of her funds had been lost? Did perhaps Mr. Avellino know something about Bernie Madoff's fraud some ten days before his arrest?
Inquiring minds really would like to know more about the recent relationships between Bernie Madoff, Frank Avellino and Michael Bienes. Hopefully, more information will be forthcoming shortly. Jan15Bob Jaffe, Bernie Madoff's Man To See, Ducks Subpoena Toomre Capital Markets LLC ("TCM") has been rather amazed by both the number of and the sophistication of the various individuals, institutions and charities that have been victims of
the Bernie Madoff fraud. (Yes, under American law, one is presumed innocent until one either pleads guilty or is convicted by a jury of one's peers. However, given that Bernie Madoff apparently confessed to his brother Peter Madoff, his two sons, Andy and Mark Madoff and the FBI agents on the morning of his arrest, TCM is this particular scandal
will henceforth forgo using the term "alleged".) Like many in the finance industry, TCM has been surprised that a fraud of this magnitude could have been perpetuated against so many investors for so long by a firm that flew relatively below the radar.As TCM has written about previously in the post Update on Bernie Madoff Scandal and Feeder Funds, one of the keys to Bernie Madoff's fraud were the various "feeder funds" that in essence bundled investment monies from multiple investors and then deposited much, if not all, of those funds with Bernie Madoff. Apparently the five largest of these "feeder funds" were Fairfield Greenwich, Tremont Capital, Banco Santander, Bank Medici and Ascot Partners. Other "gate keepers" who apparently funneled funds to Bernie Madoff included Jerry Breslauer, Richard Spring, Bramdean Alternatives, Prospect Capital, Stanley Chais, Cohmad Securities Corp. , and Robert M. Jaffee (pictured to right in picture by Greer Gattuso/Palm Beach Daily News).
According to a December 21st 2008 article in The Boston Globe entitled Bernie Madoff's Man To See, Robert M. Jaffe, 64, of both Weston, Massachusetts and Palm Beach, Florida cut quite the figure, even in the rarefied world of high society in Palm Beach. "With his impeccably coiffed hair, a golf game to envy, and a $17 million waterfront mansion, he was a man to be seen. He was also the man to see, if you wanted in on a sure thing - Bernard L. Madoff's investment." Apparently Mr. Jaffe "relished his access to wealthy friends and investors at country clubs and charity galas" and
hence attracted "an A-list of the powerful and famous, as well as his closest friends, family - and himself" to Bernie Madoff's fraud.
Mr. Jaffe served as a Vice President of Cohmad Securities Corp., a broker/dealer that apparently was set up primarily to bring in investment management clients for Bernie Madoff. In Palm Beach and Boston, Mr. Jaffe offered coveted access to the now infamous New York investment firm and apparently this MBA dropout functioned more as a symbol of the extraordinary wealth and status Madoff clients could achieve. Driving "a green 1954 MG TF British convertible, [Jaffe] seemed to find more success doing business on the golf course than in the boardroom. And it showed in his game: Jaffe was the club champion earlier this year at Palm Beach Country Club."
The article continued, "Massachusetts investigators are looking into questions such as whether Jaffe or his firm failed to protect investors they steered to Madoff. In an interview, Massachusetts Secretary of State William F. Galvin said he had subpoenaed Jaffe to better understand Madoff's operations. 'Maybe Mr. Jaffe didn't know' about the alleged fraud, Galvin said, 'but he certainly was a key player in getting people to invest.'"
http://www.reuters.com/article/idUS262711+09-Oct-2008+MW20081009 Prospect Capital Announces $20,000,000 Share Repurchase Plan, Updates Net Investment Income Guidance Range to 79 to 87 NEW YORK, NY, Oct 09 (MARKET WIRE) -- Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today
that its Board of Directors has approved a share repurchase plan. Under
this plan, Prospect may repurchase up to $20,000,000 of its common stock
at prices below its net asset value as reported in its then most recently
published financial statements.
In addition, Prospect has updated its net investment income guidance for
the quarter ending September 30, 2008, to 79 to 87 cents per share,
including 34 cents from the previously announced realizations of net
profits interests in IEC Systems LP and Advanced Rig Services LLC.
In addition, the Board of Directors has modified Prospect's windows for
insider purchases to allow for insiders to purchase stock on the open
market, through and including the close of business October 24, 2008.
Prospect anticipates that share purchases will be made from time to time,
depending upon market conditions. Shares may be purchased in the open
market, including through block purchases. Prospect will not repurchase
any shares from directors, officers or other affiliates of Prospect. The
repurchase program does not obligate Prospect to acquire any specific
number of shares and may be discontinued at any time.
Prospect intends to fund the repurchases with available cash. The
repurchase program is expected to be in effect after shareholders receive
notice through the mail, which should be on or about the week of October
20, 2008, until the approved dollar amount has been used to repurchase
shares.
ABOUT PROSPECT CAPITAL CORPORATION
Prospect Capital Corporation (www.prospectstreet.com) is a closed-end
investment company that lends to and invests in private and microcap
public businesses. Prospect Capital's investment objective is to generate
both current income and capital appreciation through debt and equity
investments.
Prospect Capital has elected to be treated as a business development
company under the Investment Company Act of 1940 ("1940 Act"). We are
required to comply with a series of regulatory requirements under the 1940
Act as well as applicable NASDAQ, federal and state laws and regulations.
We have elected to be treated as a regulated investment company under the
Internal Revenue Code of 1986. Failure to comply with any of the laws and
regulations that apply to Prospect Capital could have a material adverse
effect on Prospect Capital and its shareholders.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any such
statements, other than statements of historical fact, are likely to be
affected by other unknowable future events and conditions, including
elements of the future that are or are not under the Company's control,
and that the Company may or may not have considered; accordingly, such
statements cannot be guarantees or assurances of any aspect of future
performance. Actual developments and results are highly likely to vary
materially from these estimates and projections of the future. Such
statements speak only as of the time when made, and the Company undertakes
no obligation to update any such statement now or in the future.
Please send investment proposals to:
Grier Eliasek
President and Chief Operating Officer
Email Contact
(212) 448-9577
Copyright 2008, Market Wire, All rights reserved.http://www.toomre.com/Fairfield_Greenwich_Sued_Again_Over_Madoff_Losses
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