why did Madoff go undetected?

Ye Gods and little fishes!!!  Lyndon LaRouche????

Madoff's choice of auditors should have set off enough alarm bells.  Fifty odd billion dollars supposedly spread over multiple countries and his auditor was a one man firm (actually two if you count the 70 year old and his son).

NorthReport wrote:

Why aren't these auditors under house arrest as well? Or are they that incompetent that the title accountant or auditor is now meaningless, and the ca profession needs to be disbanded.

 I believe Bill Clinton agreed to eliminate the Glass-Steagall Act in place before that since the 1930's altogether. The Act put together in 1933, and among other things, separated banks into to two types: investment and commercial banking. These banking distinctions were blurred in the 1920's as well and are said to have been at the root cause of thousands of banking collapses across the U.S. from 1929 to 32-33 or so. Glass-Steagall has been whittled away at by private banking and other financial sector interests since about 1980.

 I think this Madoff thing is reminiscent of the tech bubble collapse at start of the 2000's. Bank managers and accountants were in conflict of interest doubling as stock promoters. Auditors were also promoting stocks. And sometimes stock promoters and banksters were hand in glove. There was less separation of roles at arm's length as the incestuous relationships gained momentum. Separation of FIRE, Finance, Insurance and Real estate sectors - pillars of their economy really- was once deemed necessary in FDR's time in order to save American capitalism from ruin.

People like Elliot Spitzer proposed sweeping changes and "new" regulations be implemented. I dont think it really happened though. Big business complained that all the new paperwork for the sake of scrutinizing their shady selves would not be affordable for smaller companies and would cause the smaller companies to fold up as a result. What they dont say is that less paperwork and regulation also happens to make it easier for big fish to swallow smaller ones in eliminating kapitalist competition.  There has been similar maneuvering with, for example, big sugar companies in the U.S. When they want to justify high prices for sugar in the US, they will trot out a small farmer infront of Congress, and there aren't too many small farmers left in the U.S., and wring their hands that lower sugar prices will cripple this poor farmer struggling to sell his harvest of sugar beet or whatever. The main thing is, they get their way through lobbying. All this proposed socialist regulation, they say, would only subtract from and hamper "the dynamism of capitalism" to build what is good and destroy the bad in some kind of Darwinian competition separating wheat from chaff, or some such. What it is is capitalism devouring itself.

NorthReport wrote:

Why aren't these auditors under house arrest as well? Or are they that incompetent that the title accountant or auditor is now meaningless, and the ca profession needs to be disbanded.

At the risk of being pedantic, they're American, not Canadian, so they'll be CPA's not CA's.

And they will be sued.  However, given the nature of their operation, I'd be very surprised if they've got more than a couple of million in professional liability coverage so there is no deep pocket there.

The reality is, they should have either (i) declined the assignment up front, (ii) resigned when the Madoff's operation exceeded their capabilities [the logistics of handling audit confirms alone would have exceeded their capabilities], or (iii) subcontracted the work to someone that had the resources and expertise to handle the assignment.  Not doing so is a dereliction of their professional responsibilities and I'm sure constitutes a violation of the AICPA's Code of Conduct.  I don't know how disciplinary procedures work in that body but I would expect that they will end up in front of the relevant disciplinary board sooner or later [more than likely later since there isn't much that the AICPA can do until all the court cases have settled].

I'd also question the actions of the auditors for the various feeder funds.  If Fund X gave Madoff a billion dollars of their assets to invest I would expect that X's auditors would want to at least look at Madoff's accounts and would have requested confirmation that the billion dollars had been invested etc.  You'd think that they'd have questioned why a no-name accounting firm was auditing a multi-billion, multi-national investment operation.  [Expect those feeder funds to be sued along with their auditors.]

As an aside, without trying to defend their actions, most people do have a misunderstanding of the nature of an audit and the responsibilities of an auditor.  Their primary function is not to detect fraud nor is it to check that every single transaction entered into during the year is correctly accounted for. 

Sky Captain wrote:

Fidel wrote:

Lyndon LaRouche said:

Quote:

The GMAC "bank" swindle, in fact, overlaps the scandal of Bernard Madoff's $50 billion Ponzi scheme. The head of GMAC the new "bank"—installed as CEO by Cerberus Capital Partners 30 months ago—is a hedge fund operator, Ezra Merkin, who threw more of his investors' money into Madoff's scheme than any other "investment manager." How much from derivatives dealing on GMAC's debt was skimmed into Madoff's black hole by Merkin since 2006?

LaRouche noted that his Lyndon LaRouche Political Action Committee (LPAC) had widespread constituency pressure on Congress in support of his Homeowners and Bank Protection Act (HBPA), which would have put a "firewall" protecting the economy from the banks' breakdown crisis. Congress was blocked at the brink of introduction of the HBPA, and panicked into completely futile bank bailouts instead. "Now the entire system is collapsed, the economy is facing ruin—we must mobilize those constituencies to get a Congressional 'Pecora hearing' going immediately. This is the way to break [Speaker Nancy] Pelosi's grip on the Congress."

The ~"currently-onrushing collapse" of the financial system threatens "a new dark age" not unlike the 14th century plunge into darkness. That is, unless the global monetary system is put through bankruptcy proceedings. Scrap it all, says LaRouche, and reinstitute FDR's firewalls of regulation to save America and the world from the "thundering nit-wits" of Wall Street and the federal reserve etcetera. It's all the fault of that empiricist fraudster Paolo Sarpi along with Galileo, some other guys,  that "black magic specialist"Isaac Newton, and Prince Philip's lackey, the silly, but nasty former U.S. VP, Al Gore

I guess you haven't heard that Lyndon LaRouche [url=http://publiceye.org/larouche/truestory.html]is a batshit crazy racist extremist jive-ass motherfucker[/url], or you wouldn't be posting his bullshit as if it were gospel....

That's funny. Because that's exactly what the batshit, trade mark smear tactics crazy mofos in the two old line U.S. parties say about him, too. Meanwhile those two parties of the rich are political shell organizations for war criminals, crooks, liars, and crooked-liars.

The SEC is looking for a scapegoat.  They've screwed up royally and it's not just Cheung that's responsible.  They've received numerous tips over the years (they've supposedly investigated him at least 8 times in the last 16 years) and every time they've given him a clean bill of health.  No way is she the only guilty party here.

The lady clearly bears a lot of responsibility since it seems she didn't have the mathematics background required to understand what's going on here and, as such, should either have removed herself from the case or insisted on receiving support from staff that were qualified.  But any attempt to pin the whole thing on her is unjustified and is most politely defined as a serious effort at CYA.

http://tinyurl.com/8ka4dp

Quote:

The Securities and Exchange Commission confessed Tuesday it blew chance after chance for at least a decade to uncover what may be the biggest financial fraud ever.

Chairman Christopher Cox ordered a probe by the SEC's inspector general, saying the agency's staff had "credible and specific allegations" but never brought them to commissioners.

He ordered all SEC staffers who had contact with Madoff or his family removed from the investigation.

Cox called his agency's lack of action "deeply troubling" and said, "I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them."

The SEC's enforcement division investigated Madoff's company only last year, without bringing a claim.

Because the SEC staffers never recommended that the commission open a formal investigation, no subpoena power was used to get information.

Instead, staffers relied on information voluntarily produced by Madoff and his firm.

[i]etc....[/i]

Except that this article isn't the only one that talks about him; here's some more info-[url=http://www.freedomofmind.com/resourcecenter/groups/l/larouche-movement/] LaRouche Movement Factsheet by Steve Hassan[/url] 

Perhaps I didn't make my point clear about him, so here's some of the text of the linked article from the previous post:

Quote:

Lyndon LaRouche: Man of Vision or Venom?
What's the Real Story?

Supporters of Lyndon H. LaRouche, Jr. seem to be everywhere these
days: on street corners, behind campus literature tables, outside post
offices, at anti-war meetings and demonstrations. Is the man behind the
LaRouche Youth Movement a progressive mentor for young activists? Is he
really-as some of his supporters suggest-one of the world's greatest
living economists and philosophers? Is LaRouche, the perennial
presidential candidate, an important leader in the Democratic Party? Or
is Lyndon LaRouche a self-promoting demagogue surrounded by devoted
followers who sanitize his long history of bigotry and crackpot
statements, and dismiss his criminal conviction as the result of a vast
conspiracy?

Twenty years ago these questions weren't necessary. Back then, a
wide range of activists across the political spectrum readily denounced
Lyndon LaRouche and his international network as a fascistic
totalitarian group spreading lunatic political theories, monitoring
progressive activists and providing the information to government
agencies, and engaging in dubious fundraising schemes.1

These days, browsers stopping by a LaRouche table at an anti-war
rally may be unaware of his past, or the truth about his political
views. LaRouchite publications critical of the Bush Administration, the
neoconservatives, and the Iraq War can seem appealing to progressives.
So let's review the LaRouche record.

Sexism and Misogyny

LaRouche has written about "Mothers' Fears," the many psychological
problems of activists allegedly caused by their moms. An early
LaRouchite editorial declared that "all across the U.S.A., there are
workers who are prepared to fight. They are held back, most
immediately, by pressure from their wives." 2
Women in the LaRouche organization at the time report they were
verbally attacked in long criticism sessions as "witches," and
"sadistic bitches" and were accused of "mother-dominating" the male
members. 3

One former member said she left the LaRouche group in disgust when
told that women's feelings of degradation were because female sexual
organs are near the anus, thus causing women to confuse sex with
excretion. 4

Racism

LaRouche and some of his followers spread racist ideas that range
from the absurd-such as the claim that Black musicians did not invent
Jazz5-to
the crude, as in the question posed by LaRouche in one essay: "Can we
imagine anything much more viciously sadistic than the Black Ghetto
mother?" 6
It's not just Blacks LaRouche has a problem with. He has dismissed
rural Chinese culture as "hideous muck" with its people "paralleling
the behavioral stagnation of lower animal life." 7
Elsewhere he dissed a group of Puerto Rican organizers as incompetent,
which LaRouche asserted was tied to their being "almost totally
sexually impotent."8

While the cultural accomplishments of people of color have been
routinely dismissed by LaRouche, he regularly celebrates Eurocentric
icons. We all become civilized, according to the LaRouchites, by
learning to sing along with Bach, Mozart, and Beethoven; 9 reading the work of 17th century European scholars such as Leibniz; 10 and, surprise, studying the words of LaRouche.

[url=http://publiceye.org/larouche/truestory.html] [b]Lyndon LaRouche: Man of Vision or Venom?[/b][/url]

[url=http://business.theglobeandmail.com/servlet/story/RTGAM.20090204.wmadoff... blew the whistle – and no one listened[/u][/color][/url]

[quote]Harry Markopolos spent 17 years in the U.S. Army Reserve and managed troops overseas, but he has never been so scared as when he began investigating Bernard Madoff.

"I thought I was a dead man," Mr. Markopolos told a congressional committee Wednesday. "I didn't think I was long for this world."

Mr. Markopolos, a former fund manager, has been hailed as a whistleblower in the Madoff case, having spent eight years probing Mr. Madoff's New York-based investment firm and [b]trying to persuade the Securities and Exchange Commission to get involved.[/b] During his testimony Wednesday, which included discussions about complex financial products and his fears about the Russian mob, [b]Mr. Markopolos railed against regulators, The Wall Street Journal and some accountants for failing to pick up on the alleged $50-billion (U.S.) Ponzi scheme.[/b]

But most of his venom was aimed at the SEC. [color=red]"If you flew the entire SEC staff to Boston, sat them in Fenway Park, they would not be able to find first base," he told the committee. The SEC "is a group of 3,500 chickens tasked to chase down and catch foxes which are faster, stronger and smarter than they are."[/color]

Mr. Markopolos began looking into Mr. Madoff in 1999...

[b]Mr. Markopolos took his concerns to the SEC office in Boston in May, 2000, handing over an eight-page report that said "Madoff Securities is the world's largest Ponzi scheme." The report was ignored, along with several others he sent, including one that ran 32 pages.[/b]

Over the next [b]eight years[/b], Mr. Markopolos said he spent hours with senior SEC officials in Boston, New York and Washington and even offered to work undercover for the agency. He said [color=red]many SEC officials couldn't understand some of the basic financial concepts[/color] he was explaining and others treated him with scorn, refusing to return his calls. Frustrated by the SEC, he said he went to The Wall Street Journal in 2005 but was shot down by senior editors who declined to pursue the story.

As he and some colleagues kept digging, they became convinced Russian mobsters had invested in Madoff funds. "My team and I surmised that if Mr. Madoff gained knowledge of our activities, he may feel threatened enough to seek to stifle us," he said....

In April, 2008, Mr. Markopolos said he gave up after yet another SEC official failed to return his calls. A few months later, Mr. Madoff was arrested and charged with orchestrating a $50-billion fraud.

Mr. Markopolos, now an independent investigator, has complained about the SEC for years. On Wednesday, he said [b]the commission was unable and unwilling to take on Wall Street.[/b]

Much has been said about the SEC being incompetent. That seems to be the line of deffense in the States and in Canada whenever some professional people being paid big bucks runs into trouble.

I'm not sure it's a deffense that should be allowed.

That's not a defense.  The fact that the regulators aren't capable of catching something this big is a serious indictment of the regulatory regime but it's not a defense for Madoff's actions.  And I've never seen anyone use it as a defense - plenty of people have asked why Madoff didn't get caught years ago but I've never seen anyone say that what he did was okay because he didn't get caught.

That doesn't mean that more regulation is needed, it just means that the regulators need to be given the tools and/or staff to do their jobs.  If the SEC investigators don't have the knowledge and/or smarts to understand what Madoff claimed to be doing and weren't willing (or able) to pick up on the obvious clues that's a problem that needs to be addressed.

abnormal wrote:

The riveting testimony came on Capitol Hill as a seemingly endless list of victims was released in a court filing in New York.

[i]snip...[/i]

[b]There was clean money apparently mixing with dirty money funneled into Madoff Securities through off-shore accounts.

"When you're that big and that secretive you're going to get money from criminals like the Russian Mob and the drug cartels,"[/b] said Markopolis.

ha ha They want to slide blame everywhere but where it lies, with a system that is corrupt as the day is long. 

Larouche's journal (if we can call it that) was one of the first to  spread certain interesting pieces of historical information, e.g., the link between the Bush banking interests and Nazi Germany from the 20's to the 40's, and the overthrow of Peron in Argentina for refusing to enter into agreements with the IMF in the 50's.  Having said that, it's also a hodge-podge of progressive notions, useful data and misleading facts and lies and slander.

Larouche started out with an extremist Marxist-Leninist (or pseudo-same) group in the early 70's, whose trademark was showing up on picket lines and threatening or encouraging violence against bosses and scabs.  Even then his views and tactics justified calling him "left-fascist", if he ever was "left".

Larouche's wife, I believe, co-founded and heads (or headed) the Schiller institute (see http://www.schillerinstitute.org/), ostensibly separate from the political outfit. It's a promoter, indeed, of Germanic civilization focusing on the age of Enlightenment and a public advocate of world peace (they have co-opted a veteran of the US Civil Rights movement as a vice-president and ambassador at large, which could be intended to de-fuse allegations of racism).

Larouche's people, for those whom remember the 70's and early 80's, were the ones at airports and other public places with the NUKE THE WHALES and NUKE JANE FONDA signs --  contentious debaters who would engage you in a flash into unwinnable arguments that usually culminated in a gross put-down or veiled threat if you were too hard-headed a debater. 

Unfortunately, Larouche served prison time for politically-unrelated reasons, which enabled him and his followers to tout him as a political prisoner and make their anti-establishment rants more credible.

Scary, venomous, and often persuasive. 

They pose as intellectuals, when in fact they don't measure up in the least to those I think of as their direct counterparts -- the Reunification Church (the Moonies), who are over all far more rigorously educated and disciplined thinkers and debaters and certainly more pleasant human beings. (Their smiles are genuine, at least, not just the baring of fangs of Larouche's cadres.) 

The non-followers who fall for their attractive slogans and notions can be conned to  become useful trolls on sites like this one .

I'd say: Get them off, please.

Fidel wrote:

abnormal wrote:

The riveting testimony came on Capitol Hill as a seemingly endless list of victims was released in a court filing in New York.

[i]snip...[/i]

[b]There was clean money apparently mixing with dirty money funneled into Madoff Securities through off-shore accounts.

"When you're that big and that secretive you're going to get money from criminals like the Russian Mob and the drug cartels,"[/b] said Markopolis.

ha ha They want to slide blame everywhere but where it lies, with a system that is corrupt as the day is long. 

I have no idea why this is supposedly sliding blame.  All it says is that he was getting funds from lots of places, some legit, others not.  That's to be expected.  Given the sheer magnitude of the dollars he was playing with his fund presented a perfect mechanism for money laundering and presented an opportunity to make a profit. 

As an aside, this may well be why the courts told him to get bodyguards. 

EDITED 

Is Lyndon Larouche either a fascist or anti-semite?

Fidel wrote:

EDITED 

Is Lyndon Larouche either a fascist or anti-semite?

"survey says: BOTH". 

Trust me, Fidel, there are better sources on the issues we're talking about

than the LaRouchies. 

_________________________________________________________________________________________________ Our Demands Most Moderate are/ We Only Want The World! -James Connolly

Absolutely amazing - Madoff made no trades over a 13 year period. Don't you just love accountants.

[quote]Investors wiped out by the Bernard Madoff scandal got more bad news Friday: Investigators have confirmed suspicions that the monthly statements showing the financier was making stock trades for them were pure fiction.

“We have no evidence to indicate securities were purchased for customer accounts” in the past 13 years, court-appointed trustee Irving Picard said at a packed, town hall-style meeting at U.S. Bankruptcy Court in Lower Manhattan. “This is a case where we’re going to be looking at cash in and cash out” – the shorthand definition of a Ponzi scheme.

Picard, who’s overseeing the liquidation of Bernard L. Madoff Investment Securities LLC, called the meeting to give the investors a progress report on his efforts to unravel the alleged fraud.

Madoff was arrested in December after investigators said he confessed to his sons that he’d swindled investors of $50 billion. The 70-year-old former Nasdaq chairman remains confined to his Manhattan apartment under house arrest.

The trustee so far has recovered an estimated $950 million in assets that would be used to help cover claims likely to reach into the billions. A lawyer working for Picard also warned that the trustee would seek to recover – or “claw back” – phony profits earned by some investors so they can be redistributed to others. [quote]

Well our Canada Pension Plan has investments in the stock market which may well decrease the amount Canadians will receive in the future in their pension checks. We were happy to go along with this change initially because the stock market was rising but these stock market investments by the CPP should never have been made in the first place. When something is wrong, it's wrong, no matter how good it looks with its wrapping paper on. These CPP investors should not be investing another cent in the stock market from now on but have they stopped. No way as these professionals have not got a clue what they are doing. The whole lot of them should be given the boot. Where is the accontability? Where is the Canadian anger towards these idiots!!!

What, if anything, should Canada Pension Plan funds be invested in?

[url=http://onlinejournal.com/artman/publish/article_4385.shtml][color=medium...’s behind Madoff?[/b][/u][/color][/url]
By Wayne Madsen

Quote:

WMR has learned that in addition to 20 million documents stored by Madoff in a warehouse in Queens that were stored without any indexing system and merely placed in boxes and strewn around the floor are millions of additional documents that were stored by Madoff in a Brooklyn warehouse that was partially flooded. A number of the Madoff documents there were destroyed by water damage.

WMR has also learned that a key element in Madoff’s Ponzi scheme was Madoff Energy LLC, formed as a Delaware corporation in February 2007. Other Madoff firms in the energy arena were Madoff Energy Holdings LLC, Madoff Energy III LLC, and Madoff Energy IV LLC. There are links between these now-defunct Madoff energy entities and Texas oil and natural gas industry interests, some close to the Bushes and Dick Cheney.

WMR has also learned that the kid glove treatment given by federal authorities to Madoff, including allowing him to remain in his Upper East Side luxury town home, is because Madoff’s Ponzi scheme was part of a much larger operation, one involving top officials of both the George W. Bush and Barack Obama administrations, as well as the notorious Russian-Israeli Mafia.

M. Spector wrote:

What, if anything, should Canada Pension Plan funds be invested in?

What's wrong with the way it was prior to its foray into common stock shares? Canadian or provincial government bonds for instance, where there is little risk of losing the capital.

The main problem is the schools have churned out 1000s of MBAs who all think in only one direction, which is based totally on greed and power, so anyone who challenges their idiotic approach to economics is ridiculed by these management schools, their graduates, the multinationals, governments, and of course the press.  And they run the show, and they are running most of our society into the ground. 

To most of the folks in the financial community, people like Madoff are heroes, and their only mistake is getting caught, because it has a slight possibility of discrediting the financiers. With the resources at their disposal, they need not worry.

*snerk*, the man has ponzied billions, never launched a trade on the stocket market with said investment money, yet was the president of NazD and you say z'nothing to see here. move along.."

There was a similiar type scheme in Vancouver in the 80s. The company was called King Lung Commodities, it was on Cambie Street near Marine Drive, and not downtown. Why bother processing trades when you have do all that paperwork, pay trading fees, etc. Seriously as an outsider, how can you tell for sure if your broker actually executes a trade on your behalf. You can't.

http://www.leg.bc.ca/Hansard/33rd2nd/33p_02s_850215a.htm#04993

This is/was a blue chip Canadian stock.

How can you make money with a situation like this?  Unless you short the market that is. Do you see how long it takes for a stock to rise but how quickly it drops.

http://investdb.theglobeandmail.com/invest/investSQL/gx.show_chart?pl_comp_id=165832&pl_errmsg=&iaction=Chart&pl_primary_listing=RY-T&iaction=Chart&pl_additional_listing=0&pl_period=60M&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

Royal Bank of Canada | Chart

• Update report
• Print
• Help

• 27.070
• -0.860
• -3.08%
• Vol: 7,526,135
• Last Trade: Feb 20, 2009 16:51:27 EST