“The Madoff Affair” Can’t Stop, Won’t Stop
It’s been quite a week for America’s most reviled modern Ponzi-schemer. Despite the fact that Bernie Madoff’s sitting in a North Carolina prison, the ripples stemming from his multibillion-dollar deception continue on.
+ Madoff and the Mets: A federal appeals court ruled in Madoff trustee Irving Picard’s favor on Tuesday, allowing him to use his proposed calculation to determine which investors should receive compensation stemming from their investment losses. The formula, known as the “net-investment method,” subtracts the amount a person withdrew from Madoff from how much that person invested. That means, as an Los Angeles Times editorial explains: “Madoff’s investors will wind up no better off than had they hidden their money in a mattress, and possibly worse if they’d spent some of the supposed earnings.”
This could cause big trouble for Mets’ owners Fred Wilpon and Saul Katz, who will likely owe Picard at least $300 million. And then there’s the additional $700 million Picard wants over a separate issue: He says the pair should have known about the fraud, a claim Wilpon and Katz flatly deny. A hearing on that matter is scheduled for today. [Update (Aug. 20, 2011): According to The New York Times, a federal district judge on Friday hinted at the possibility of a jury trial over Picard’s suit; the Times places Picard’s demands at $1 billion.]
For some good weekend reading, here’s Jeffrey Toobin’s May feature on Wilpon and Katz in The New Yorker.
+ A New Lawsuit Against Madoff Feeder Fund: Picard today sued seven companies for the $172.8 million he says they money made from investing in Fairfield Sentry Ldt., a Madoff feeder fund. For background, here’s our timeline that includes information on Fairfield’s alleged role in the scheme, and an interview with Sherry Shameer Cohen, who worked at Fairfield Greenwich for 11 years.
+ Damning SEC Allegations: In the latest issue of Rolling Stone, Matt Taibbi lays out claims that the SEC has been systematically destroying documents pertaining to high-profile investigations over the past two decades. The allegations, made by an SEC lawyer and whistleblower, include evidence that “two MUIs [Matters Under Inquiry reports] involving con artist Bernie Madoff vanished.”
+ Breakup Rumors: Did Ruth leave Bernie? She did, according to Madoff biographer and New York Times reporter Diana Henriques. Appearing on the CBS Early Show, Henriques noted that Ruth hasn’t visited Bernie since the December 2010 suicide of their son Mark, and that Bernie is supporting her move away from him and toward reconciling with the rest of her family. It’s the end of a strangely tragic modern love story, one that left both husband and wife publicly vilified:
“She fell in love with him when she was 13, married when she was 18,” Henriques said. “It was a 50-year romance, and she simply couldn’t leave him. But for all practical purposes, the Madoff marriage was split apart by that 150-year prison sentence that will keep Madoff behind bars for the rest of his life. So my sense is that Ruth is now focusing all her efforts on rebuilding a relationship with her surviving son, Andrew, and her grandchildren.”
Ruth Madoff is currently living in Boca Raton with her sister and brother-in-law.