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Sprott: Is it all a Ponzi?
In his latest missive to investors (pdf link here), Eric Sprott asks if our Ponzi economy is at risk of collapse. In fiscal 2009, foreigners scooped up $698 billion of Treasuries while the Fed upped its holdings by $286 billion. But the public debt increased $1.9 trillion. So who bought all the rest? According to Treasury, "other investors" bought $510 billion, up from just $90 billion in 2008. With the Fed's printing press turned off, the question for next year is whether "other investors" can buy more Treasuries than they did this year...
As we have seen so illustriously over the past year, all Ponzi schemes eventually fail under their own weight. The US debt scheme is no different. 2009 has been witness to spectacular government intervention in almost all levels of the economy. This support requires outside capital to facilitate, and relies heavily on the US government’s ability to raise money in the debt market. The fact that the Federal Reserve and US Treasury cannot identify the second largest buyer of treasury securities this year proves that the traditional buyers are not keeping pace with the US government’s deficit spending. It makes us wonder if it’s all just a Ponzi scheme.
Sprott has over $4 billion under management, the majority of which is in physical bullion, both gold and silver.
This blog has also argued that the American economy is a pyramid scheme:
At the end of the day, flushing more debt through the system is the only lever policy-makers know how to pull. Lower interest rates, quantitative easing, deficit spending, it’s all the same. It’s all borrowing against future income. Each time we bump up against recession, we borrow a bit more to keep the economy going. With garden variety recessions, this can work. Everyone wants the good times to continue, so no one demands debts be paid back. Creditors accept more IOUs and economic “growth” continues apace. If it sounds like Bernie Madoff’s Ponzi scheme, that’s because it is.
Each time Bernie’s scam got a few too many investor withdrawals, he’d simply plug the hole by raising more investor cash. The guys at Fairfield Greenwich were making so much in fees, they were happy to funnel more his way. But at a certain point, Ponzis get too big. There simply aren’t enough new investors to pay off older ones. In the aggregate, the same is true for Western economies. Their debt loads are now so huge, they are simply unpayable.
Naturally, policy-makers sound just like Ponzi-schemers: Just give us a little more cash to get us through this rough patch and everything will be copacetic. Ben Bernkanke at the National Press Club alluded to the famous quote by St. Augustine: “Oh Lord, give me chastity, but do not give it yet.” President Obama convened his “fiscal responsibility” summit days after passing the stimulus bill and days before proposing huge increases in health care spending.
Like pyramid schemes, fractional reserve banking systems simply don't work in reverse. "It's A Wonderful Life" demonstrates why.There must always be new money coming into the system to refinance debts. If investors/depositors suddenly demand their money back, the system crashes.
Deflation to a central banker is like withdrawals from a Ponzi scheme. Too much at once and the scheme collapses. The Fed's (impossible) job is to make sure it never does.
Finra messed up, what a shock
The report by Finra on its failure to detect the alleged Ponzi scheme at Allen Stanford’s offshore bank is no shock.
Finra makes the SEC look like an agressive regulator. And this should give anyone reason to pause when you consider that Mary Schaprio, the current Securities and Exchange Commission chairman, most recently headed-up Finra.
Schaprio tells us her mission is to beef-up the SEC’s enforcement procedures in the wake of its own failings on Stanford and more significantly its botched investigation–or non-investigation–of Bernard Madoff. Why didn’t she first do this when she was at Finra?
The report outling Finra’s missteps notes regulators failed to follow-up on claims made by former Stanford brokers that the CDs the firm’s offshore bank in Antigua was selling were either bogus or “too good to be true.” Going as far back as 2004, a number of brokers raised this claim in arbitration disputes they had with Stanford.
Late last year, after Madoff was arrested, I began investigating allegations that Stanford’s financial empire was a Ponzi scheme. I did this while I was still working at BusinessWeek and early on I came across a few arbitration cases in which brokers had alleged the returns Stanford CDs seemed too good to be true.
Soon after Stanford was charged by the SEC with civil fraud, a source pointed me to an old lawsuit filed in Florida state court where a former employee also claimed the operation was a Ponzi scheme.
All of of these legal filings were either in the public record or in Finra files, yet it appears the level of communication between Finra’s arbitration unit and its enforcement operation is poor. This has been a long standing complaint from brokers, investors and securities lawyers and it needs to be fixed.
I am going through an absolute nightmare arbitration claim with FINRA, the Financial Industry Regulatory Authority. Paid for by the industry, for the industry. My hearing has been delayed time and time again. We had an arbitrator who had fraudulent degrees – a MA and PhD from a degree mill. I had to PUSH to get this guy off the panel– FINRA was going to let him stay as the chair — and to the best of my knowledge, he is still a FINRA arbitrator and chair! so, someone else could get him next… the respondent filed a retaliatory lawsuit against me – that was dismissed and he was sanctioned – but i spent tens of thousands of dollars fighting and wasted time with it. Check out my blog, http://www.myfinraclaim.com to read my story. and what is wrong with mandatory arbitration clauses. and FINRA – this is the only place for relief for investors and associated persons. and it is completely industry driven and run. it’s shameful… it’s time for congress to take over finra and have real regulation of the financial services industry… the commercials they are running? a joke. i haven’t been able to get a job in 19 months because of this – and they want me to wait another 4-6 months to get my day in court.
Kroll’s roll in the Stanford muck
Kroll Associates is the big name in the world of corporate investigations. But a former top gumshoe at Kroll has mud on his feet as a result of the firm’s past involvement with accused Ponzi mastermind Allen Stanford.
In the late 1990s, Stanford hired Kroll’s Miami office to help with a number of internal investigations. But more important, Stanford retained Kroll to help smooth the waters with a parade of federal investigators who were raising questions about Stanford’s growing banking empire on the Caribbean island nation of Antigua.
And for a long time, Stanford’s strategy of hiring Kroll to put some polish on his image appeared to work. Stanford was finally unmasked as a charlatan this year, when the Securities and Exchange Commission and federal prosecutors charged the former Texas billionaire with running a $7 billion Ponzi scheme.
This week’s indictment of Stanford’s former chief of security, Thomas Raffanello, may further muddy the waters over the dealings of Kroll — a subsidiary of Marsh & McLennan Companies — with Stanford.
Raffanello, accused in a federal indictment of obstructing justice by ordering the shredding of documents at one of Stanford’s offices in Florida, is the former head of the Miami office of the Drug Enforcement Administration.
And Raffanello got his job at Stanford five years ago largely on the recommendation of Thomas Cash, a former Kroll executive managing director, who was a close confidant of the accused fraudster.
Lawyers, former federal investigators and former Stanford employees say that it was no secret that Cash, a former DEA agent himself, was instrumental in getting Raffanello the top security job at Stanford’s firm.
I was a private investigator for ten years and worked for a leading law firm for 15 years, doing due diligence. Kroll should have shed its bad apples on its own, before any unsavory relationships with Stanford could develop. One must wonder how many more toxic and explosive relationships are in Kroll’s pipeline. It’s most important investigation should have been an internal one that would have prevented this outcome and black mark.
Madoff verdict: The SEC is plain incompetent
A lengthy report examining the many ways the Securities and Exchange Commission botched its investigations of Bernie Madoff tells us something we already knew: the SEC can be awfully incompetent.
The report by the SEC Inspector General quickly dispenses with the notion that regulators either protected Madoff or covered-up their investigatory failures. But that’s the best that can be said for the SEC in this massive undertaking.
For now, the IG has released a 22-page summary of his findings. But a full 450-page book, outlining all the gory details of regulatory bungling, will hit the shelves in the coming days.
SEC Chair Mary Schapiro commenting on the IG’s findings says Madoff is a “failure we continue to regret.” She says the agency is already reforming its ways and promises not to miss the next $65 billion Ponzi scheme.
I am a Petters victim who has had $50 million embezzled by Petters while judges and lawyers he paid to “look the other way” looked the other way. The Minnesota US Attorney’s Office reported that Petters swindled $3.65 billion but in reality swindled in excess of $50 billion- the difference will go to the judges and politicians he paid off over a 20 year period- more on this massive swindle is available from mspexec@gmail.com
Stanford receiver calls out Libya and rich ballplayers
The court-appointed receiver, defying the wishes of securities regulators, is going ahead with a lawsuit seeking to recoup $925 million from investors and former employees of indicted Ponzi schemer R. Allen Stanford.
The Securities and Exchange Commission went to court last week seeking to block the receiver from “clawing back” early redemptions paid to “innocent investors.” The SEC said it had no problem with the receiver targeting brokers who benefited from selling some $7 billion of Stanford’s bogus certificates of deposit.
Regulators claim it makes no sense to go after investors who had no knowledge of the alleged fraud and were simply lucky enough to cash-in some of the CDs before the long-running scam was exposed in February. I agree with the SEC’s desire not to victimize Stanford investors twice.
But Ralph Janvey, the Dallas attorney serving as the recevier for what little is left of Stanford’s fallen financial empire, didn’t wait for the federal judge to issue a ruling on the SEC’s request.
Today, he filed a lengthy motion explaining his rationale for pursuing the claw backs and the list of people he’s seeking to recoup money from. Most of the investors on the list are average folks who never would appear on the cover a celebrity magazine.
But just as with the infamous list of Bernie Madoff investors, there a few notable names on the Stanford receiver’s hit list. (A hat tip to Alex Dalmady, the financial analyst who was early on the Stanford situation, for helping me sort through the list of names).
The investor Janvey is seeking to reclaim the most money from is Gary Magness, a cable television magnate, who Forbes describes as one of the 400 richest men in the America. Of course, you’ll recall that Stanford himself regularly made the Forbes list before his downfall. Janvey seeks to recoup some $88 million in CD procees from Magness’ irrevocable trust.
Stanford investors get fleeced again
It’s bad enough being a victim of a Ponzi scheme. But it’s rubbing salt in the wound when the court-appointed receiver charged with cleaning up the mess makes things worse for investors fleeced in the scam.
Yet that’s just what the receiver appears to be doing in the case of R. Allen Stanford, who has been accused of running a $7 billion Ponzi scheme.
In an unusual turn of events, the receiver, Ralph Janvey, again finds himself doing battle with the Securities and Exchange Commission, which recommended the Dallas attorney’s appointment back in February. A month ago, the SEC opposed a $20 million fee application that Janvey had submitted, saying the receiver’s compensation request was excessive.
Now the SEC is asking the Texas federal court judge who approved Janvey’s appointment to strip the Dallas attorney of the power to bring so-called “clawback” lawsuits against innocent investors. The SEC contends the lawsuits are unnecessarily punitive and not supported by either “logic or law.”
A clawback suit is a favorite remedy of receivers in fraud cases to recapture earlier payouts to investors who may have either had some knowledge of the scam, or received preferential treatment from the Ponzi ringleader.
Janvey, who didn’t return a phone call, already has filed a number of clawback suits against former Stanford brokers, contending that they benefited financially by selling Stanford’s high-yielding certificates of deposit that prosecutors say were bogus.
The SEC says it has no problem with those lawsuits, but it is drawing the line at actions that target investors who simply had the good fortune of cashing in some of their Stanford CDs early.
WHEN THE LAWYERS GET INVOLVED THE VICTIMS FOR SURE LOOSE THEIR MONEY………..WHY DO THEY NEED A SPECIALLY APPOINTED ATTORNEY WHEN THE GOV. HAS BILLIONS OF ATTORNEYS ON THEIR PAYROLL ALREADY THAT CAN DO THIS JOB. BECAUSE THE APPOINTED ATTORNEYS SPLIT THEIR FEE WITH THE JUDGE THAT APPOINTS THEM ITS AS SIMPLE AS A PONZI SCHEME AND JUST AS ROTTEN, LOW DOWN AND STEALS THE REMAINDER OF THE INVESTORS MONEY WHICH THE JUDGES AND STTORNEYS THINK IS NOW THEIRS FOR THE TAKING……….SORRY VICTIMS AINT NOBODY LOOKIN OUT FOR YOU……..BRING BACK THE GOOD OLD DAYS……..BEAT THEIR ASSES TO A PULP AND THE HORSE THEY RODE UP ON…..
Petters, the forgotten Ponzi
The alleged $3 billion Ponzi scheme involving Tom Petters has never gotten the attention it deserved.
Some of that is because the case broke open right around the time Lehman Brothers was filing for bankruptcy. And given that the scandal took place in Minnesota and involved mainly midwestern hedge funds funneling money to Petters operation, it didn’t galvanize the attention of the East Coast media.
But Petters continues to make headlines–albeit small ones–even as Bernie Madoff and Marc Dreier go away for lengthy prison sentences.
Most notably, the Securities and Exchange Commission last week filed civil charges against Greg Bell, the former manager of Chicago-based hedge fund Lancelot Management, which invested $2 billion in Petters’ operation. Regulators allege that Bell “pocketed millions of dollars in fraudulent fees at the expense of investors in the funds.”
Kudos to Dealbreaker.com and freelance journalist Teri Buhl for staying on the Petters story and speculating which other hedge fund manager may be on the SEC’s radar screen.
1 September, 2009
B Todd Jones, US Attorney
Minnesota District US Attorney’s Office
300 S 4th Street, Suite 600
Minneapolis, MN 55415
612 664-5600 VIA US Mail and FAX (612) 664-5787
Dear US Attorney Jones:
This writing seeks your expedited assistance in appointing a special prosecutor, replacing receiver Doug Kelley, to oversee and adjudicate the entire Petters matter, both as to matters which are now before the Minnesota US District and Bankruptcy courts, and to stay all matters until such an appointment is made and a grand jury is convened, all under authority given you as follows:
18 USC Sec. 3332
TITLE 18 – CRIMES AND CRIMINAL PROCEDURE, PART II – CRIMINAL PROCEDURE
CHAPTER 216 – SPECIAL GRAND JURY
Sec. 3332. Powers and duties -STATUTE-
(a) It shall be the duty of each such grand jury impaneled within any judicial district to inquire into offenses against the criminal laws of the United States alleged to have been committed within that district. Such alleged offenses may be brought to the attention of the grand jury by the court or by any attorney appearing on behalf of the United States for the presentation of evidence. Any such attorney receiving information concerning such an alleged offense from any other person shall, if requested by such other person, inform the grand jury of such alleged offense, the identity of such other person, and such attorney’s action or recommendation.
U.S. Attorneys Criminal Resource Manual 158
Special Grand Juries
The special grand jury has a duty under 18 U.S.C. § 3332(a) “to inquire into offenses against the criminal laws of the United States alleged to have been committed within that district.” Such alleged offenses may be brought to the jury’s attention by the court or by any attorney appearing for the United States to present evidence to the jury. It is incumbent upon any such government attorney to whom it is reported that a Federal offense was committed within the district, if the source of information so requests, to refer the information to the special grand jury, naming the source and apprising the jury of the attorney’s action or recommendation regarding the information.
Such actions requested of you are congressionally mandated plus they are necessary because the current atmosphere is fraught with thus far unabated felonies by various officers of the courts at the imperilment of creditors like me. In short, the Petters matter is out of control and I don’t see any remedies forthcoming, either in the long or short-term, plus a grand jury has already indicted Petters on twenty (20) counts of fraud.
I have advised the courts, who appointed Kelley, of such criminal activity to no avail, and even though I will have done my duty to report such felonies under 18 USC § 4, such reports will never be acted upon because receiver Kelley and the courts are focusing only on paying Petters, his cronies, his lawyers, his illegitimate family, receiver Kelley and all other lawyers who are representing the perpetrators themselves; hereinafter “Petters et al”. This of course is ludicrous and most certainly criminal itself.
I notice on your website that Petters is one of your top priorities and that said case “appears to be serving as Exhibit A for Jones’ desire to increase collaboration between the office’s criminal and civil divisions in complicated cases that require expertise in both prosecutorial arenas” Acting on this instant request, sir, will allow you to accomplish the above objectives. My case is combinationally criminal and civil; ergo, this request.
I am a long-term victim-creditor of Petters and have reported crimes, which are still being committed by receiver Kelley and being apparently ignored by the Minnesota US District and Bankruptcy Courts who appointed him. Said crimes are that Kelley and the courts are on an apparent mission to drain all Petters’ liquidated assets (which Petters acquired with swindled cash) and to turn such liquidated properties over to Petters et al, without any accounting at all to me and the many other victims whose money Kelley continues to squander under a “guise” of legitimacy.
For many years now, I have been asking both the US District Court and the Bankruptcy courts for interim relief since the inception of the Petters matter, yet the only financial relief I see being attended to by all such courts by and through Kelley are to Petters et al. Kelley is even on the record stating “creditors come last”- see http://www.petters-fraud.com.
In the 2000-2001 timeframe, both Senators Wellstone and Dayton were contacted by me because it had become obvious that Petters and his primary crony at that time Ruth Kahn, conspired (in conspiracy with the Hennepin County Attorney) to have me arrested on false charges so Kahn (with me out of the way) could claim my promissory Notes on her bankruptcy schedules (to pay her creditors) and Petters could get his Notes back without paying me a “dime”. At the time I contacted the Senators, Kahn had already confessed to what she and Petters had done but both state and federal bankruptcy courts refused to return the notes and my money, notwithstanding such Kahn confessions (two affidavits) which are of record. Acting on such validated evidence which included seven (7) promissory Notes and five (5) bounced checks, both Senators Wellstone and Dayton demanded a criminal investigation by both the FBI and the US Attorney’s Office where after only the FBI would meet with us- that meeting took place in December of 2001 and at that meeting, two special agents of the FBI told us that there were a number of judges known to be corrupt here in the Minnesota district and then asked me who the state and federal bankruptcy court judges were who presided over the Kahn/Petters orchestrated bankruptcy swindle, and after telling them who they were, I was told that I had drawn most of them. After they told us that they (the FBI) would not criminally prosecute said judges, we asked why and were summarily and without a plausible explanation told “we do not prosecute corrupt judges”. The FBI then advised me to sue all of the perpetrators of this massive swindle including the corrupt judges, which I did in May of 2002.
The FBI, in making this recommendation to me, advised that such a suit brought by me in US District Court would offer the relief I sought. That suit (actually five of them all contemporaneously filed) went nowhere and in point of fact, I was not only denied access to my property and money that Petters swindled (for which he has now been criminally indicted), but prosecuted as a Plaintiff by the court for asking to have my property and money returned, and then told not to file for further relief against Petters. In 2008, that same judge prosecuted Ponzi schemer Petters for fraud, which I was prevented from doing in 2002.
In short, seven (7) years before he was arrested and criminally indicted for swindling everyone in his path including me, I blew the whistle on Petters for swindling me (along with two (2) United States Senators plus US Attorney David N Kelley of the New York Southern District- Kelley and I tried to stop the Polaroid acquisition in June of 2005 when Petters bought Polaroid for $426 million in swindled cash), got the door slammed in my face, and had all of my money and property embezzled by Ponzi schemer Petters. In five separate causes of action, I sued Petters, Kahn, and all others with whom Petters and Kahn conspired to swindle my money and property which included various judges in Hennepin County District Court and the Minnesota bankruptcy courts. Before doing so, I asked the FBI what made them believe that the judges at the US District court level were not part of the same judicial corruption about which they espoused and they offered no comment. During the pendency of these meetings with the Senators and the FBI, both Senators Wellstone and Dayton also made demands (for a criminal review) upon the Minnesota US Attorney’s Office. Such demands were ignored. Ever since, it has been increasingly difficult in fact impossible for me to have my money and property stolen from me by Petters et al returned, and frankly, when Petters was arrested, I rejoiced thinking that this would lead to a return of the money and property which he had earlier swindled from me. That turned out to be wishful thinking. Receiver Kelley had other plans for my money, as do the courts.
You are possibly aware that USAG John Ashcroft declared our bankruptcy courts as “organized crime” and Fifth Circuit Chief Judge Edith Jones averred that the “AMERICAN LEGAL SYSTEM IS CORRUPT BEYOND RECOGNITION”.
To accept such comments at face value is to accept that we are living in anarchy and not a country governed by the rule of law. This is why I have opted to take this matter to someone such as yourself who I am told will uphold the law. Because such combined criminal and civil offenses have persisted now for over a decade, your office is congressionally mandated to act on such matters which have gone civilly and criminally unprosecuted now for over a decade.
In the course of this twelve (12) year “kafkaesque”, I discovered that Petters had a long track record of buying judges and politicians (boasting of his judicial and political “clout” here in the Minnesota District) to keep him out of harm’s way, at least until he was arrested in October of 2008 which of course I had reported much earlier to the FBI in 2001. At this stage however, it is a foregone conclusion that Kelley and the courts will direct all liquidated cash realized by and through the efforts of receiver Kelley and the courts into the pockets of Petters et al, whether Petters is criminally convicted or not. Petters, even in jail, is “above the law” and pocketing money from me and the many others he has swindled, now via a court-appointed receiver.
Sir, it is indeed time to appoint a special prosecutor before Kelley and the courts drain every dime to pay Petters et al and leave me and other similarly situated creditors permanently impoverished. As of September of this year, I am entitled to a return of and on capital loaned Petters in the amount of $46,400,357.32 and I watch literally on a daily basis this money go to Petters et al. I’ve received nothing to date. This is egregiously unlawful and morally repugnant, and can be stopped by and through the involvement of a special prosecutor who will uphold the law and respect the rights of the victims, and not the perpetrators. I have asked for this on a regular and consistent basis beginning in March of this year with the Kishel Polaroid bankruptcy proceeding, and after twelve (12) such prayers (which I urge you to review) for relief with the Kishel court, the last being 13 August, 2009 where I collaterally noticed USAG Holder, the Kishel court continues to ignore requests for a special prosecutor, for discovery, for interim or permanent relief, for a “clawback” of all past monies unlawfully paid by Kelley (also suggested by Assistant US Attorney John Marti), instead directing his (Kishel’s) attention and all cash to Petters et al.
Because I have been civilly and criminally assaulted now for over a decade by courts which have been recognized by the FBI as corrupt (both state and federal) within this Minnesota District, and the US bankruptcy court is now holding many of the purse strings which contain money and property embezzled from me initially by Petters and now Petters et al, I must continue to remind you as the Minnesota US Attorney, pursuant to 18 USC § 4, of the continuation of such civil and criminal malfeasance with an expectation that you, sir, might arrange for the appointment of a special prosecutor and the convening of a special grand jury as also mandated under 18 U.S.C. § 3332(a). So this office is appropriately aware of damages sustained thus far because of such civil and criminal malfeasance on the part of Petters, and now Petters et al, apparently abetted (according to the FBI) by various offending judges, I have attached hereto two (2) spreadsheets; that is, a Proof of Claim and an interim relief assessment as part of an interim or permanent claim against personal or corporate estates of his whether a decision is handed down by a court of competent jurisdiction or the grand jury itself. Because I lack the necessary finances (between Petters and the courts, I am destitute) to hire counsel of choice, I must leave the prosecution of such causes to your office- this should have been done in 2001 when relief was first demanded by both Senators Wellstone and Dayton.
In conclusion, Petters, his lawyers, his advisors, those he paid to protect him from being arrested; that is, “Petters, his band of thugs”, were able to get away with this massive swindle for almost two (2) decades, and now that he has been jailed, the courts are directing receiver Kelley to liquidate Petters’ various estate holdings (all acquired with swindled cash) and to turn all such liquidated cash back over to Petters, his band of thugs on a priority basis over any creditor making a similar claim upon any such estate.
This is a runaway freight train which can only be stopped by a special grand jury armed with the facts, operating under the watchful eye of a no-nonsense special prosecutor.
If nothing is done to alter the current administration of the Petters’ holdings, whether Petters goes free or spends the rest of his life in prison, all of the money this man swindled from me and the multitudes will permanently scar the State and will continue to raise additional questions of why the presiding judges continued to favor Petters over his many victims, even after Petters was criminally indicted on twenty (20) counts of fraud.
The FBI has already told us how Petters was allowed to get away with this but the truth will never memorialize as long as the administration of the Petters matter remains vested with a “corrupt judiciary”; that is, no judge would ever indict another.
Allow me, as the author of this prayer for relief, to wish you God’s Speed as you deliberate the merits of this prayer and hopefully and accordingly make the necessary arrangements to re-convene a special grand jury to work in concert with a special prosecutor to replace receiver Doug Kelley.
The welfare of my family as the welfare of the tens of thousands of other victims of predator Petters rests in your very able hands.
Thank you kind sir for your courtesies and forbearance. Time is of the essence. Please act before it’s too late. Matters at this time are substantially out of control and you have been empowered by President Obama and Congress to effectuate remedies. I pray that you will. It would delight me immensely to re-communicate with Chief Judge Jones that justice did ostensibly prevail for me here in the Minnesota District under your leadership after “living a life of hell” since 1997.
In addition to this writing and the record itself, the grand jury would perhaps find instructive an hour long video which I prepared for various congressional leaders.
Respectfully,
Richard Hettler
4818 Overlook Lake Circle
Bloomington, Minnesota 55437
Tel: 612 285-8458
Attachments: Proof of Claim as of 1 Sep, 2009, interim relief request (ignored by all courts)
What sentence should a Ponzi get
Federal prosecutors are sort of boxing themselves in when it comes to sentencing requests for big Ponzimeisters.
Bernie Madoff, the king of Ponzis, got 150 years. And now federal prosecutors in NY are seeking an almost equally as punitive 145-year sentence for Marc Dreier, the mastermind of a much, much smaller Ponzi that fleeced some hedge funds out of some $400 million.
Dealbreaker’s Bess Levin surmises that Dreier, who was arrested in December a few days before Madoff, must be disappointed because he’s once again been upstaged by Bernie.
OK, I can understand the 150-year sentence for Madoff. Sure, it was overkill but it was intended to send a message as much as anything else. But Dreier is a mere Ponzi piker compared to Bernie.
And what about Tom Petters? The Minnesota businessman was charged by prosecutors with bilking hedge funds out some $2 billion. Most people aren’t familiar with the Petters case because it unfolded around the same time a little investment bank called Lehman Brothers was filing for bankruptcy.
If Petters is convicted, what should he get 147 years?
And don’t forget about R. Allen Stanford, the alleged architect of the second-biggest Ponzi. Sure, we’re only talking about $7 billion–chump change compared to Bernie’s estimated $60 billion scheme.
Killers may get out in 15 years, after they’ve taken one life. How many lives get lost to these filthy scammers who’ve ripped many thousands of innocent investors out of their lives’ savings? These people put themselves out their and then in effect, kill other people all over with their scams.
Stanford gets Madoffed
It appears the punishing 150-year sentence meted out by a federal judge to Ponzi king Bernie Madoff is already having legal reprecussions.
A day after Madoff was sentenced to spend the rest of his life and then some in a federal prison, another federal judge in Texas sided with prosecutors in ordering R. Allen Stanford to remain in jail pending a trial on his own Ponzi-related charges. Now there’s no definitive connection between the Madoff sentencing and the ruling in the Stanford case, but it’s hard not to see some cause-and-effect.
After all, a federal magistrate judge initially ruled that the alleged $7 billion Ponzi mastermind could be released after posting $500,000 in bond. But a federal judge overruled that decision, agreeing with prosecutors that the one-time Texas billionaire is a flight risk.
It’s this kind of tough justice that may do more than anything the SEC could ever do to deter future scamsters.
Tough questions after Madoff
Even as Ponzi king Bernard Madoff goes away to prison for the rest of his life and then some, there are still so many unanswered questions — both big and fundamental.
Were Madoff’s sons involved? What did his wife Ruth know? Were the operators of the giant feeder funds that sucked in tens of billions of dollars in investor money in on the charade?
Those questions, though important, ultimately pale when compared with the bigger ones that remain about the root causes of the worst financial crisis since the Great Depression.
Indeed, for all the misery Madoff and his Ponzi brethren have caused, none of those scam artists were the cause of the crisis that brought the financial system to the brink. If anything, it was the financial crisis that helped flush out Madoff and his scurrilous ilk, as many investors rushed for the exits at the same time.
So that’s why Congress needs to act quickly to get up and running a bipartisan commission to study the underlying causes of the financial crisis. House Speaker Nancy Pelosi likens this new 10-member panel to the Pecora Commission, the famous Depression-era investigative committee that led to passage of Glass-Steagall — the 1933 law that drove a wall between commercial and investment banking.
The 1999 repeal of Glass-Steagall contributed mightily to the current crisis by opening the door to an anything-goes mentality on Wall Street and allowing far too many banks to become too big to fail.
This new commission, armed with the power to subpoena witnesses and documents, is meant to investigate all aspects of the crisis, including regulatory lapses, Wall Street excesses and deceptive behavior by lenders and securities traders.
We Americans are so gullible especially with regards to the profit motive. Those who invested with Bernie Madoff are supposedly learned if not academically superior. How can anyone with over $50K not study about the basic rule of banking. That for every deposit, there is a lending side. If deposit interest rates are doing less than 4% how much more can lending rates be. If the operation is not a pawnshop business, how can people think of rates as high as what Madoff was offering. People(investors) are blinded by their own greed and then “cry” foul after the fact. The bottom line is trust your basic instincts not people who profess to be “masters of business”. Look at what happened to Wall Street.
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The Wall
From the economist, “America is a Ponzi scheme that works”
‘Immigration keeps America young, strong and growing. “The populations of Europe, Russia and Japan are declining, and those of China and India are levelling off. The United States alone among great powers will be increasing its share of world population over time,” predicts Michael Lind of the New America Foundation, a think-tank. By 2050, there could be 500m Americans; by 2100, a billion. That means America could remain the pre-eminent nation for longer than many people expect. “Relying on the import of money, workers, and brains,” writes Mr Lind, America is “a Ponzi scheme that works.”‘
http://www.economist.com/world/unitedsta tes/displayStory.cfm?story_id=15108634&s ource=hptextfeature
Demographically speaking, our underlying trend is growth, if only due to demographics, and this can cover a great many sins. Contrast this with Japan, where the overbuilding up to 1990 can’t be absorbed, EVER, because the population is shrinking. Here in the DC area, house inventory overhang is 40% less than it was at the peak, and prices are climbing again.
We’ve had inflation over the years, and lots of it too. We’ve gotten through… Government budgets will get crunched and fiscal sanity will return. Guess what: There are 1.9 million people employed by the federal government (ex post office and military), same as 1963.
Compared with all history the standard of living of Americans is far higher than ever before. And the vast majority of goods and services in the economy are by Americans, for
Americans. Trade is only a minority of the economy. Speaking of trade, our deficit for the first 3 quarters was just $300B, less than half of what it was a year ago. That is also less than 3% of GDP.