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Show Me The Money, Bernie
OK, so Bernie Madoff will spend the rest of his life in jail. But the question of what happened to the money still remains.
The central problem being played out among Madoff victims is that only a small fraction of the nearly $65 billion that disappeared has been recovered.
So he didn't earn 10% a year on the invested money with some fantastic stock picking skill. Even if he had left it in a money market account earning 2%, it wouldn't explain how most of the $65 billion has disappeared, unless as I speculated in January it was just a money laundering operation for some very bad people who made sure they got whole.
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Well, there was never $65 billion. That's what he claimed the account balances were. We need to know how much cash he actually raised, net of outflows.
June 29, 2009 12:51 PM | Reply | Permalink
A recent report indicated something like $13B actually disappeared. That's still a lot to account for, but I wonder how it was calculated. Some people were taking tons of money out long before 2008. If $13B refers only to the net losses (cash in minus any payouts) of those claiming losses, what about other investors who took fake profits out for years and then took their principal out too? They would not be counted in the $13B figure. And how about taxes paid on fake profits?
June 29, 2009 4:36 PM | Reply | Permalink
Yeah; there isn't all that much information out there. We have little to no idea of what the out-of-pocket losses are.
I know Picard has gone after Picower, Ezra Merkin, Chais, and some feeder funds, and he's trying to recover pre-bankruptcy preference distributions.
But what about the ultimate beneficiaries? As an example should "investors" who got back some percentage of their out-of-pocket investment be excluded from participating in the final distribution?
If so, at what percentage?
June 29, 2009 9:27 PM | Reply | Permalink
Your last thought is probably correct. His operation was allowed to go on as long as it did because it benefitted powerful people who needed his service. When they no longer needed him, he was arrested.
June 29, 2009 1:48 PM | Reply | Permalink
How's your Russian mob theory playing out? I thought you had a reliable source telling you that Madoff was turned in by his sons to make sure the Feds got to him before someone else did.
June 30, 2009 5:59 AM | Reply | Permalink
Futility of the blogs!
This post is a poster-post for somebody's screed about the futility of "news" blogging.
Newspapers no longer have the staff or budget to dig through a story like Bernie Madoff, and instead we have a million blogs like TPM to tell us...
Nobody knows where the money went!
And isn't that useful?
No.
June 30, 2009 1:24 PM | Reply | Permalink