Palin's latest Twitter missive:

"As has been the case for decades, family is commercial fishing in Bristol Bay-I look forward to joining the work crew for 1 day picking fish"

With less than three weeks left to wrap up the affairs of state and turn the job over to Sean Parnell, Governor Palin is going to spend Monday picking fish.

Somebody ought to figure out just how many Governor's Picnics she's going to between now and D-Day. I know there's one in Anchorage and there should be one in Wasilla. 

Maybe she's never going back to the office. Clearly, they don't need her there.  

Sarah Palin - the gift that keeps on giving!

Update: 16 minutes later, Palin posts again-

"Grateful Todd left fishing grnds to join me this wkend; but now he's back slaying salmon & working the kids @ the site; anxious to join 'em"

Whatever floats your boat, Gov!

A lot of references to wasting Alaskan taxpayer money on investigations in Palin's press conference!

During last year's campaign, I asked questions about Alaska's prison operating and construction budgets. I speculated about what Palin had to do to get the gas pipeline extended to Wasilla and wondered whether the results of clean water tests in Wasilla were covered up in the late '90s.

Those are my three picks for the real reason why Palin suddenly resigned late Friday before a holiday. And yours?

No one now, of course, would make the mistake of assuming Bernie's foundation was ever legitimate. But even early on there was a tipoff in the foundation's IRS filings that something was amiss.

Reading  Lucinda Franks' new post in the Daily Beast about the Mark & Stephanie Madoff Foundation prompted me to pull up the 990s filed by the Madoff Family Foundation. (990s are informational returns that non-profit organizations are required to file with the IRS.) The Foundation, originally registered in New York in 1997 as the Bernard L. and Ruth Madoff Foundation, changed its name in 2003.

(The Madoff Family Foundation 990s for 2001-2007 are available at the 990 Finder.) 

In 2006, the Foundation transferred corporate stock with a book value of $13.5 million and a fair market value of $16 million from Cohmad Securities to Bernard L. Madoff Investment Securities (BMIS). That year, the Foundation recorded a net gain in book value from the sale of stock of $4.2 million and income from dividends and interest of $500k. The book value and fair market value of the stock both equaled $17.2 million at year end.  

Generating a return on investment of 7% plus was pretty standard for BMIS then but, as we now know, BMIS never actually made any investments. In effect, the Foundation had no assets at the end of 2006 except for a small amount of cash. In 2007, the Foundation's total  contributions were only $95k.  

The next question is did the Foundation ever have $16 million in stocks in a Cohmad account to transfer to BMIS and the answer is not evident in the 990s.  

The Madoffs made no contributions to the foundation between 2001 and 2006 so any contributions would have to have been made between 1997 and 2000. (The 990s for those years are not publicly available online.)

It  appears that there was no trading in the Cohmad account at all in 2001 and 2002. In 2003, the Foundation actually lost $1.3 million on the sale of $6.9 million in stock and it lost another $535k in 2004 on the sale of another $4.2 million in stock sold for a loss. In 2005, again no trading.

Was the Foundation's Cohmad investment a red flag that Paul Konigsberg, the CPA who prepared the 990s, should have picked up on?

Konigsberg, a senior partner at Konigsberg Wolf, was intimately familiar with the steady returns generated by BMIS because he prepared the 990s for several private foundations that  had hundreds of millions of dollars invested in BMIS. Plus he was a business associate and personal friend of Bernie's.

On the face of it, it made no sense to leave the Foundation's assets invested in Cohmad Securities when it could have been earning a better return with BMIS.

Plus there were some odd transactons in the Cohmad account. At the end of 2000, the Foundation only owned $2.4 million in stock but it held $24.7 million in "other assets". The other assets were described simply as "Cohmad cash equivalents". They weren't treasuries nor were they stocks or bonds.

In 2001 and 2002, approximately $20 million and $4 million, respectively, of other assets were converted to stocks.

In 2003, as noted above, the Foundation reported that it sold $6.9 million of stocks for a loss, all of which purportedly were purchased in 1997. In 2004, $1.7 million of the $4.2 million of stocks sold at a loss were also purportedly purchased in 1997.

The problem is that the Foundation reported only owning $2.2 million in stocks in 2000. How could the Foundation sell $8.6 million of stocks purchased in 1997 in 2003 and 2004 if it didn't own the stocks in 2000?

Unlike other private foundations like Mark and Andrew Madoff's, the Madoff Family Foundation never reported what specific stocks it held at year end in the 990s. Paul Konigsberg, of course, was responsible for ensuring that the Foundation complied with IRS reporting requirements for private foundations so he would have made the decision about what to disclose.

In Bernie's case, it hardly matters if he knowingly filed 990s that were in any way false. What the Feds would want to know is whether Ruth Madoff or someone like Paul Konigsberg knew there was a problem with the Foundation's financials.

ProPublica's article, "Madoff Client Jeffry Picower Netted $5 Billion--Likely More Than Madoff Himself", is a must-read for anyone following the Madoff saga. 

Jake Bernstein does a fabuous job sifting through data in court records about Jeffry Picower, a so-called Madoff "investor". He determined that Picower and his family members withdrew an astonishing $5.1 billion more from BMIS than they deposited between 1995 and 2008. The ProPublica staff lays it all out in an easy-to-follow chart that accompanies the article.

This raises all kinds of questions about the real relationship between Bernie and Picower. Why in the world would Bernie give so much money away without himself benefitting? Or was Picower in cahoots with Bernie?

Whatever the answer, Jeffry and the rest of the Picowers were certainly not Madoff victims as they were initially portrayed when the Madoff scandal broke.    

Huge development in the Madoff case today!

The SEC today filed civil fraud charges against Cohmad Securities and Cohmad principals, Maurice "Sonny" Cohn, 78, and his daughter, Marcia Beth Cohn, 49. Cohmad agent and Palm Beach society swell, Robert Jaffe, 65, was also charged.

The actual complaint is worth a read because it spells out how Cohmad marketed the Madoff investments and how information about the investments was deliberately concealed from the SEC (a point that was laid on with a heavy hand and somewhat self-serving on the SEC's part).

Maurice "Sonny" Cohn and his brother, Milton "Bud" Cohn (who was not charged) from a front page article in the North Shore-LIJ 2008 winter newsletter about the generosity of the Cohns. Also featured on the front page is an article about the generosity of mobster Thomas "Tommy" Gambino.

This photo from a Vanity Fair article was taken at one of Bernie's company outings at Montauk. Marcia Beth Cohn is in the middle. To the left is Peter Madoff and to the right is Cohn's girlfriend, Elaine Solomon, who was Peter Madoff's secretary.

Robert Jaffe, son-in-law of Carl Shapiro, a wealthy Madoff investor from Boston.  Jaffe recruited many Madoff customers in Palm Beach who, according to the SEC, invested $1 billion with Bernie. Shapiro is also under investigation in the Madoff case.

In early January, I wrote about the likelihood of Cohn's involvement in the fraud and in another post, I speculated about the nature of Cohn Delaire & Madoff, Inc. registered in NY in 1986. The company dissolved itself in June 1992, only months before the SEC charged Avellino & Bienes with selling more than $430 million in unregistered securities. Was CD&M an early feeder fund that the SEC let slip by?

According to the SEC, Cohmad ownership by percentage is as follows:

Maurice Cohn - 48%
Marcia Beth Cohn - 25%
Bernie Madoff - 15%
Peter Madoff  - 9%
Milton Cohn - 1%
Rosalie Buccellato - 1%

(Note: Buccellato was not named by the SEC but she is listed in a FINRA report on Cohmad.) 

Alvin Delaire, a longtime Cohmad agent, was not charged in the case and there is some speculation that he assisted the Madoff investigators with their inquiries.

One of the best articles about Cohmad is Nina Mehta's "It's a Cohmad, Mad, Mad World" posted at her blog, MehtaFiscal.    

There is also a lot of speculation as to what exactly SEC Inspector General H. David Kotz discussed with Bernie for three hours last week since the case against Cohmad was already in the can. Keep in mind Kotz himself made the trip from DC to the Metropolitian Correction Center.

The SEC also charged Stanley Chais for being a financial idiot who still managed to make $250 million in fees by convincing his equally unsophisticated customers to sink $900 million into his various investment vehicles. Chais apparently told Bernie never to show a loss on an equity trade so Bernie didn't. Ever. 

The Chais complaint can be read here.  

More to come.  

The story is there is no story. Six months after the biggest fraud in history was exposed, not one article about Joann "Jodi" Crupi's background has been published even though Crupi, 48 years old, worked on the 17th floor for twenty-five years and handled all of the money for the investment advisory business. 

Frank DiPascali, check, Annette Bongiorno, check.  Joann Crupi, not even a photo. 

When the bankruptcy trustee issued a report last month about BMIS paying personal expenses incurred by employees, news that Bernie gave Crupi $2.7 million last year got scant attention in comparison to Ruth Madoff's crummy little $5k Paris shopping trip.

Crupi apparently used most of the money to finance the purchase of a $2.25 million house in Mantoloking, an exclusive community on the Jersey Shore. The sales contract dated 6/2/2008 was signed by both Crupi and her girlfriend, Judith G. Bowen.

1081 Barnegat Drive, Mantoloking, NJ

When the sale was officially recorded on 1/2/2009, the property was in Bowen's name only but whether the closing was held before or after Bernie's arrest is not clear. What I think is clear is that Crupi had concerns about owning an attachable asset.

According to BMIS bank statements provided by the trustee, the $2.7 million was wired to Crupi's lawyers, Guston & Guston, in two increments: $475k on 6/25/2008 and $2.25 million on 10/16/2008. The trustee did not disclose whether the money was recorded as taxable income in BMIS payroll records.

(Also listed on the 10/16 bank statement was a $1.2 million wire transfer purportedly withdrawn from Annette Bongiorno's "Ruann" account and wired into a Citibank account held in her and her husband's name . The trustee did not disclose whether the money benefited Bongiorno or a Ruann customer.)  

How did Joann Crupi become such a trusted insider? Crupi appears to be a former resident of Howard Beach like her coworkers, DiPascali and Bongiorno. A search website listed 155-46 79th St. in Howard Beach as one of her former addresses which could mean Crupi was brought in by Bongiorno or DiPascali.

Looking at a map, Crupi, Bongiorno, DiPascali and a number of Madoff customers with a Howard Beach address actually lived in Lindenwood, a section of Howard Beach cut off from the rest of the neighborhood by the Belt Parkway. Lindenwood is primarily made up of two-family houses and garden apartments unlike the section of Howard Beach where John Gotti lived in a single family house.

Some time prior to 1997, Crupi bought a house in Westfield NJ in her name only. In 1997, she sold that house and bought another one with Bowen on Grove St. in Westfield for $412k which they still own.

In January, Business Insider asked about the nature of two companies registered by Crupi in Nevada, EastVest LLC and Murphy Girl, LLC. No information was forthcoming.

EastVest, registered in 2000, lists Crupi and Bowen as managing members along with Joan Taaffe and Tonia Bowen. Taaffe is listed as a Madoff customer with a Westfield address but Dillon is not. One commenter suggested that Dillon is in the securities industry which might be verified through FINRA's BrokerCheck.

EastVest was dissolved on 4/24/2004.

Murphy Girl LLC was registered on 9/26/2005 and is still active. The only managing members listed are Crupi and Bowen. When Crupi registered the company, she used an address in Las Vegas which appears to have been the home of her parents.

EastVest and Murphy Girl may have been legitimate businesses that had nothing to do with BMIS but the point is Crupi obviously has enough business acumen to know how to form corporations out-of-state which means she was financially sophisticated enough to appreciate the enormity of Bernie's Ponzi scheme and her role in it.

Despite what Irving Picard, bankruptcy trustee, would have us believe, the employees on the 17th floor were not all dummies who couldn't have been expected to figure out what was going on because they never got past high school. Picard is a snob to the nth degree and he is a prime example of why this fraud lasted as long as it did.

Did Lev Dassin, the acting US attorney handling the Madoff case, make the same mistake as Picard and assume that a high school grad from Howard Beach couldn't have been instrumental in carrying out Bernie's scheme? 

In March, the Wall Street Journal reported that the prosecutors had a proffer agreement with Crupi which means the prosecutors agreed not to use any statements made by Crupi against her as long as she told the truth. According to the WSJ, the prosecutors' strategy was to find out what the low-level employees knew about their supervisors and work up the ladder.

If the Feds characterized Crupi as a low-level employee and gave her immunity from prosecution, they were conned just like Bernie's customers and this may explain why no one other than Bernie and his CPA, David Friehling, have been indicted since Bernie was arrested more than six months ago.

Is Lev Dassin trying to drag out the Madoff investigation as long as he can to obscure his mistakes? The public's interest in the case is flagging which certainly works to his advantage and that of the wrongdoers.

Hmm...  

CNN reported earlier today that SEC Inspector General H. David Kotz and other SEC officials met with Bernie for three hours yesterday. 

The visit may have been instigated a request from Rep. Paul Kanjorski, chairman of a sub-committee on the securities industry, for a report on the SEC's investigation of Bernie. (Article available through Google News.)

Koch claims the SEC has already interviewed more than a hundred people and reviewed millions of email and other documents.

Yesterday, the SEC announced that it had settled civil charges against Bernie and banned him from the securities industry without Bernie admitting wrongdoing.

Bernie is scheduled for sentencing on June 29th. Yesterday, the DOJ postponed indicting Bernie's CPA, David Friehling, for another thirty days.

No word at all about Frank DiPascali's fate.

Where this case is going remains to be seen.

Update: The NY Times blog, The Deal, posted  the US attorney's request to postpone Dave's day of reckoning for another 30 days. What the heck is left to talk about?

June 17. Today's the day David Friehling, Bernie's CPA, is supposed to be indicted by a grand jury or cop a plea.

From a 5/18/2009 Dow Jones article:

"The deadline to seek an indictment in the criminal case against the former accountant of convicted Ponzi-scheme operator Bernard Madoff has been extended another 30 days.
On Monday, U.S. Magistrate Judge Gabriel Gorenstein in Manhattan extended the deadline to present evidence to a grand jury in support of an indictment against David G. Friehling, the sole practitioner at Friehling & Horowitz, CPAs, PC until June 17..." 

Nothing on the docket  and nothing in the news so far.

After reading letters to the court from the Madoff victims, I doubt Friehling will want to face a jury.  

David Margolick's Vanity Fair article about Mark and Andrew Madoff is available online now. Interesting stuff.

Odd. Margolick writes that the closest the two sons have gotten to Bernie since his arrest was when they were each on jury duty downtown.  I wonder how it happened that both Mark and Andrew were called up in the last six months. 

One nitpicky point. Margolick claims Mark and Andrew did not have access to Madoff financial statements but that's not entirely accurate. The BMIS statements of financial condition were online at the SEC website until 3/18/2009 (available here) and I read that a copy was sent out annually to investors. A complete set of financials for the London operation were available online at the Companies House website (available here ).

Me, I think they knew.

"Meanwhile, Mr. Picard said in court filings Friday that he would depose Sandra Manzke, the principal of Maxam Capital Management LCC, which channeled client money to the Madoff firm, on June 17. He said he could seek to recover nearly $100 million from Maxam. Lawyers for Maxam didn't respond to requests for comment." 6/12/2009 Wall Street Journal, Amir Efrati

(The court filings referred have been redacted on PACER and are not currently available to the general public.) 

On 12/13/2008, the WSJ reported that Maxam redeemed $30 million in November 2008. Now $100 million of Maxam money is in question and Picard made a point of letting everyone know it. Why? 

After Bernie was arrested, Sandra Manzke-Platt (nee Mehner) announced she was "wiped out" implying that she personally had suffered a substantial loss. As far as I know, no one in the press ever questioned what her fellow directors on the Maxam board lost, if anything.

In addition to Maxam employees who served as managing directors, the other members control or are directly linked to Pequot Capital Management, the hedge fund that is closing down because it has been accused of insider trading by the SEC in a very controversial case.

Arthur Samberg is the chairman of Pequot Capital Management and Peter Dartley, Dartley Family Limited Partnership, is vice-chairman. Campfire Family LLC is headed by Jeffrey  Samberg, Arthur Samberg's son.

The Sambergs and Dartley became members of Maxam Capital Management in November 2005. 

Presumably, the Pequot Capital crowd became involved in Maxam because they had invested in Maxam funds or otherwise backed Manzke.

On 1/9/2009, Maxam Capital reported that it had $1 billion of funds under control on Form ADV submitted to the SEC. $243 million of that held in the Maxam Absolute Return Fund was reportedly lost in the Madoff swindle.

Some of the other funds under Maxam control were:

$100 million fund for the Seattle Transit Union. 

An unspecified allocation from the Chrysler Corp.Retirement System.

Maxima Alpha Bomaral and Maxima Alpha Strategy Funds, based in Jersey in the Channel Islands. Deutsche Bank marketed 5 year 2.5x leveraged certificates in the two funds as described in a prospectus.

Matrix Money Management announced in 2007 that MAXAM would manage its new fund.

Maxam announced in 11/2005 that it would market three investable hedge fund indices. According to the press release, Maxam had $1.3 billion under management at the time.

The Miles/MAXAM Deep Value Managers Fund Ltd. was registered in the Cayman Islands and was under the control of Reid R. Miles, CEO of Miles Howland LLC. According to SEC filings, the fund was promoted by Sandra Manzke. Whether this fund invested in BMIS is not clear.

Given Sandra Manzke's close ties to Tremont Capital and the Kingate Global Funds which together had more than $6 billion invested in BMIS, her actions are undoubtedly being very closely scrutinized by the Feds.   

On Friday, Robert and Joan Roman filed claims of $8.7 million and $2.7 million, respectively, in the Madoff bankruptcy case, according to PACER records. Joan Alpern Roman is Ruth Madoff's only sibling.  

The $11.4 million probably includes profits earned and the amount of any money redeemed in prior years was not disclosed.

Some of Joan Roman's claim may represent the money she inherited from her parents which ABC News claimed was about $1 million. I don't know what her husband did for a living.   

The Romans have three daughters who also had Madoff accounts, according to the BMIS customer list but they apparently chose not to file claims at this time. I was told that one of the daughters has had her house up for sale since December so their losses may have been significant.

The Romans may have gone public with their claims to put to rest any suspicion that they were not Madoff victims.     

Coincidentally, the New York Times has an article today about Ruth Madoff, "The Loneliest Woman In New York." No word on how close Ruth and Joan are these days.

Note: The Romans appear to be avid croquet players, according to this article about the 2008 Mar A Lago Doubles Invitational.  

33. In addition, an individual named Christopher Warrin was listed on the BLMIS payroll. There is no evidence that Mr. Warrin was an employee of BLMIS, but is instead the boat captain for Frank DiPascali. Mr. DiPascali is a BLMIS employee who worked in the investment advisory business of BLMIS. A copy of Mr. Warrin's W-2 is attached hereto as Exhibit 23. - Filing #197, MadoffTrustee.com

Madoff junkies know Frank DiPascali won $55,070 in the 2007 South Jersey Mid-Atlantic Tuna Tournament in a dramatic down-to-the-wire finish which some might deem a little suspicious now that the real Frank DiPascali has been revealed. Anyone who submits a phony resume to his local school board is certainly capable of cheating in sports.

DiPascali's boat is named the Dorothy-Jo after his daughter and wife. He and his wife, Joanne, are the managing directors of Dorothy-Jo Sportsfishing LLC, registered in New Jersey in October 2002. In 1998, DiPascali registered Dorothy-Jo Fishing Team LLC but the registration was allowed to lapse in 2005.  

Dorothy-Jo Sportsfishing LLC c/o Frank DiPascali was a Madoff customer. How that fits into the case against DiPascali is not clear nor is it clear the company was a "legitimtate" customer.

Christopher Warrin was the Dorothy-Jo captain in the 2007 tuna tournament and the Dorothy-Jo was a 61-foot Viking sportsfishing boat. I don't know what year the Viking is but two to five-year-old Vikings can range in price from $1.75 million to $2 million plus.

Curiously, the Dorothy-Jo was described as a 50-foot Post Marine boat in the 2008 South Jersey Mid-Atlantic $500,000 Tournament. The listing could be a mistake but if it isn't, the question is whether DiPascali owns more than one very expensive sportsfishing boat or whether he sold one boat and bought a much smaller one.

Anyone interested in Frank DiPascali's assets is going to have to figure out how much money he has invested in the fishing business. In 2001, DiPascali bought a 7-acre estate in Bridgewater and put the property in his wife's name. He obviously was aware of the financial consequences if the Madoff swindle was exposed and he planned accordingly.

Three months before the DiPascalis registered Dorothy-Jo Sportsfishing, Christopher Warrin registered two companies, Warrin Boat and Engine LLC and Coldwater Fisheries Limited Liability Company, to an address on E. River Road in Rumson NJ. Warrin described his role in the two companies as "Other" rather than officer or director.

Warren Boat and Engine is the registered owner of the Triton, a 42-foot Osmond fishing boat. In June 2006, the Nantucket Waterfront News blog posted a photo of the Triton moored in Nantucket (no word on whether Mark Madoff was around). One commenter noted that Warrin was the owner and Jim Henderson was operating the Triton for him. He also knew Warrin ran a Viking for a living.

I can't tell if the Triton is for hire or if it is a commerical fishing boat. It has a big diesel engine and apparently goes up and down the East Coast. The captain employs some sort of innovative fishing method created by the Japanese called the greenstick which involves a wooden bird as a decoy. Whatever floats your boat.

Several business directories list "DiPascali" as a business located at 33 West St. in Monmouth Beach, NJ but the phone number, (732) 728-9378, has been disconnected.

The Dorothy-Jo was reportedly based in Monmouth Beach which might explain the "DiPascali" listing.

Businesses listed at 33 West St.: Blue Water Marine, Channel & West Yacht Sales, Channel Club Marina, Mobile Marine Repair, Sallee Tee's Grille and Vital Cash LLC.

On the 7/2008 BMIS Amex bill, DiPascali had several charges to the Channel Club Marina and to Sallee Tee's.    

I'm sure the Feds are looking into whether DiPascali's trip to the Bahamas last March was more than just a vacation.

Joann Crupi bought a $2.2 million waterfront house in Mantoloking NJ in 2/2008. Shana Madoff Swanson bought a $2.8 million house in East Hampton in 5/2008. Mark Madoff bought a $6.5 million waterfront house in Nantucket in 6/2008. Andrew Madoff bought a $4.2 million condo on the Upper East Side in 10/2008. 

What did Frank DiPascali buy?   

For example, Kotz is looking into a former SEC official who allegedly had a personal relationship with a Madoff family member. It has been reported that the former SEC employee is Eric Swanson, a compliance lawyer for the SEC who is now married to Shana Madoff, Bernie Madoff's niece. Kotz is investigating whether or not their relationship affected the SEC's regulatory oversight of Madoff's affairs. - 6/3/2009, "SEC Probes Its Own Chummy Ties to Madoff", Faiza Virani, CBS News

The New York papers had fun last week extracting the juicier bits from Vanity Fair's forthcoming article about how the Boo-Hoo Boys, Andrew and Mark Madoff, are faring post-Bernie (here and here).  Mark and Andrew's p.r. rep, George Sard, is going with the meme that the "boys" were too weak and spoiled to have participated in Bernie's Ponzi scheme.     

The other big Madoff story was about SEC Inspector General David Kotz's internal investigation into how the Madoff swindle escaped detection by the SEC despite seven investigations of BMIS in eleven years. So far, Kotz has interviewed 44 employees and ordered the SEC to turn over emails from 27 employees involved in the investigations. 

Curiously, CBS News was the only member of the media to even mention Eric Swanson's possible involvement in the case and it did so carefully.

In December, the New York Times called Swanson an "unlikely player" in the Madoff scandal because he seemed to be a straight arrow from the Midwest. But Swanson had a huge stake in the outcome of the SEC's 2006 investigation, something the NYT downplayed. (I think the Swanson p.r. rep., Eric Starkman, had a lot to do with that.)

If Swanson read the Markopolos complaint when it was first filed, he knew about the allegation of a Ponzi scheme. I don't know if the SEC investigators showed the Markopolos complaint to Bernie but if Swanson knew about it, I'm sure he told Shana Madoff.

The mere mention of a Ponzi scheme would have terrified Bernie and he would have done anything in his power to prevent it from being uncovered.

The other day, I posted about the Swansons buying a $2.8 million East Hampton mansion in May 2008 and how they were all set to buy a $4.2 million Upper East Side condo in  December but canceled the deal when Bernie was arrested. In the post, I suggested Peter Madoff borrowed $9 million from Bernie in December 2007 to buy the real estate as a wedding gift for his daughter.

What I didn't consider was the timing of the loan and the conclusion of the SEC investigation. 

The investigation officially wrapped up in February 2008 but the SEC closing statement is dated 11/27/2007. The statement effectively ended the investigation since the three investigators, Doris Bachenheimer, Meaghan Cheung and Semona Suh, signed off that they had found no basis to continue it. 

Two weeks later, on 12/12/2007, Bernie wired $9 million into Peter Madoff's bank account, calling the transfer a loan. 

Was the $9 million "loan" really a bonus for bringing the SEC investigation to a successful conclusion? If so, was part or all of the money intended for the Swansons?  

A multi-million dollar sham loan to his compliance officer and her husband, a former SEC investigator, would have been out of the question. I say "sham" because it was unlikely a loan from Bernie would ever be repaid but as long as it was on the books, the borrower didn't have to pay income taxes on the money.  I'm sure the IRS is going to take a look at the $32 million Bernie "loaned" to Mark and Andrew between 1998 and 2008.

Did the Swansons finance the East Hampton deal with a "loan" from Peter Madoff?  It seems unlikely they used their own money to buy the $2.8 million East Hampton property and still have more than $4 million left over to buy a condo seven months later.

Shana Madoff, of course, may have had money of her own. I couldn't find any evidence that she and her first husband, Scott Skoller, bought real estate during their marriage which makes me wonder if the Madoffs were careful about giving Shana money while she was married to Skoller.

Despite her telling New York Magazine she lived in a Park Ave apartment, Shana Madoff appears to have lived in a rented apartment in the River Tower on E. 54th St. for a number of years. Online records indicate Eric Swanson now lives there with her.

I read  somewhere that Shana Madoff's salary was about $500k. Half a million is not a huge salary by NYC standards and Madoff had an expensive lifestyle.  

Given that Swanson worked for the SEC for most of his career, he probably did not accumulate much wealth other than the equity in his DC townhouse. (If he did, I'm sure the DOJ is looking into the source.) How much the sale of the property netted him is not clear.

According to DC property records, Swanson bought a 2100 sq. ft. townhouse from the District of Columbia in 1999 for cash. He took out a $160k mortgage with Independence Bank in mid-2000 which he repaid in 2005 after taking out another mortgage which was attributed to high-powered DC real estate attorney, Roy L. Kaufmann. A satisfaction of the mortgage was never filed nor is it evident who the actual lender was.

On 11/27/2006, Wells Fargo filed a mortgage on the property for an unspecified amount. On 12/11/2006, a notice of a deed transfer was filed indicating the property was sold to Prudential Relocation for $915k. On 1/22/2007, Wells Fargo filed a notice of satisfaction of mortgage.

The timing of the sale appears to indicates that Swanson stayed at the SEC until late 2006 but Vanity Fair claimed he resigned four months after he allegedly began his affair with Madoff which translates to September or thereabouts.   

What about Swanson's claim that he was not involved with any of the BMIS investigations?

Swanson most certainly was involved with one investigation that directly involved Bernie Madoff. BMIS owned 10% of the National Stock Exchange and Peter Madoff was on the board of directors. The NSX flagrantly violated SEC regulations for years but after a three-year investigation, Swanson gave the NSX a slap on the wrist in September 2005. 

The NSX investigation was ongoing when Swanson says he first met Shana Madoff in October 2003. 

The opening statement in the Markopolos investigation dated 1/4/2006 refers to an investigation of BMIS earlier in the year during which Bernie lied about his role as an investment advisor (which should have been a five-alarmer, imho.)

During that time, Swanson and Shana Madoff were becoming close even if they weren't sleeping together at that point. (According to the NY Times, they became romantically involved in April 2006 and the WSJ puts it as after Shana's brother, Roger, died on 4/18/2006.)

In 2005, Eric Swanson would have had a very good reason to hide an affair with Shana Madoff. He would have been required to disclose that fact to the SEC as a potential conflict of interest in the NSX investigation.  

But Swanson didn't have to participate in a Madoff investigation to influence it. Providing confidential information about an investigation to Shana Madoff would have helped Bernie. As an unofficial go-between, Swanson could help negotiate settlement terms favorable to Bernie. Or maybe Swanson pitched his role as a Madoff insider to the investigators as reassurance that Bernie was on the up and up.

A former Madoff employer told me Eric Swanson was considered to be just as pretentious as Shana Madoff around the BMIS water cooler. If that's true, Swanson must have been thrilled to hobnob with NYC's creme de la creme and the prospect of owning a $2.8 million home in the Hamptons would have been irresistible to the aspiring social climber.

 It wouldn't have taken all that much for Swanson to sway the investigators. A word here, a word there and the investigation is dropped. A grateful Bernie gives all of the credit to Swanson and he gets the summer home of his dreams.  

Unbelievable? Hardly.  

It's official! Suffolk County Clerk records show Eric Swanson and Shana Madoff Swanson as the holders of the deed for 8 Barclay Court in swanky East Hampton. The high-flying couple purchased the mansion on 5/8/2008 for $2.8 million, according to KnowX. 

Eric Swanson & Shana Madoff Swanson,
8 Barclay Court, East Hampton, New York
(Microsoft Virtual Earth)

In December, the late Braden Keil of the New York Post reported the Swansons were all set to buy a $4.2 million condo in the Diamond House on E. 77th St on the Upper East Side but canceled the deal the day Bernie was arrested.

These real estate deals probably explain why Bernie loaned $9 million to his brother, Peter, in December 2007. Shana and Eric were married on 9/27/2007 and the loan may have been used for a wedding gift.

No word yet whether Madoff bankruptcy trustee, Irving Picard, intends to clawback this gorgeous summer home. If Peter Madoff can't repay the $9 million, I would think a clawback is a given.  

In the past year or so, the Madoff offspring have been on a real estate buying spree. In June 2008, Mark Madoff bought a house sitting on 3.3 acres in the Southeast Quarter on Nantucket and in October, Andew Madoff bought a $4.3 million condo on E. 74th St on the Upper East Side.

Although Mark Madoff borrowed the full purchase price of $6.5 milllion from Bernie, he and his wife, Stephanie, sold another Nantucket house they owned for $2.3 million in the same month. I guess Mark and Stephanie needed a couple of million to renovate and decorate.

Andrew Madoff's condo was also financed by Bernie.

Were the Madoffs trying to stash as much cash as they could in the months before their empire collapsed?  Sure looks like it.

Steven Leber filed a $4 million lawsuit against Paul J. Konigsberg and his accounting  firm, Konigsberg & Wolf charging Konigsberg with negligence and professional malpractice with respect to a Madoff account opened by Leber in 1998.   

The suit was initially filed in Palm Beach District Court in March 2009 and subsequently removed to the Southern District of Florida in April 2009.

The complaint can be read here. (The actual complaint begins on p. 13.)

Konigsberg's response to the complaint can be read here. While admitting he does have a fiduciary responsibility to Leber, he claims the suit is not valid for several reasons.  

Paul Konigsberg, of course, is the CPA who owned a small percentage of Madoff Securities International Limited in London. He also prepared the 990s for the Madoff Family Foundation.

Konigsberg and his wife accompanied the Madoffs on a 2004 ski trip to Switzerland.

Konigsberg's homes in Greenwich CT and Palm Beach Gardens FL are both held in the name of his wife, Judith, only.

Konigsberg had a number of Madoff accounts under his name including two in the name of the Westlake Foundation. Paul J. and Judith Konigsberg are officers and directors of the foundation.