Bernie Madoff: Sonja Kohn, Austrian Banker & Former NYer, "Loses" $2.1 Billion w/Madoff
Update: According to Bloomberg News today, Milan-based UniCredit SpA holds 25% of Bank Medici, not the Bank of Austria. The Wall Streeet Journal also reported on Sonja Kohn and her husband, Erwin, here and here.
Update II: Bloomberg News is now reporting the Dublin-based Thema Fund gave $1.1 billion to Sonja Kohn who "invested" the money with Bernie. According to Bloomberg, the Bank Medici website claimed Kohn, 60, had "active relationships" with more than 70 fund management companies representing 2,000 funds.
Update III: Sonja Kohn maintains an address and telephone number in Monsey NY. See comments below.
Sonja Kohn owns 75% of Bank Medici and the Bank of Austria owns the other 25%.
According to Reuters today, the exact amount of the losses haven't been reported but Bank Medici said earlier this month two of its funds -- Herald USA Fund and Herald Luxemburg Fund, with a total volume of $2.1 billion -- were exposed to the alleged fraud.
This 12/22/08 Financial Times profile of Sonja Kohn is fascinating:
Sonja Kohn, an Austrian bank executive who helped raise funds that invested with Bernard Madoff, is hard to ignore in Vienna's small financial community.
With her heavy jewellery and her loud voice, Ms Kohn built up a reputation in Vienna over the years as a successful money manager. She was born and raised in Vienna in a traditional, but not religious Jewish family. In the 1970s, she and her husband moved to Milan and later Switzerland. Her life changed when she moved to New York in the 1980s. The family became orthodox and settled in Monsey, NY, a suburb with a large orthodox community.
In 1990, she founded Eurovaleur, which managed various funds for other institutions. During her time in New York she became acquainted with Mr Madoff.
Ms Kohn returned to Vienna in the early 1990s. In 1994, Ms Kohn founded Medici Finanz in which Bank Austria took a 25 per cent stake. At Bank Austria, Ms Kohn was known for her connections and the private way she conducted her operations.
Most of her time was thought to have been spent in Israel, Switzerland and New York. She also travelled to eastern Europe and Moscow, where some of her biggest clients apparently lived.
There seems to have been a lot more going on in the world of banking than I ever knew about.
This is the only bit of good news I've seen in any of this:
I see the Madoff situation as exactly opposite to the credit default swap fiasco: The first people in the CDF situation seemed to be buying insurance to cover them for something they'd genuinely invested in, while I see the later CDF buyers as leeches trying to get something for nothing. I feel that the money made by the later CDF buyers should go back to the original investors to bring back balance to the system (and, of course, the whole system needs to be reformed and regulated).
But the first people in the Madoff investment scam made out like bandits, which, essentially, they are. Madoff's returns were too good to be true, literally. And the later investors, while they may have been motivated by greed and the hope that they would get the kind of returns the early investors did, are basically Madoff dupes, and should at least get their principal investment returned.
When did Sonja start drinking Madoff's Flav-R-Aid? If early, I have no pity, because, as you imply by putting "loses" in quotes, it's not real money. Did she really "lose" money, or has it all be diverted else where, at the expense or actual investors in Bank Medici's fund?
December 31, 2008 1:55 PM | Reply | Permalink
I don't think it's as simple as saying that the first people made out like bandits. I also don't think it's fair to call the early investors bandits.
I know people who gave Madoff money 30 years ago and never took anything out since then. Why are they bandits?
Same thing for the CDS market. There are plenty of people who made a ton of money selling protection against credits they felt good would not default (and didn't). These investors had plenty of capital to actually deliver to the buyers of protection if the credits actually did default. But these people aren't "leeches" like you describe just because they made money in the CDS market over the last year or two
December 31, 2008 6:18 PM | Reply | Permalink
Okay, Bill, I should have been clearer about the original Madoff investors.
The ones who left their money sitting are not the bandits I'm referring to. The ones who cashed in the huge returns that made investing with Madoff so attractive are the bandits. It's being shown, step by step, that much, if not all, of those huge returns came from later investors. It wasn't "real" money. It wasn't money made from, say, investment in a product that became successful and returned profits to its investors.
Regarding the Credit Default Swaps, since I truly am from the middle class and have a Liberal Arts education, I am not conversant in the arcana of Wall Street's doings. But I am good at finding out about things, and I did a lot of research on CDRs when all this came into general consciousness in early October. The best explanation I found was from a This American Life broadcast with Planet Money's reporters Alex Blumberg and Adam Davidson. From the transcript:
So, Bill, all the more scholarly things I read about this practice supports the plain-speaking explanation above. Now please tell me how people taking out "insurance" on something in which they have no material stake—who are simply speculating on someone else's business and property—are not leeches?
January 1, 2009 3:22 PM | Reply | Permalink
More on Sonja Kohn (who I suspect will turn out to be just as big a crook, if not bigger, than Bernie Madoff).
NYS Secretary of State:
Current Entity Name: EUROVALEUR INC.
Initial DOS Filing Date: MARCH 26, 1990
County: NEW YORK
Jurisdiction: NEW YORK
Entity Type: DOMESTIC BUSINESS CORPORATION
Current Entity Status: ACTIVE
DOS Process (Address to which DOS will mail process if accepted on behalf of the entity)
EUROVALEUR INC.
767 FIFTH AVENUE
5TH FLOOR ROOM 507
NEW YORK, NEW YORK, 10022
Chairman or Chief Executive Officer
SONJA KOHN
767 FIFTH AVE
NEW YORK, NEW YORK, 10153
=================================================
Eurovaleur
9 Dolson Rd
Monsey NY 10952-2820
(845) 425-9609
=================================================
Erwin, Sandra & Yvonne Kohn
9 Dolson Road
Monsey NY 10952-2820
(845) 425-9609
==================================================
Per Wiki:
Monsey is a hamlet (and census-designated place), in the Town of Ramapo, Rockland County, New York, United States located north of the state of New Jersey; east of Suffern; south of Airmont and west of Nanuet. The 2000 census listed the population at 14,504.
The hamlet has a large and influential community of Orthodox Jews, consisting predominantly of Chasidim, Hareidim and other Orthodox groups, as well as the Vizhnitz-Monsey hasidim who reside mostly in the Village of Kaser.
==================================================
From the Bank of Medici website (bankmedici.com):
Our Chairman
In the 21st century, financial institutions operate in an increasingly sophisticated environment. Financial instruments have proliferated and gained new layers of complexity, while information technologies have revolutionized the speed and manner with which business is conducted. Each of these developments creates new challenges, each, new opportunities.
To excel in this environment, the finest specialised knowledge is essential. Experience and expertise are the keys to protecting capital and unlocking profits in this constantly changing environment. BANK MEDICI's chairman and founding partner, Sonja Kohn, has both.
Fluent in five languages, she blends European values with sophisticated American financial know-how. In 1987, she founded a New York-based broker dealer active in proprietary trading, arbitrage and executions for hedge funds. In 1990, also in New York, she created Eurovaleur, an investment banking firm specialising in devising innovative products and services for leading financial institutions. 1994 saw Mrs. Kohn launch Medici Finanz, a joint venture with Länderbank, a predecessor to Bank Austria Creditanstalt based in Vienna. Medici Finanz rapidly exhibited the same excellence in innovative product development and market strategy as Eurovaleur and formed the basis for BANK MEDICI.
Successful in building her own businesses, Mrs. Kohn also developed significant ventures with partners Jupiter, Commerzbank's asset management company, and BSCH, the leading Spanish banking group. She was also a founder of FundsWorld, a European leader in online investing that is today owned by Banca Intesa.
Having served as an official advisor to the Minister of Economic Affairs of the Federal Republic of Austria from 1996-2000, Mrs. Kohn was awarded the Grand Medal of Honour for Service to the Republic of Austria in 1999. She has been as well advisor to the Austrian Minister of Foreign Affairs and the Vienna Stock Exchange for which she initiated MOUs with the Dubai Financial Markets and the Shanghai Stock Exchange
January 1, 2009 1:07 PM | Reply | Permalink
However titillating the comments and inuendos posted by "Mrs Panstreppon" , one would think that real insight can come directly from www.bernard-madoff-scam.blogspot.com
:)
January 1, 2009 2:54 PM | Reply | Permalink
BLM,
The Feds gave you unfettered access to the worldwide web, didn't they?
Anyone ask why you have a New City accountant or why Sonja bought a house in Monsey or why you have so many bank accounts in Rockland County? (That last one is just a guess!)
BTW, know anything about the MADOFF FRAUD VICTIMS RELIEF FUND, registered in Delaware on 12/29/08?
January 1, 2009 3:24 PM | Reply | Permalink
I've heard this explanation about buying insurance on a house you don't own. But lots of people buy protection on certain bonds because there isn't a CDS market for lots of other, more illiquid bonds that they do own. Let's say for example you owned a bond issued by a small software company. You may not be able to buy protection on that exact bond but instead you buy protection on an IBM bond that you don't own. It's the next best thing you can do if you think two bonds in the same industry might be somewhat correlated.
Also - how is that any different from writing a call option on a stock that you don't own? If the stock price falls you get to keep premium you collected but you don't need to own the underlying stock. You can also buy a put option without owning the underlying stock. But I don't hear people complaining about these types of equity derivatives.
January 1, 2009 5:45 PM | Reply | Permalink
Bill,
It's clear that you are a big Wall Street booster. You understand and approve of its practices. I don't, and I'll tell you why.
The activities outside of actual investment in companies are, to me, simply highfalutin gambling. Instead of going to an Indian casino, Wall Street addicts gamble on CDSes and put options and all the other methods of playing financial games with stock they have no actual stake in.
The difference is that when people go to casinos to gamble (places I doubt any Wall Street gamblers would be seen dead in) and they lose, only they lose. There can ultimately be a cost to society, when the losses become so great that these people lose their cars, homes, etc., but it's nowhere near the cost exacted when the Wall Street gamblers lose.
These highfalutin gamblers, with their connections, are going to do their damnedest to make sure that they get their money back somehow. It'll come from actual stockholders, generally, with costs passed on to the consumers of the companies' products. But then we get to where we are today, where everyone in the country is supposed to make up for the Wall Street gambling jones.
I'm sure you disagree with everything I've written and that you see me as naive, but I see it as a matter of ethics. The kind of capitalism that has been allowed to thrive, epitomized by Wall Street's denizens, is an unethical system. Ultimately, it takes from the poor and gives to the rich.
January 2, 2009 1:21 PM | Reply | Permalink
The mess today has a lot of people to blame. But I disagree when every just blames it on "Wall Street" and says capitalism doesn't work and should be "killed". There were lots of people (ie consumers) that stretched beyond their means. And I don't buy that that banks "tempted" innocent people who didn't know any better.
If people don't understand how an option-ARM mortgage works, then they shouldn't take one out. And if states or municipalities don't understand CDS then they shouldn't be buying synthetic CDOs
January 2, 2009 5:51 PM | Reply | Permalink
MCBill, Please don't comment in my posts anymore.
January 3, 2009 8:20 AM | Reply | Permalink
You don't believe in the first amendment?
January 3, 2009 1:45 PM | Reply | Permalink
Sure I do. You can criticize me as much and as often as you like in your very own TPM blog. Or you can be rude and continue to comment here despite my polite request that you don't.
January 3, 2009 10:56 PM | Reply | Permalink
Sorry if I am being rude. But you shouldn't be allowed to accuse the Bank of Greenwich, Planfield Asset Management, Goldman Sachs, etc. of all being "in on" the Madoff scandal without people like me having an opportunity to disagree
January 4, 2009 7:37 AM | Reply | Permalink
MCBill, For the second time, please do not comment in my posts anynore.
January 4, 2009 9:33 AM | Reply | Permalink
Sorry but if you're going to continue to make half-baked accusations I will respond. Maybe your next post should be about my cousin who grew up in Ozone Park and works for Newsday. She must be guilty of conspiring with Madoff too. And just because she's from Ozone Park she must also be part of the mob.
January 4, 2009 11:51 AM | Reply | Permalink
For the third time, please do not comment in my posts anymore.
January 4, 2009 1:21 PM | Reply | Permalink
Ha Ha
January 4, 2009 5:17 PM | Reply | Permalink
For the fifth time, please do not comment in my posts anymore.
January 4, 2009 5:30 PM | Reply | Permalink
You should stop being so polite to someone who's ignoring your request
January 4, 2009 10:17 PM | Reply | Permalink
MCBill, For the eight time, please do not comment in my posts anymore.
January 5, 2009 8:32 AM | Reply | Permalink
without people like me having an opportunity to disagree
Ah yes, those brave "Middle Class Bills", armed with the First Amendment, coming to the defense of those poor schlamzels
Bank of Greenwich, Planfield Asset Management and Goldman Sachs.
What courage, what compassion!
January 5, 2009 5:08 PM | Reply | Permalink