Bernie Madoff: An Affair to Remember
Are Shana Madoff Swanson and her husband, Eric Swanson, telling the truth about when their affair began? Does it matter? You bet it does. Shana and Eric are up to their elbows in the $50 billion Madoff scandal and if they try to claim they knew nothing about the fraud, their integrity will matter a lot.
The Madoffs are predators of the worse kind and nothing they say can be taken as truth without independent verification. Facing the loss of their freedom and the family fortune, Eric and Shana Madoff Swanson have every reason in the world to lie about their affair. The Feds should check their calendars and expense reports rather than take the word of the Swansons.
In December, much was made of whether Eric Swanson favorably influenced a 2006 SEC investigation of Bernard L Madoff International Securities LLC. But Eric Swanson was in a much better position to influence an earlier SEC investigation that directly impacted Shana Madoff's father, Peter, and BMIS:
From 2002 to 2005, Mr. Swanson was involved in developing a case against the National Stock Exchange. At the time, Peter Madoff was a director and Madoff Securities was a significant investor in the company. -Stephen Labaton, New York Times, 12/18/2008
To put it less politely, Eric Swanson, in his position at the SEC Office of Compliance, Inspections & Examinations, was investigating Shana Madoff's father and his business associates at the National Stock Exchange (NSX) for cheating customers by manipulating stock prices for more than five years.
Mr. Swanson has told friends that he met Ms. Madoff at a breakfast at the offices of A. G. Edwards in St. Louis in October 2003. At the time, Ms. Madoff was on a compliance committee of an industry group. It held regular meetings around the nation with regulators and industry executives and lawyers to examine market and regulatory trends. -Stephen Labaton, New York Times, 12/18/2008
If a record of the breakfast meeting is online, I haven't found it.
What Labaton did not mention is that Peter Madoff was an A.G. Edwards director for a number of years. A. G. Edwards later had its own problems in 2005 when the SEC charged the company with illegal "market timing" related to the sale of mutual funds between 2001 and 2003. (Note: Missouri is the only other state besides New York where BMIS is registered.)
The only industry group Shana Madoff appears to have been active in is NASD. From a 2005 NASD Regulation Inc. report (p.60):
NASD 2005 Market Regulation Committee
Shana Madoff 2003 (I)
Bernard L. Madoff International Securities LLC
Did Shana Madoff get herself on the committee in 2003 just so she could meet Eric Swanson? Probably not but when an opportunity to advance the interest of her family presented itself, I doubt if she turned it down.
Shana Madoff is a lawyer, (Fordham Law, NY Bar, '97) as is her father, (Fordham Law, NY Bar '71). Both were BMIS compliance officers.
In 1997, Madoff married Scott Ira Skoller, a tall, very good-looking Jewish manager of a men's store in Roslyn NY. The couple divorced some time after the birth of their only child in 1999:
After her divorce from Scott Skoller, Shana began dating some of the young masters of Wall Street--"bad boys living the fast life," as a friend described them. These were exciting, good-looking men, in the social pages more than the business press. That is why many people thought it out of character for Shana, in 2007, to marry a man some say is the polar opposite of her prior swains: Eric Swanson, who was a lawyer for the S.E.C. for 10 years. - Mark Deal, Vanity Fair, 4/2009
In the Swanson fairy tale, Eric and Shana hold off becoming romantically involved until 4/2006, two years and a half years after their first meeting. This implies adherence to an ethical standard that might be called the "Oh, No, Not Us! We Would Never Jump In Bed Until We Were Sure The SEC Would Never Really Investigate The Family":
The two maintained what one associate described as a professional relationship, occasionally seeing each other at industry meetings. In April 2006, they became romantically involved while he was visiting New York. On Dec. 8, her birthday, he proposed to her. They were married soon afterward and he had an opportunity to meet many of the members of his new family.- Stephen Labaton, NY Times, 12/18/2003.
Little is known about Eric Swanson's personal life. No one seems to know his middle name or even his middle initial. If he was married previously, the information has not been made publicly available.
What we do know about Mr. Swanson, thanks to the NY Times:
Mr. Swanson, 41, arrived at the commission's office of compliance inspections and examinations in 1996 after clerking for a federal appeals court judge in South Carolina. A native of Minneapolis, he graduated from the University of Minnesota and the Hamline University School of Law.
The SEC settled the case against the National Stock Exchange case in 2005 with a relatively small fine and NSX CEO and president, David Coker, was only censured.
A Shane E. Swanson of South Carolina now sits on the NSX board but I don't know if he is related to Eric Swanson.
Ahhh, THE DANCERS. So close, so much in love.
Prisons are segregated by sex still, are they not?
Too bad. Love can be so fleeting.
March 23, 2009 5:10 PM | Reply | Permalink
I hear the love was, indeed, fleeting.
March 24, 2009 9:48 AM | Reply | Permalink
From this:
ERIC SWANSON, is Chief Counsel for Regulatory Strategy at Ameriprise Financial, Inc. He manages a staff of attorneys, project managers, and analysts in connection with responding to regulatory inquiries, developing and maintaining regulatory relationships, and tracking and analyzing new and proposed rules and regulations. Previously Swanson served at the Securities and Exchange Commission ("SEC") in Washington, DC, most recently as an Assistant Director in the Office of Compliancer Inspections and Examinations. While at the SEC, he directed a staff of attorneys and examiners in conducting routine and cause inspections of broker-dealers, investment advisors, transfer agents, and self regulatory organizations for compliance with the federal securities laws. Prior to joining the SEC, Swanson served as law clerk to the Honorable Donald J. Russell of the United States 4th Circuit Court of Appeals. He holds a Bachelors degree in economics from the University of Minnesota and a JD from Hamline University School of Law.
March 23, 2009 6:52 PM | Reply | Permalink
Thanks, Merrill. I lost track of that bio somehow. I think Swanson helped settle a civil case against Ameriprise during his tenure.
After he left Ameriprise, Eric Swanson joined BATS, a Kansas City-based ECN (electronic communicaton network) in January 2008. BATS was trying to get SEC permission to become a registered national stock exchange.
Eight months after Eric Swanson joined the firm, the SEC approved the registration.
Clusterstock posted the original BATS Swanson bio which was severely edited after Bernie was arrested.
March 24, 2009 10:16 AM | Reply | Permalink
Shana Madoff most certainly orchestrated a faux relationship (that turned into marriage) so her father, Peter Madoff, and Madoff Securities would be cleared. It is not just a coincidence that Swanson, a Minnesota loser, left the SEC right after doing this dirty deed and that Shana left Madoff Securities. They felt that their dirty fingerprints would not be left on the crime scene, but they are. The timing for their farce will convince, and obvious complicity will convince any jury. I hope Shana and Eric are the next ones to go to prison where they belong.
March 24, 2009 5:37 AM | Reply | Permalink
A 12/22/08 Wall Street Journal article subtitled "Well-Regarded Industry Figure Called 'Devastated and Distraught'" illustrates how successful Bernie was in convincing the press that he was a lone gunman.
Because Shana Madoff was well-versed in SEC regulations and a "nice" person is not evidence she wasn't involved in the fraud. Con artists are almost always "nice" people and knowing the rules is a big plus if you are carrying out a stock fraud.
Someone was pulling out all the stops for Shana Madoff in this article. Read the last few paragraphs. This about sums it up:
"Shana is a wonderful person who took care of her dying brother all by herself and then singlehandedly raised a lot of money for leukemia, managed regulation in the securities industry and fell in love with a very honest man."
Her brother, Roger, was married and I am sure he had round-the-clock, top-of-the-line caretakers paid for with money swindled from Madoff customers. Why Shana Madoff was so exhausted is a mystery.
As far as being on her Blackberry during her honeymoon, she was probably ordering clothes from her favorite designer. Eric should have realized then and there his marriage was not about love. That's if he ever thought it was about love to begin with.
March 24, 2009 10:53 AM | Reply | Permalink