Going once... Going twice... Sold to the highest bidder!
The U.S. Marshals Service is selling jewelry and other items from the disgraced financier Bernard Madoff.
The auction Saturday in New York City is a part of the continuing effort to raise money for the victims of Madoff's Ponzi-scheme.
Things aren't quite adding up for David Friehling, the former accountant for Ponzi-scheme operator Bernard Madoff.
He is expected to plead guilty to fraud and other charges, according to a letter today from prosecutors to U.S. District Judge Alvin K. Hellerstein.
According to the latest update by Reuters, Friehling is expected to plead guilty to securities fraud, investment adviser fraud, making false statements with the U.S. Securities and Exchange Commission and breaking tax laws, the office of the U.S. Attorney in Manhattan said in its court filing.
Senator John Ensign is back in the news after a New York Times article questioned whether the aftermath as his affair violated criminal laws and Senate ethics rules. At least preliminary investigations on both fronts appear likely. What criminal laws might come into play? Conspiracy to assist a former employee break a federal lobbying law, and perhaps "honest services fraud."
For the background on Senator Ensign's affair with the wife of his former co-chief of staff Doug Hampton, and the "soft landing" in a lobbying job Ensign reportedly arranged for Hampton, see the New York Times article that has some anticipating investigation by the Department of Justice.
So, what laws would be in play?
First off, federal lobbying laws. Federal law forbids some former employees of Senators from lobbying any Senator for one year after their employment. In this context, lobbying means knowingly communicating with or appearing before any Senator (or employee of the Senate) with the intent to influence them regarding something on which the former employee seeks action by any Senator or any part of the Senate.
The same one year cooling off period applies to former employees of House members, except they are banned only from lobbying the specific House member who used to be their boss.
This law speaks about the former employees turned lobbyists, but what about the elected officials they lobby?
Philip Barry, a Brooklyn "money manager," has been arrested and charged with orchestrating a 30 year Ponzi scheme. Another mini-Madoff whose long-run operation collapsed when too many investors needed their money back, Barry is alleged to have parted about 800 investors from about 40 million of their dollars. Rather than investing their money, he allegedly used it to fund real estate purchases, a mail order pornography business and his lifestyle.
The number of decades long investment schemes that unraveled in the past year might underline how intensely our economy has been shaken. Even if some of it was dressed up in language like "split strike conversion strategy," old school flimflammery simple enough to survive for decades has been forced into light. Taking money from new investors to pay off old investors whose money you never actually invested (at least in the sense that they understood the word "invest") can't keep going when everyone calls in for their money.
And allegedly, this fate has now befallen Philip Barry. According to the U.S. Attorney's Office, Barry began accepting investments in the 1970's. Through the "Leverage Group," Barry purportedly promised large returns and made false assurances of investment protection, but unfortunately did not invest his clients' money as planned. Instead, the DOJ alleges that he began using the funds for personal investments, such as real estate, his mail order pornography business and his lifestyle.
After months of negotiating, an agreement has been reached by which Swiss Bank UBS will hand over thousands of account holders' names and account information to the IRS. The move is the latest in attempts by US authorities to crack down on tax cheats hiding assets overseas.
First of all, what's so special about Swiss banks? In a word, privacy. Swiss banks have long reputation for guarding the privacy of account holders. Though Switzerland became an international banking capital long before, in 1934 it codified the practice of bank secrecy into law. This made it a crime for bankers to release certain information regarding bank clients.
As reported by the LA Times, last year US authorities requested from Swiss bank UBS information to identify the holders of 52,000 accounts. Authorities believed that these accounts may have been used to hide assets in order to avoid paying taxes.
This put US attempts to track down tax cheats in direct conflict with centuries of banking secrecy in Switzerland. The Swiss government intervened, stating that it would not allow UBS to hand over the information.
Bernie Madoff granted his first jailhouse interview this week. Speaking with attorneys who have filed suits against his family members and various feeder funds, Madoff shielded others from blame by saying he pulled it all off by himself.
Madoff saying that he pulled it off alone, to lawyers who have sued his wife, isn't too surprising. (Whether she knew about the scheme or not, Ruth Madoff has now been sued by the Madoff operation's bankruptcy trustee for $45 million to help repay victims).
What did surprise attorney Joe Cochett, however, was to hear that since 1995, while billions of dollars plowed through the Ponzi scheme, Madoff's operation didn't trade a single stock or security.
We've long known that the money funneled into Madoff's operation was not exactly invested as promised. However, news that he never bought any stocks, even to try to cover himself, begs the two questions that won't go away: who knew?; and why didn't anyone stop him?
What do high power executives often do when their business faces a problem? Hire consultants. What do they do if by chance they end up prison bound? Apparently, hire consultants.
Prison consultants work in one cottage industry that shows no sign of economic turmoil. They help those unfamiliar with life on the inside prepare for the big house. As reported by the AP, many former pro-athletes, convicted politicians, and billion dollar scam artists turn to prison consultants to ease the transition.
The services generally lobby for better prison placement for their clients, advise on sentence mitigation (shortening), and give crash courses on surviving in prison.
Wall Street Prison Consultants ask on their website whether you are: "Going From The Exchange Floor To The Prison Yard?" If so, it offers Fedtime 101, a federal prison survival crash course by telephone. Along with sentence mediation assistance and advice on suing prison officials, clients can learn a variety of survival skills, including how to:
Three New Jersey mayors, multiple state officials, and even a group of Rabbis have been arrested in a federal political corruption probe. In all, 44 people were arrested in the case which a U.S. attorney says illustrates "the pervasive nature of public corruption" in New Jersey.
To see the complaint, along with details about how the investigation went down, take a look at this post in FindLaw's Courtside.
For some insight into what charges can be used to bring down widesweeping corruption, let's take a look at the crimes and jailtime on the table here.
Co-founder of the famous Dooney & Bourke line of handbags and accessories Frederic Bourke was found guilty of conspiracy to violate the Foreign Corrupt Practices Act. The case revolved around investments to buy the state owned oil company of Azebaijan.
The Foreign Corrupt Practices Act makes it illegal for individuals or companies to bribe foreign government officials in order to obtain or keep business.
Before his recent trial, Frederic Bourke was famous for Dooney & Bourke all-weather leather handbags. Now he'll be cited for years by lawyers fighting cases of international corporate corruption.
As detailed in a press release from the Department of Justice, evidence at trial established that Bourke knowingly participated in a scheme to purchase the State Oil Company of the Azerbaijan Republic on the cheap.
Bourke was found guilty of conspiring with fugitive Czech financier Viktor Kozeny ("the Pirate of Prague") to pay millions in bribes to Azeri officials in exchange for their privatizing the state oil company and selling it to Kozney, Bourke and their consortium in a rigged bid.
Efforts to Unravel Fraudulent Scheme, Recoup Losses Continue
It looks like the punishing sentence handed down on Bernie Madoff may just have been one cellhouse door closing, while others may be opening up to take in new crooks. An AP source indicates that authorities are looking at charging ten more people, although a reuters story indicates that the investigation is closer to its beginning rather than its conclusion.
The source told Reuters:
"There will probably be more people charged," the law enforcement source said. "It is likely to be 10 or more, but it is going to be a lengthy process that could take months or more."
