New York Attorney General Andrew Cuomo charged Merkin with civil fraud for steering many of his clients to invest with Madoff. According the the charges, Merkin steered $2.4 billion of his client’s funds to Madoff, all the while ignoring “glaring red flags” that should have told him the investments weren’t safe. For his part, Merkin earned $470 million in incentive and management fees.

“Merkin duped individual investors, non-profits, and charities into believing he was responsibly managing their investments, when in actuality he was dumping them into history’s largest Ponzi scheme,” Cuomo stated at a press conference.

Merkin, 55, has denied wrongdoing. He said he was “absolutely shocked” to learn about Madoff’s scheme. His lawyer, Andrew Levander, said he would “vigorously defend” his client against court action.

Merkin is already being sued by New York University and Mort Zuckerman over his role in the scheme.

Ezra Merkin ran both the Gabriel Capital and Ariel Fund, which have been shut down. Both are now said to have operated as “feeder funds” that solicited funds for Madoff in return for large fees. Cuomo alleged that Merkin presented himself to clients as an “investing guru” but was only a “master marketer.” Cuomo’s written statement that accompanied the charges went so far as to say that Merkin realized professional investors were questioning “Madoff’s uncommonly steady returns, there were fundamental questions about Madoff’s money management business that suggested fraud.”

Cuomo stated that Merkin had two articles that questioned Madoff’s investments in his files.

Levander said that Merkin had done his due diligence, and found nothing untoward about Madoff.

“Unfortunately, Mr. Merkin’s due diligence, just like the detailed investigations performed by countless others, including regulators, was thwarted by the intricate, fraudulent scheme perpetrated by Madoff,” he said.

According to a document filed at the U.S. District Court in Manhattan, US Prosecutors are seeking the forfeiture of Madoff’s homes, cars, boats, securities, silverware and a piano that were believed to be paid for with gains from his illegal business activities.

Bernard Madoff is accused of swindling as much as $65 billion dollars from numerous investors. His scheme didn’t discriminate – he took from actors, charitable organizations and Holocaust survivors.

Madoff took new investment dollars to pay off earlier investors. When the credit market imploded and Madoff couldn’t tap into new money to cover the withdrawal requests of his clients, his fraudulent investment company came undone.

Madoff was denied bail and is currently in jail awaiting sentencing, scheduled to take place on June 16, 2009.

At that time Madoff told his sons that he had engineered a $50 billion fraud. Now prosecutors have upped the amount to $64.8 billion. The actual amount of money stolen is unknown. Investigators are using numbers that include probably false profits that Madoff included in his documents.

So far investigators have only recovered $1 billion.

Assistant U.S. Attorney Marc Litt said that there was no plea agreement with Madoff and that the sentence could be 150 years.

Madoff is expected to plead guilty on Thursday.

Madoff, the former Chairman of NASDAQ, has been under house arrest since December 2008.

On Friday US District Judge Denny Chin invited victims to attend court this Thursday, when Madoff is expected to enter his “Guilty” plea.

It’s widely being speculated that Madoff is likely to enter into a “plea agreement” in order to minimize his legal damages. After his guilty plea, it’s expected that the District Attorney will hit the disgraced financier with even more charges.

“Madoff is about to enter his guilty plea,” SEC attorney Jacob Frenken said. “A criminal information is a consented-to criminal charge used to enter a guilty plea.”

The judge has added certain restrictions to Madoff’s bail. One new one is “restrictions of transfer of all property whatsoever, wherever located” belonging to Madoff.”

Since Madoff sent valuable jewelry to his family members, the judge made certain it won’t happen again anytime soon. Madoff must now compile a “valuable portable items” and be subjected to a twice weekly audit of the items.

Madoff currently faces up to twenty years in prison if convicted of all charges.

The prosecutors say he’s responsible for sending $1 million worth of jewelry to family members, after he’d been arrested for his massive Ponzi scheme. Not only that, but the man represents the greatest flight risk since the Spruce Goose. He’s old, he may have millions of dollars in hidden assets, and he’s facing a long jail term (when you’re over 70 any prison sentence could be for the rest of your life), and he’s a scammer. Of course there’s a chance he might decide to seek greener pastures in some remote part of the world that doesn’t have an extradition treaty with the U.S.

“The need for detention in this case is clear,” the prosecution wrote.

They told the judge that Madoff “has admitted to having perpetrated one of the largest frauds in history.” His fraud is a Ponzi scheme with “losses in the tens of billions of dollars.”

Madoff lawyers responded by saying that Bernie didn’t understand the rules of his probation and he’d be willing to agree to tighter restrictions to keep himself out of jail.

So far it hasn’t moved the judge to revoke bail and place Madoff in jail. Despite a non-stop investigation there hasn’t been a single word of exactly how much Madoff may have taken from investors and what became of the assets. It appears likely that investors won’t recover a red cent from Madoff. These victims must be outraged to think Madoff is sending jewelry worth millions through the mail while their own fortunes have been destroyed.

To them it must appear that “personal mementos” such as Rolex watches were purchased with their money. It must also seem like he’s trying to hide the asset to avoid repaying his victims.

Today Barack Obama spoke about the public markets.

“Wall Street has not worked, our regulatory system has not worked the way it’s supposed to,” Obama told CNBC. He vowed a “substantial overhaul” of US financial markets.”

“So it’s going to be a substantial overhaul. We’re going to have better enforcement, better oversight, better disclosure, increased transparency.”

The time for enforcement, oversight, disclosure, and increased transparency is long overdue. The case of Bernard Madoff illustrates the point clearly.

Merkin is currently in hot water due to the huge failure of his hedge fund, which invested billions of dollars with Bernard Madoff, in what is now being described as the world’s biggest Ponzi scheme.

It’s not as if his performance at the help of GMAC has been anything less than a dismal failure, either:

Merkin, 55, presided over $7.9 billion of losses at GMAC during five quarters caused by defaults on subprime mortgages and a collapse in auto sales. He closed his $1.5 billion Gabriel Capital LP last month after disclosing losses tied to Madoff, who allegedly ran a $50 billion Ponzi scheme. Gabriel and two other Merkin funds, Ascot Partners LP and Ariel Fund Ltd., face lawsuits for investing with Madoff.

As part of the TARP funds already paid out to GMAC, the company is required to pick a new seven-member board to oversee the company. It’s doubtful that Merkin will be anyone’s top pick, considering his involvement in the Madoff scheme, as well as GMAC performance under his tutelage.

The retooled board will be decided on within 90 days.

It appears that Madoff told Shapiro that he needed the quarter billion for a short period of time, that the investment was safe, and he’d repay it quickly with a decent return. Shapiro has now lost a personal total of $400 million, as well as his charitable foundation losing over $100 million more.

It was Carl Shapiro who gave a 22 year old Bernard Madoff his start in business, and over the years the two became close friends.

A successful entrepreneur who sold his Kay Windsor clothing business to Vanity Fair Corp. in 1971, Mr. Shapiro built his fortune over the years to hundreds of millions of dollars through investing and other businesses. He now lives in Palm Beach with his wife, Ruth. The couple has donated millions of dollars to Brandeis University, the Dana-Farber/Brigham and Women’s Cancer Center, the Hospice of Palm Beach, Boston’s Museum of Fine Arts and other charities.

Worse even, Shapiro wasn’t the only person who Madoff approached for investment capital as his firm imploded. He hit up a number of people, who, fortunately for them, refused to part with their hard earned money.

The Federal prosecutors say that Madoff sent over $1 million of jewelry to family members, despite the ongoing investigation into his criminal activities. Madoff is still out on bail, pending a hearing. Madoff posted $10 million bond when he first confessed his crimes to police.

The new, more hostile approach from prosecutors indicate a change in stance towards Madoff. Madoff had been said to be co-operating with the prosecution. Now his lawyers have backed off those claims.

A related sidebar in the Madoff fraud case is that the SEC is now undergoing heavy scrutiny for their continues mis-handling of serious complaints about Madoff’s firm as well as hedge funds that funneled billions to Madoff, without informing clients.

H. David Kotz, inspector general of the S.E.C. promised a full investigation into the matter.

Madoff mailed jewelry to family in December claims prosecutors

Central to the argument that Madoff is a flight risk and should have his bail revoked is the discovery that he mailed jewelry said to be worth $1 million to family members. Plus, Madoff is old, probably still has millions hidden, and is facing a long jail sentence.

“The case against the defendant is strong and it continues to grow stronger as the government’s investigation continues,” United States Attorney Mark O. Litt said. “Given the defendant’s age, the length of the likely sentence, the strength of the proof against the defendant, including his confessions, these facts present a clear risk of flight.”

Of course it seems pretty obvious to most observers that Bernard Madoff should be jailed awaiting his trial. The amount of damage he’s done to his clients and to the public faith in investments should warrant his incarceration.

According to Rene-Thierry Magon de la Villehuchet’s brother, Bertrand, Rene-Thierry Magon de la Villehuchet lost “several tens of millions” of his own personal wealth by vesting with Bernard Madoff.

Bertrand told the AP, “He trusted Madoff completely.”

Rene-Thierry Magon de la Villehuchet was found dead in his Access International Advisors New York office with both of his wrists slit and a bottle of sleeping pills near his body last Tuesday.

According to Access International Advisor’s website, the company specialized in “managing hedged and structured investment portfolios.”

Rene-Thierry Magon de la Villehuchet’s investment clients included friends and family and his company was one of the largest investors in Madoff’s “fund.”

He and his company lost over a billion dollars of holdings when Bernard Madoff finally came clean about his illegal (and immoral) activities.

Bertrand said, “At first he thought he’d be able to get the money back. He was very determined. Gradually he realized he wouldn’t be able to.”

Other victims of Bernard Madoff’s investment fraud include the Elie Wiesel Foundation for Humanity, Lilliane Bettencourt of L’Oreal fame, the Robert I. Lappin Charitable Foundation, the Picower Foundation and several other charitable foundations and individual investors.

The total scope of Madoff’s losses remains unknown.

It’s estimated that Bernard Madoff lost $50 billion dollars using an uncomplicated scheme that promises high returns on investment (ROI) to new investors. The “new” cash is then used to pay earlier investors, but the scheme failed after new investors dried up and global credit markets failed to provide more cash for leverage.

Madoff was arrested on December 11, 2008. The day before his arrest he confessed to his senior executives that the management and advisory segment of the business was “basically, a giant Ponzi scheme.”