GMAC Becomes Bank As Their Chairman Is Sued

25. December 2008 · Write a comment · Categories: Business · Tags: , ,

GMAC becomes a bank on the same day the company’s chairman, J. Ezra Merkin, is sued for losing billions of dollars. As Don King used to say, “Only in America.” Considering the nature of GMAC’s business, there were plenty of critics who though their proposal to become a bank was absurd. Now the company is eligible for TARP “bailout money.”

Regulators also wanted to approve GMAC’s application to become a bank so that it could apply for federal funds before a year-end deadline set by the Treasury Department. “GMAC will be well capitalized on completion of the proposal,” the Fed said in a public notice.

As a condition of the Federal Reserve’s approval, General Motors will have to reduce its ownership stake in GMAC to less than 10 percent, from 49 percent. An independent trustee, whose appointment will be approved by the Fed and Treasury, will sell the company’s stake within the next three years.

Of course many investors would have to be squeamish about this conversion, especially at a time when the auto industry is in the tank, new capital is impossible to get and you have J. Ezra Merkin steering the Titanic and there’s an iceberg in clear view.

Under the terms of the deal, GMAC is eligible for $6 billion dollars in bailout money, that will no doubt be carefully invested by Merkin, who announced he’s shutting down his Ariel LTD hedge fund because he lost $1.8 billion to his “good friend” Bernard Madoff. NYU accused Merkin today of handing money to Madoff, with little or no oversight. Can we expect more of the same at GMAC? Of course we can. Not only is Merkin asleep at the wheel, the Federal government just handed him the keys and a bottle of Jack Daniels.

This wasn’t the only good news for GMAC. This week GM announced it was agreeing to postpone payment by GMAC for up to $1.5 billion for cars already sent to dealers. Christmas has come early and stayed late for GMAC.

GMAC has lost $8 billion in the last two years.

J. Ezra Merkin Ordered Not To Destroy Records

25. December 2008 · Write a comment · Categories: Business Fraud · Tags: , ,

J. Ezra Merkin has been ordered to not destroy any financial records related to the dealings of Bernard J. Madoff. Merkin is the chairman of GMAC who runs several hedge funds which invested with Madoff. The dealings came to light when one of Merkin’s clients, New York University, learned that Merkin had lost $24 million of their capital.

The suit claims that Merkin and his hedge fund, Ariel Fund Ltd. and its’ management group Gabriel Capital Corporation, failed on their responsibility of cash management by turning the money over to Madoff for investment. The Ariel Fund Ltd has already announced plans to liquidate their holdings in light of the recent scandal. The suit also mentions Fortis, who partnered with Merkin in the creation of Ariel Fund Ltd. All told, NYU had invested a staggering $94 million into the fund.

As the losses come in from the Madoff scam, the elite of New York City Jewish philanthropy are among the victims, as well as helping to perpetrate the fraud. Merkin is the grandson of Hermann Merkin who was known as a titan of Jewish philanthropy. He donated gave millions to help build Yeshiva University, and the Fifth Avenue Synagogue.

Human loss mounts in Madoff Ponzi Scheme

The human expense of the Madoff scheme is mounting. Charitable foundations and lives have been destroyed. Merkin clearly used his influential position and the capital of Yeshiva University to invest $1.8 billion into Bernard Madoff’s firm.

That was little consolation, however, to Yeshiva University, said to have lost $110 million of its endowment; or to Congregation Kehilath Jeshurun, the Ramaz School of Manhattan and SAR Academy in Riverdale, said to have lost substantial sums; or to several family foundations belonging to Merkin’s fellow trustees at Yeshiva University, including Robert M. Beren and Ludwig Bravmann.

Another Ascot casualty was a charitable trust founded by real-estate magnate Mortimer Zuckerman, the chairman of real-estate firm Boston Properties and owner of the New York Daily News and U.S. News & World Report. That lost $30 million.

NYU said Merkin blindly turned the money over to Madoff.

“Without making disclosures in the quarterly reports to investors, and in the face of an extraordinary number of ‘red flags,’ Merkin, for years, simply turned over a substantial portion of Ariel’s funds to Madoff,” said NYU in their complaint.

Merkin has so far denied wrongdoing, laying the blame squarely on Madoff.

“Mr. Merkin remains committed to obtaining for shareholders the best results possible in the wake of the terrible fraud committed by Bernard Madoff,” Andrew Levander, attorney for J. Ezra Merkin said.

Madoff has caused huge damage to the work of Jewish philanthropic organizations

It’s safe to say the the amount of damage to Jewish philanthropic organizations is significant.

The Elie Wiesel Foundation for Humanity has lost virtually all of their funds as a result of investing with Madoff.

The Elie Wiesel Foundation for Humanity said Wednesday it invested $15.2 million or “substantially all” of its assets with Bernard Madoff, adding the name of the Nobel Prize winner to the confirmed list of those caught up in what Mr. Madoff described as a $50 billion Ponzi scheme.

“We are deeply saddened and distressed that we, along with many others, have been the victims of what may be one of the largest investment frauds in history,” the foundation said in a statement posted on its Web site.

The foundation was started by Holocaust survivor and Nobel Prize Winner Elie Wiesel and his wife in 1986. The foundation will not be going out of business. Of course a man like Wiesel who won a Nobel prized for detailing “his own personal experience of total humiliation and of the utter contempt for humanity shown in Hitler’s death camps” can survive a financial crisis like this. Other charitable foundations have not been so lucky, already wrapping up their operations upon learning of their lost endowments.

Bernard Madoff is unique among scammers due to the size of his Ponzi scheme, and the fact he was willing to stick it to anyone, even fellow Jewish people, no matter how close of a friend they considered him to be.

Wiesel Foundation Loses Everything In Madoff Scam

24. December 2008 · Write a comment · Categories: Business Fraud · Tags: , ,

Bernard Madoff’s long running Ponzi scheme has collapsed another entire charitable organization.

The Elie Wiesel Foundation for Humanity, which was founded by Elie Wiesel and his wife, Marion after he won the Nobel Peace Prize in 1986, recently announced that their foundation lost everything – more than $15 million dollars – after investing with Bernard Madoff.

Bernard Madoff recently admitted to losing over $50 billion dollars entrusted to his investment company. Madoff told authorities that he used an unsophisticated Ponzi scheme to bilk investors out of their cash.

The Elie Wiesel Foundation operates both domestically and internationally and was set up to remember the Holocaust. The foundation’s mission statement is “to combat indifference, intolerance and injustice through international dialogue and youth-focused programs that promote acceptance, understanding and equality.”

A statement at the Foundation’s website reads,

“We are deeply saddened and distressed that we, along with many others, have been the victims of what may be one of the largest investment frauds in history. We are writing to inform you that the Elie Wiesel Foundation for Humanity had $15.2 million under management with Bernard Madoff Investment Securities. This represented substantially all of the Foundation’s assets.

The values we stand for are more needed than ever. We want to assure you that the Foundation remains committed to carrying on the lifelong work of our founder, Elie Wiesel. We shall not be deterred from our mission to combat indifference, intolerance, and injustice around the world.

At this difficult time, the Foundation wishes to express its profound gratitude for all your support.”

The foundation operates the Beit Tzipora Learning Centers, in Ashkelon and Kiryat Malachi, Israel. These schools enroll more than 1,000 students in after school programs and are role models for other schools. They were named in memory of Elie Wiesel’s sister, who died at Auschwitz.

Elie Weisel is 80 years old and survived the Holocaust.

Whether Wiesel’s foundation will be able to survive through this massive fraud perpetrated under the guise of ‘trust’ remains to be seen.

Bernard Madoff is currently being electronically monitored after posting $10 million bond and investigators in the case continue their probe.

Liliane Bettencourt – L’Oreal Heiress – Bilked By Bernard Madoff

24. December 2008 · Write a comment · Categories: Business Fraud · Tags: ,

The world’s wealthiest woman has also been scammed by Bernard Madoff, the world’s biggest scam artist. She was one of the first ever investors who put money with Access International Advisors. Of course the founder of Access International Advisors was Thierry Magon de la Villehuchet, who likely committed suicide yesterday.

Madoff bilked the super rich using a network of hedge funds with big money connections

Bettencourt, 86, is the daughter of the founder of L’Oreal SA, Eugene Schueller, and is considered to be the world’s wealthiest woman, with a fortune totalling $22.9 billion.

The Ponzi scheme fraud perpetrated by Bernard Madoff was different from many in the past due to the pedigree of the people it drew in. Investors of enormous fortunes have lost billions in the giant scheme.

Bettencourt, a Parisian, joins wealthy individuals from around the world, including Spanish billionaire Alicia Koplowitz, U.S. moviemaker Steven Spielberg and Nobel laureate Elie Wiesel, among victims of what Madoff, 70, told investigators was a $50 billion Ponzi scheme.

“More high-profile names who have been victimized by Madoff will start to become known now,” said Ron Geffner, who represents hedge funds at the New York-based law firm Sadis & Goldberg LLP. “There’s a strong sense of anguish, fear and distrust.”

Bettencourt is not only the world’s richest woman, but she weighed in at position number 17 on the Forbes list of richest people in the world. Investigators expect many other big names to emerge as victims now realize the extent of Madoff’s wrongdoing. Hedge funds with extremely wealthy clients funneled money into Madoff’s company, and now many of those hedge funds are in danger of being sued by those clients for the grave mishandling of their funds.

Ponzi schemes prey on the trust of investors, no matter how rich they might be

In the case of Villehuchet and Walter Noel, who was sued along with his Fairfield Greenwich hedge fund yesterday used their social standing to solicit money from rich clients. Villehuchet was from a French Aristocratic family, and Noel was a high-ranking member of the big money Jewish aristocracy in New York City. Using sales agents like this, Madoff was able to continuously take on more clients with fresh money, which is essential to the survival of a Ponzi scheme. With the money he took from new investors, he could pay returns on his older investors.

Now that the scheme has collapsed, it’s clear that rich people are not immune to losing money in scams, despite a high level of personal trust in their advisors. When an investment manager lies about the numbers, the outcome can only be bad.

De La Villehuchet Found Dead

23. December 2008 · 3 comments · Categories: Business Fraud · Tags: ,

The fallout from the Bernard Madoff fraud scheme continues to mount up, this time apparently claiming the life of hedge fund manager Thierry Magon de La Villehuchet, who had invested money with Madoff’s firm.

De la Villehuchet, 65, was a co-founder and chief executive officer of Access International Advisors, according to a marketing document. Access, based in New York, invested $1.4 billion with Madoff, who was arrested on Dec. 11 for allegedly running a $50 billion Ponzi scheme.

The death of Rene Thierry Magon De La Villehuchet is “highly likely” to be called a suicide.

Mr De la Villehuchet was a founding partner and chief executive officer of Access International Advisors. Access had reportedly invested $1.4bn with Mr Madoff, who was arrested on December 11. Access raised funds on the European markets to plough into Mr Madoff’s investment fund.

De La Villehuchet had been described in one report as “desperately” trying to recover funds, to no avail. He had been spending “day and night to find a way to recoup his investors’ money.” This included initiating legal action in the U.S.

This recent news comes on the heel of the FBI announcing that their agency is shifting terrorism resources to fight the war on financial fraud. The Madoff mess only gets worse as time roles on.

Madoff Fallout Continues – Fairfield Greenwich Sued

23. December 2008 · Write a comment · Categories: Business Fraud · Tags: ,

The fallout in the case of Bernard Madoff continues. It’s not surprising considering the scale of his scam, which is clearly the largest investment swindle ever uncovered. Now the scam has engulfed a man who once thought of Bernard Madoff as his good friend. Walter Noel and his hedge fund firm Fairfield Greenwich is being sued for $7.5 billion that they placed with Madoff to invest.

Noel’s Greenwich Sentry fund invested $220 million with Madoff and his Fairfield Sentry fund invested $7.3 billion solely in Madoff, jeopardizing investors’ interests while collecting “millions of dollars in fees,” according to a complaint filed Dec. 19 in New York State Supreme Court in Manhattan.

Fairfield Greenwich Group founding partners Noel, Andres Piedrahita and Jeffrey Tucker are accused of breach of fiduciary duty, negligence and unjust enrichment, as are Brian Francouer and Amit Vijayvergiya of FG Bermuda, a Noel affiliate. The complaint was filed as a class-action, or group, lawsuit on behalf of investors.

“FG defendants failed to perform even a minimum level of due diligence regarding the activities of Madoff,” according to the complaint.

The net of victims of Madoff has been worsening since the legendary investor admitted to at least $50 billion of fraud when he was arrested by police on Dec. 11th. So far, institutions and investors worldwide have been emerging with billions lost.

The main contention is that Fairfield Greenwich, acting in its’ capacity as a hedge fund, didn’t do enough to make sure Madoff and his returns were legitimate. In a case such as this, there’s plenty of blame to go around as billions evaporate into thin air. Fairfield Greenwich was particularly active in recruiting more money to be invested in Madoff’s firm.

Banque Benedict Hentsch & Cie. SA, a company that merged with FG in September, is now canceling that agreement and returning money to investors. They say that $48 million may be lost.

“The management of the bank and its advisers are carefully following the development of the situation in order to undertake any further steps, particularly legal, judged necessary,” the company said in a statement.

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