Bernie Madoff

So where did the money go?

Are we to believe that one guy -- Bernie Madoff -- bears sole responsibility for a Ponzi scheme which may have raked in as much as $170 billion?

Actually, we have differing estimates as to how much money is involved. Former SEC Chairman Harvey Pitt has mentioned a figure of $17 billion -- one-tenth the highest quoted estimate, but still an astonishing amount of money. Of course, the SEC has been "investigating" Madoff since 1999, and a lot of people think that those investigations were terribly compromised. Keep that fact in mind as you assess the credibility of Pitt's statement.

From the Klownhaus blog:

So in all these multi-billion dollar cases, why is there so little interest is where the money went? The media act like it was a magic trick and the money really vanished. But it didn’t disappear, the money went somewhere.

It’s virtually impossible to spend that kind of money and have nothing to show for it.

As anyone who saw Brewster’s Millions knows, it’s hard to spend that kind of money. There’s only so much stuff you can buy. If you spent a million dollars a day it would take you the better part of three years to spend a billion. If Bernie Madoff had spent a million dollars a day for the last twenty years he would still have only spent less than 25% of the missing loot. The amount he gave to politicians was chickenfeed - a few million.

Lucinda Franks tells us that Madoff has not been cooperative, and appears to be protecting others.

The wildest tales about Madoff come from the always-questionable Wayne Madsen. He is, as I have noted on many previous occasions, not exactly my idea of the world's most trustworthy journalist. Still, his material does occasionally check out.

As always, caveat lector. From his February 19 piece:

Madoff’s Ponzi scheme was part of a much larger operation, one involving top officials of both the George W. Bush and Barack Obama administrations, as well as the notorious Russian-Israeli Mafia.

One of the investors in Madoff’s scam was, according to the published list of Madoff “victims,” was the Bank of New York (BONY) and a contrivance called the “Alternate Investment Service.” BONY was the subject of a previous detailed WMR report on the activities of the Russian-Israeli mob...

Another Madoff story by Wayne Madsen (dated March 16) appeared in my inbox recently, although his site makes the article available only to subscribers. This account differs from the previous one. Here, Wayne Madsen offers a very full tale of conspiracy and corruption.

I'll reprint a few choice bits...

A reliable source who is close to both the U.S. Court for the Southern District of New York and the U.S. Attorney's Office for the Southern District of New York's Organized Crime Unit tells WMR that Ponzi scammer Bernard Madoff, who was remanded to prison last week by U.S. Judge Denny Chin, took a "fall" for some of New York's most powerful and wealthiest politicians who were using Madoff's private investment scheme as a "front" to assist in a major real estate redevelopment plan for New York that stood, and still stand, to make the conspirators super-rich.

Sigh. That's Madsen for ya. Always with the unnamed sources whose reliability we can never gauge. For what it is worth, we continue:

WMR has been informed by a well-informed New York legal source that Madoff is a second-tier player in a major real estate development plan that used some of the money skimmed off by Madoff's Ponzi scheme to fund some of the real estate development projects. WMR has been told that another second-tier player in the real estate scheme is none other than Madoff's trial judge, Chin.

The judge, WMR is told, particularly represents the real estate development interests of Tishman Speyer, the real estate firm that owns the Chrysler Building, Rockefeller Center, and the MetLife Building. Chin has been amply rewarded for his "services" with a luxurious penthouse for him and his wife in Battery Park City in lower Manhattan. WMR has also been told that Chin has been responsible for destroying important email evidence that points to the involvement of New York's top political leadership in the Cornerstones project.

By the way -- Chin's partner, Madsen says, is Dubya's Attorney General Michael Mukasey.

Tishman is, among many other things, heavily involved with entertainment/casino construction. Note this, paranoia fans:

Last July, Tishman and Revel Hotel and Casino in Atlantic City executives were killed in a plane crash in Owatonna, Minnesota, 60 miles south of Minneapolis.

Madsen never actually states that the main purpose of the Madoff scheme was to fund the Cornerstones project, but such is the clear implication of this article. And just what is the Cornerstones project? Basically, the plan is to turn Manhattan into Vegas:

There are four Cornerstone redevelopment projects planned for Manhattan that will see the building of major entertainment and gambling casino operations in the city with high-speed rail links between them and to other parts of the city. The four "Cornerstones" are the new World Trade Center site surrounding the future Freedom Tower, Grand Central Station/Times Square, Penn Station, and a floating casino complex on the East River near the Brooklyn Bridge.

Tishman is indeed building the Freedom Tower. Beyond that, I cannot verify Madsen's version of events.

Madsen goes on to claim that these projects were opposed by New York Governor Eliot Spitzer and New Jersey Governor Jim McGreevey. Both men were taken out of office by sex scandals.

As you may recall, the McGreevey scandal was a gay honeytrap involving an Israeli named Golan Cipel. Madsen states that Cipel worked for Tishman. That part, at least, is provable: See here and here. Tishman hired the young Mr. Cipel for $7500 a month.

(Cipel also played a bizarre, and as-yet unexplained, role in the 9/11 aftermath. That's a tale for another time.)

Is there an Obama connection? But of course.

The Barack Obama administration's interest in the mega-bucks real estate boondoggle in New York is heightened by the fact that Klein was on the short list to be Obama's Secretary of Education. In fact, WMR has been told by a knowledgeable source that the Cornerstones project and its receipt of federal stimulus money is a major priority for both Obama and his chief of staff Rahm Emanuel, along with New York Democratic Senator Charles Schumer, a major recipient of campaign contributions from Madoff and his well-heeled associates.

The Madoff money that was "parked" in Israel, with Russian-Israeli mobsters earning interest and able to use the funds for other financial "leverag," was to be pumped back into New York for the Russian-Israeli mob to make billions from the Cornerstones casino/entertainment complexes in Manhattan. Bloomberg was being counted on to "deliver" the project but now that Madoff was caught the project has been further delayed and silent "investors" in the project are growing restless.

What to make of these allegations?

I've done some preliminary Googling on the topic of building casinos in New York. This article speaks of a proposal to build a racetrack casino in Queens; obviously, that has no relationship to the project described above. Gambling is still illegal in New York (except on Indian land, obviously), although budget woes have made the state legislature take a more sympathetic view of legalized gambling.

I simply do not know what to make of Madsen's tale. My gut tells me that he has it wrong, or at least part of it wrong. Yet some aspects of the account may be true, or true-ish. Wayne Madsen is indeed rash -- but is he rash enough to libel an entity like Tishman? Would he libel Judge Chin? Does Wayne Madsen have sufficient pocket-depth to make him worth suing?

One thing is for sure: There's more to the Madoff affair than Madoff and his immediate family. This kind of money means that state actors must be involved.