Seven Red

From the Former Crooked Employer files, the trustee appointed to investigate and disburse the remaining Madoff assets reported today that Madoff’s much vaunted fund does not show a record of investing in any securities whatsoever in the past – wait for it now – thirteen years. This revelation is both jaw-droppingly shocking and perversely hilarious. Let me translate: all that money that these people were putting into the Madoff fund? He never bought one single share of stock or one bond unit with it. In the last thirteen years! He was claiming consistent 10% returns on money that he never invested. We knew already, of course, that this fund was a Ponzi scheme, but this revelation really raises it to the level of a pure Ponzi scheme: he didn’t even try to make any legitimate investment returns with the money flowing into the fund. Zero securities. I’m literally giggling. It’s so brazen it’s funny.

More importantly for my narcissistic purposes, the thirteen year number is crucial. That would put the birth of the fraud at precisely the time when I worked in operations at Madoff. Sending out statements. Statements that listed the securities that were purportedly bought and sold with the fund’s money.* In other words, it must have been that all those statements we were sending out for client tax purposes were filled with false information, because they all indicated the revenue generated by a standard set of equity securities. I know this because I stared at them all day long. Here’s more on Madoff’s statement from a Reuters article:

Each month, Madoff sent out elaborate statements of trades conducted by his broker-dealer. Last November, for example, he issued a statement to one investor showing he bought shares of Merck & Co Inc, Microsoft Corp, Exxon Mobil Corp and Amgen Inc among others.

It also showed transactions in Fidelity Investments’ Spartan Fund. But Fidelity, the world’s biggest mutual fund company, has no record of Madoff or his company making any investments in its funds.

That is exactly what I remember of the statements we were sending out; that’s what they looked like. Maybe I really will get a federal subpoena! I’d be happy to speak with them about stapling technique. In any case, the notion that Madoff would be able to pull this fraud off alone becomes increasingly dubious with each new revelation. Are we to believe that Madoff, by himself, stayed up late at night fabricating the statements? I have my own ideas about how this might have worked, but I’ll keep them to myself.

* As a note, Madoff’s business was split into two sections, standard trading and the (Ponzi) fund. It may be that the statements I was sending out were for the standard trading side of the operation rather than the fund.

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