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  • Judge Orders Freeze Of Madoff’s Assets; Investigators Will Try To Determine If Funds Were Co-Mingled In Ponzi Scheme

    Bernard Madoff
    Bernard Madoff

    UPDATE DEC. 14, 7:51 A.M. EST (U.S.A.): Forbes.com is quoting a lawyer from Akerman Senterfitt on the Bernard Madoff case. Akerman Senterfitt is representing Andy Bowdoin in the Ad Surf Daily Ponzi scheme case. The attorney quoted at Forbes.com is being quoted in a general sense as an expert in unraveling Ponzi schemes.

    We reported yesterday that some of the world’s great publications and journalists are reporting on the Bernard Madoff case. We’ve included a few links at the bottom of this post. Though Madoff’s alleged fraud is much more involved than the allegations against AdSurfDaily, the issues in the cases are strikingly similar. If you’ve been following the ASD case, you’ll learn a lot by following the Madoff case.

    Here, below, our earlier post . . .

    It hasn’t taken long for the probe into Bernard Madoff’s failed securities business to kick into high gear. A receiver appointed by a federal judge already has seized Madoff’s website. Meanwhile, the judge already has issued an order that empowers the SEC to go over Madoff’s financial statements and bank accounts with a fine-tooth comb. Included in the order are business and personal accounts.

    Elsewhere, clients and companies that have billions of dollars invested with Madoff already have started their own probes. One of them, Fairfield Greenwich Group, has acknowledged it had $7.5 billion — more than half of its $14.1 billion portfolio — “invested in vehicles connected to Bernard L. Madoff Investment Securities.”

    “We are shocked and appalled by this news,” said Jeffrey Tucker, founding partner of
    Fairfield Greenwich Group. “We have worked with Madoff for nearly 20 years, investing
    alongside our clients. We had no indication that we and many other firms and private
    investors were the victims of such a highly sophisticated, massive fraudulent scheme.”

    Federal prosecutors said last week that Madoff had been running a giant Ponzi scheme that had gone undetected for years. Preliminary losses were pegged at $50 billion. The alleged scheme reportedly unraveled when customers sought $7 billion due them and Madoff had no more shells to move.

    Madoff, the former chairman of Nasdaq and a Wall Street titan, is 70. If convicted, he faces up to 20 years in prison and a fine of up to $5 million.

    One of the things investigators will try to determine is whether Madoff co-mingled funds from business accounts and personal accounts.

    Co-mingling is an issue in the AdSurfDaily case. Authorities said ASD President Andy Bowdoin was running a $100 million Ponzi scheme tied to checking and bank-card accounts over which he had sole signatory authority. Investigators said the accounts were used to purchase $51,000 in jewelry on a single day, along with real estate in Florida and South Carolina.

    Prosecutors said ASD was insolvent and that Bowdoin was paying older program members with money from new members, the classic Ponzi set-up. The U.S. Secret Service seized ASD’s assets.

    Insolvency also is an issue in the Madoff case. Madoff acknowledged the firm was insolvent and had been running a giant Ponzi scheme for years, federal officials said. As was the case in the ASD probe, a judge froze Madoff’s assets in a bid to contain the damage — or, as the court documents say — to preserve the “status quo.”

    Madoff Links:

    1.) Forbes Quotes Michael Goldberg Of Akerman Senterfitt, The Firm Representing Andy Bowdoin

    2.) Wall Street Journal Identifies Some Alleged Victims

    3.) Forbes Says Some Victims Face Prospect Of Having To Return Illegal Profits

    4.) New York Times Questions Whether NY Mets’ Operations May Suffer Because Of Alleged Madoff Scheme

    5.) New York Times Calls It ‘The Stuff Of Nightmares’

    6.) Reuters: Geneva Banks Lost $4 Billion In Madoff Ponzi

    7.) Bloomberg: Madoff Used Three-Person Accounting Firm That Operated In 13-By-18-Foot Location

    8.) Boston Globe: Carl Shapiro Charitable Foundation Lost $145 Million With Madoff

  • Two Friday Bank Failures Will Cost FDIC $212.5 Million

    Some of our readers have been following the AdSurfDaily case, which involved the seizure of nearly $100 million by the U.S. Secret Service amid allegations that ASD was running a Ponzi scheme while calling itself an advertising company.

    One of the roles of the Secret Service is to protect U.S. economic health and the health of the banking system. Some ASD members have been harshly critical of the agency for seizing the money.

    The criticism, however, is short-sighted, particularly in an environment in which banks are failing and personal wealth is plunging. The U.S. banking system is in troubled waters, a point driven home yesterday in twin actions by the FDIC.

    Two bank failures Friday in Georgia and Texas will cost the FDIC insurance fund a combined $212.5 million and bring the number of U.S. bank failures this year to 25. There were seven failures in 2007.

    The Georgia Department of Banking and Finance closed Haven Trust Bank yesterday. The FDIC was named receiver. Haven Trust was headquartered in Duluth, Ga.

    “To protect the depositors, the FDIC entered into a purchase and assumption agreement with Branch Banking & Trust (BB&T), Winston-Salem, NC, to assume all of Haven Trust’s deposits, including those that exceeded the insurance limit [of $250,000],” the FDIC said in a statement.

    Haven Trust was the fifth Georgia bank to fail this year. Its failure will cost the FDIC insurance fund $200 million.

    Meanwhile, the Texas Department of Banking closed Sanderson State Bank of Sanderson, Texas. The FDIC was named receiver. The agency entered into a purchase and assumption agreement with The Pecos County State Bank, Fort Stockton, Texas, to assume all of Sanderson State Bank’s deposits, including those that exceeded the deposit insurance limit.

    Sanderson State Bank was the second bank failure in Texas this year. Its failure will cost the FDIC insurance fund $12.5 million.

  • A Note To Readers

    Dear Readers,

    It had been our plan all along to convert from Blogger to WordPress in 2009. We made the conversion earlier than planned because of significant problems we began to experience with databases and website functions earlier this week.

    Part of the plan also was to port hosting. We ended up carrying out both tasks this week. One of the challenges was to learn a Linux-based system different from the system to which we were accustomed. We’re still learning. :-)

    A good number of you have been following our coverage of the civil forfeiture case against AdSurfDaily, a so-called autosurf company. We’ll continue to cover the story, which has affected thousands of people involved in online commerce.

    We plan to build this new site a little each day. We’ll also talk about the writing life and branding. Google is one of the world’s great businesses. It indexes billions and billions of web pages. One of the challenges of launching an online business is finding a way to emerge from Google’s giant slush pile. Many entrepreneurs and hobbyists are buried under tons of electronic slush and seek ways to make their websites memorable.

    This is the “experience economy.” It’ has never been more important to provide a memorable experience to website visitors. But far too often memorability gets confused with noisiness. People try to shout their way out of the slush pile, believing screaming is a virtue because “everybody is doing it.”

    We do things a bit differently here. The spokesperson for this Blog, for example, is a cartoon-character “Poster Model” with trendy glasses, trendy hair, a magnificent red nose and a smile made for toothpaste commercials.

    It’s our way of not screaming, of climbing up through the mountains of slush. These mountains existed before we even contemplated an online presence. Our eBooks and information products are about emerging from all that slush. Our plan is for the long-term. The traditional print media — our home for years — is facing monumental challenges. Newspapers and magazines and broadcast outlets are laying off employees.

    Their fear is the fear of the blacksmith confronting the age of the automobile. Our roots are in print media. At one time the advertising pie was comprised largely of only four slices: print, radio, TV, billboards. The Internet forced a fifth slice, and has been taking an incrementally larger share of the pie. We do not believe our print share ever will increase, which is why it’s important to build the Internet share.

    Well, enough for now on this subject. Just wanted you to know we appreciate your continued visits.

    Regards,

    Patrick

    So,

  • Giant Wall Street ‘Ponzi Scheme’ Collapses; Potential Losses In Madoff Fraud Pegged at $50 Billion Amid ‘One Big Lie’

    And you thought AdSurfDaily members had problems, having been told their money was part of a $100 million Ponzi scheme.

    Former Nasdaq Chairman Bernard Madoff has been accused of running a monumental Ponzi scheme that sustained itself for years based on his reputation. Socialites from Palm Beach, New York’s celebrity elite, endowments, European banks and investment houses and others may sustain $50 billion — that’s billion, with a “b” — in losses.

    Madoff acknowledged he was “finished,” that he had “absolutely nothing,” that “it’s all just one big lie,” and that it was “basically a giant Ponzi scheme,” the SEC said.

    “We are alleging a massive fraud — both in terms of scope and duration,” said Linda Chatman Thomsen, director of the SEC’s Division of Enforcement. “We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable.”

    The FBI charged Madoff, 70, criminally. He faces up to 20 years in prison and a fine of $5 million.

    “Madoff stated that the business was insolvent, and that it had been for years,” the Justice Department said. “Madoff also stated that he estimated the losses from this fraud to be at least approximately $50 billion.”

    One of the interesting things about this case is that people raised questions about Madoff’s investment-advisory business years ago, saying the company’s bountiful returns regardless of the market environment were inexplicable.

    An employee, however, told investigators Madoff shielded the company’s true financial picture from clients and employees, a common theme in Ponzi schemes.

    “Madoff kept the financial statements for the firm under lock and key, and Madoff was ‘cryptic’ about the firm’s investment-advisory business,” the Justice Department said.

    It all collapsed this week, when Madoff ran out of shells to move. He had been a fixture on Wall Street for decades.

    In a bizarre move, Madoff further informed the senior employees that, “in approximately one week, he planned to surrender to authorities, but before he did that, he had approximately $200-300 million left, and he planned to use that money to make payments to certain selected employees, family and friends.”

    Financiers described the alleged Ponzi scheme as one of epic proportions. The ripple effect could be considerable because at least some of the money was tied to hedge funds managed by investment companies.

    “The Madoff firm had more than $17 billion in assets under management as of the beginning of 2008,” the Justice Department said. “It appears that virtually all assets of the advisory business are missing.”

  • Transition Progresses: No ASD Court Updates Yesterday

    We checked Judge Rosemary Collyer’s docket in the AdSurfDaily case several times yesterday. The most recent entry was the Dec. 3 denial of “Leave to File” directed at an unnamed party. The party who was denied had attempted to file a motion to void judgment.

    On Nov. 20, Judge Collyer issued a separate denial of “Leave to File,” this one directed at ASD member Curtis Richmond. Richmond attempted to file a motion to dismiss the ASD forfeiture case, according to the docket.

    Richmond is associated with a Utah “Indian” tribe a judge ruled a sham and has a history of clashing with federal judges, prosecutors, law-enforcement agencies and others. It is unclear if Richmond was the party who attempted to file the motion to void judgment. The sham “Indian” tribe has filed similar motions in other cases, but Judge Collyer’s docket does not list a name in the Dec. 3 denial.

    If you’re new to this site, we’ve been covering the civil-forfeiture case against money and property linked to AdSurfDaily Inc. and ASD President Andy Bowdoin. Federal prosecutors believe ASD, which deemed itself a professional advertising service, was a criminal enterprise running an autosurf Ponzi scheme. Federal agents seized about $100 million in August.

    Separately, we still are in the process of porting this website. There may be occasional outages over the next few days. We made considerable progress yesterday, and fine-tuning will continue over the next several days.

    One thing you might notice is that the site may not load properly at all times. This is because the domain is re-propagating. It is possible that such quirks may occur over the next five days or so.

  • Transition Update: Some Glitches, But Not Bad So Far

    Update on website porting . . .

    There have been spot outages and mismatch issues as the domain propagates anew. We’re in the process of porting files and reconstituting the site.

    We noticed our friends at scam.com missed our picture. Here’s hoping this will suffice for now. :-)

  • AdSurfDaily Readers: We’re In Transition

    Dear Readers,

    A good number of you have been following our coverage of AdSurfDaily and the forefeiture complaint filed by federal prosecutors.

    The URL for the “old” PP Blog should be redirecting here now. We are converting to WordPress and will be using a magazine-style theme to discuss writing, marketing, branding and topics of interest to Web-based businesses.

    There will be some downtime during this process. Our coverage will resume soon.