Madoff's Curveball" by Jeffrey Toobin & other Wilpon stories

[Ceetar]

metsmarathon wrote: rather, i think that "should have known" means that they should have suspected it but did nothing to investigate nor were ever told by anybody who did any investigating. "knowing" means either learning it oneself or being told it. when she told them that the activity was not above board, at that point, they transitioned from "should have known" to "knowing"

It seems far fetched to me that she knew that Madoff was a Ponzi scam years before he was caught. It seems more like she was saying "I think we should look closer at this before preceding" and they basically said "Nah, that's good enough. Let's do it." fine line maybe? I dunno..

[Edgy MD]

I think they have a star witness, and if she's got the paper to back herself up, the trustee's case is strengthened.

I've been dubious that they could meet the burden of proof. "Knew or should have known"? Well all the investors that Picard represents knew or should have known. But the reports of earnings dazzled them to the point where their wisdom failed them. THAT'S THE SCAM. The Wilkatzes fell for it. Everybody fell for it. Shame on them all, but that's human frailty right there, not criminal negligence or deceit.

And then I read this report and... well I'm not so much seeing it that way right now.

[Ceetar]

when did they first start investing with Madoff? Wasn't it in like the 80s? It'd been a while regardless and after that long I imagine it's pretty hard to be convinced by anyone, much less a new employee, that it's a scam.

I guess we'll find out soon enough, trials set for mid-March.. Although we've got appeals and all that too right? So not like we get what's most important, a resolution, in March?

[Guest LeiterWagnerFasterStrongr]

Ceetar wrote: when did they first start investing with Madoff? Wasn't it in like the 80s? It'd been a while regardless and after that long I imagine it's pretty hard to be convinced by anyone, much less a new employee, that it's a scam.

It's hard, yes. Because it doesn't behoove you to know it is, because you're making bank.

Then when you run something like Sterling Stamos, you're making bank regardless of eventual losses/revelation of a scam, thanks to commissions. When you don't do due dilligence at the hedge fund YOU RUN, that's not turning-a-blind-eye... that's willful disregard.

[batmagadanleadoff]

it was Harrington's strong recommendation that Sterling Stamos not invest with Merkin. Additional due diligence revealed that Madoff and Merkin's strategies did not result in the returns they both claimed, while their footprint in the marketplace was not apparent based on the trades they claimed to have made.

In other words, according to Harrington's DD, there was no evidence that Madoff was making the trades he claimed to have made. Harry Markopolos, the individual credited with unearthing Madoff's scheme, also could not find any evidence that Madoff was making any trades.


Although the Harrington article doesn't detail her DD, it's reasonable to conclude that Harrington and Markopolos came to the same conclusions about Madoff, independently of each other.

In 1999, Markopolos found that one of Rampart's frequent trading partners, Access International, was dealing with a hedge fund manager who consistently delivered net returns of 1-2 percent a month. Frank Casey, one of Rampart's principals, met with Access CEO Thierry de la Villehuchet, and found out the manager was Bernie Madoff, who was secretly operating a wealth management business in which his clients essentially gave him carte blanche to use the money however he wanted. Casey and Rampart's managing partner, Dave Fraley, asked Markopolos to try to design a product similar to Madoff's split-strike conversion in hopes of getting Access to diversify away from Madoff. When Markopolos got his hands on a copy of Madoff's revenue stream, he suspected problems almost immediately. To his mind, Madoff's strategy was so poorly structured that on paper, it couldn't possibly make money. Additionally, his return stream rose upward with only a few downticks--a nearly perfect 45-degree angle. Markopolos knew that the markets were too volatile even in the best of conditions for this to be possible. He believed there were only two ways to explain the figures--either Madoff was running a Ponzi scheme (by paying established clients with newer clients' money) or front running (buying stock for his own account based on knowledge about his clients' orders). Either way, Markopolos believed there was no legal way for Madoff to deliver his purported returns. Markopolos later said that he knew within five minutes that Madoff's numbers didn't add up. It took him another four hours to prove that they could have only been obtained through fraud.[14][15] Despite this, Markopolos' bosses at Rampart asked Markopolos to deconstruct Madoff's strategy to see if he could replicate it. Again and again, he could not simulate Madoff's returns, using information he had gathered about Madoff's trades in stocks and options. For instance, he discovered that for Madoff's strategy to work, he would have had to buy more options on the Chicago Board Options Exchange than actually existed.[14] He also couldn't find any evidence the market was responding to any Madoff trades, even though by his estimate Madoff was running as much as $6 billion--far more money than any known hedge fund even then. In Markopolos' mind, this suggested that Madoff wasn't even trading.

http://en.wikipedia.org/wiki/Harry_Markopolos

[batmagadanleadoff]

LeiterWagnerFasterStrongr wrote: Ceetar wrote: when did they first start investing with Madoff? Wasn't it in like the 80s? It'd been a while regardless and after that long I imagine it's pretty hard to be convinced by anyone, much less a new employee, that it's a scam. It's hard, yes. Because it doesn't behoove you to know it is, because you're making bank. Then when you run something like Sterling Stamos, you're making bank regardless of eventual losses/revelation of a scam, thanks to commissions. When you don't do due dilligence at the hedge fund YOU RUN, that's not turning-a-blind-eye... that's willful disregard.

Sure. Sterling can't avoid its responsibility, and liability, by sticking its head in the sand ... by intentionally looking away.

[Ceetar]

LeiterWagnerFasterStrongr wrote: Ceetar wrote: when did they first start investing with Madoff? Wasn't it in like the 80s? It'd been a while regardless and after that long I imagine it's pretty hard to be convinced by anyone, much less a new employee, that it's a scam. It's hard, yes. Because it doesn't behoove you to know it is, because you're making bank. Then when you run something like Sterling Stamos, you're making bank regardless of eventual losses/revelation of a scam, thanks to commissions. When you don't do due dilligence at the hedge fund YOU RUN, that's not turning-a-blind-eye... that's willful disregard.

It often feels like these financial workings are a lot of people in the know exchanging loopholes and technicalities to basically throw parties with investors money.

[ashie62]

Sometimes...Trial starts 3/19/2012.

Any of those 20 million dollar shares sold yet?

[Ceetar]

Ashie62 wrote: Sometimes...Trial starts 3/19/2012. Any of those 20 million dollar shares sold yet?

They're doing them in one lump deal, so no, but we keep hearing that they have buyers for most/all of them. The Bridge loan probably took away the urgency to need that money immediately, but it's 9 days to Spring Training and you have to imagine they want to get that stuff squared away.

[TransMonk]

I read Wilpon's Folly, Megdal's mini-book last night in about 80 minutes. It's actually an easy to understand account of what happened, what is happening and what could happen. Obviously, it was tough to keep the smoke from coming out of my ears during some portions. Megdal makes a pretty decent case that ownership should have at least seen some red flags in their dealings with Madoff by providing specifics and he even delves into the Einhorn situation and how that all fell apart...mostly due to Wilpon's hubris.

Essentially, the book explains that Wilpon and Katz have so many loans out on their assets (which are all intertwined and dependent on each other) that even if they sold the team NOW, they would not have enough funds to cover the balances on those loans that come due over the next 3 years. The Wilpons would be ruined and the Madoff victims would get nothing. Also, there is no way that Wilpon does not realize this and that he feels that maybe he can catch lightening in a bottle with a low budget team overachieving that will allow him to stave off bankruptcy for another year. In Fred's mind, a low percentage shot is better than no shot at all.

Medgal offers that the best solution would be for the Wilpon's to give the Mets over to the trustees. This would allow the trustees to run the Mets and pay off the debts owed by the team with Sandy Alderson promoted to team president. The trustees would infuse the team with money to put forth a competitive team, ticket revenue would go up and Picard would be able to recover some funds for the Madoff victims after the team's debts were paid. Eventually, the trustees could sell the team in 5-10 years for a profit, as MLB teams are always rising in value. Medgal opines that the Mets might even sell more tickets as soon as 2012 due to the fact that the Wilpons are out and that the trustees could spin that fans buying tickets would directly help the victims of the Madoff scam...kind of like charity. The Wilpons could retain ownership of SNY (the only part of the works that still makes a profit and a part that they could never sell off anyway due to Comcast's first right of refusal to buy the network) in order to try and stave off bankruptcy. Medgal feels this would be the best case scenario for all involved.

Either way, after reading this, it is even more obvious that until the Wilpons admit defeat, nothing is going to get better in Flushing.

[metirish]

I just bought it, for $2:50....looking forward to reading it.

[batmagadanleadoff]

If I'm interpreting Megdal's latest column correctly and the surrounding innuendo, the Mets had second thoughts about de-credentialing Megdal, flip-flopped, and are now once again granting Megdal access, probably caving in to the overwhelming support for Megdal in the immediate aftermath of the Mets short-lived petulant and spiteful ban. The Mets, however, simply state that Megdal's credentialing never changed. Whatever. If I'm right on the events, then this latest Mets announcement is just as embarrassing as their original ban on Megdal.

An Updated Note On Access Posted by: Howard Megdal - Posted in Business of Baseball, Citi Field, Today's Mets headlines on Feb 15, 2012 I have been informed by the Mets that the credentialing process has not changed from 2011. Since I received credentials 100 percent of the time they were requested by The Journal News on my behalf last year, the news comes as a great relief to me. I want to thank all of those who were supportive of me over the past two weeks, not least my editor, Sean Mayer, who stuck by me throughout this process. I have been gratified to hear from so many of you about my work, and I am thrilled that my efforts to write are receiving the response I�ve heard. I will continue to do all I can to report on what I think will most matter to you, hopefully informing in an interesting way, on matters large and small, on and off the field. Now if you�ll excuse me, it�s Jeremy Lin Time.

http://mets.lohudblogs.com/2012/02/15/an-updated-note-on-access/

[Guest LeiterWagnerFasterStrongr]

"His credentialing has never changed. We have never been at war with FloridaMarlins. We have always been at war with MiamiMarlins."

[G-Fafif]

Seven suckers...I mean minority investors reportedly lined up.

[metirish]

Forget about the seven suckers look at the cut of Jeff's hair?

[Gwreck]

Forget Jeff's hair, what the hell is that on Terry Collins' head? That's an abomination.

[metirish]

Yes, those hats are awful, worse that the ones where the stripes went over the ears.

[G-Fafif]

Those caps are a horror show and Jeff is Jeff, but good to see Jay up on his feet again.

[TransMonk]

Hey...no drop-shadow on the unis, though.

[Ceetar]

It looks like Jeff was bad-photoshopped into that picture.

[Fman99]

Ceetar wrote: It looks like Jeff was bad-photoshopped into that picture.

It looks like someone took a divot out of his head with a 4 iron.

[metirish]

I should have given the photog credit


Photo credit: Newsday/Alejandra Villa | Mets COO Jeff Wilpon, center, at spring training at Port St. Lucie, Fla. (Feb. 22, 2012)

[Guest Mets � Willets Point]

Ceetar wrote: It looks like Jeff was bad-photoshopped into that picture.

We should have a "photoshop Jeff Wilpon into different pictures" contest.

[Benjamin Grimm]

That cap that Terry is wearing is hideous.

[TransMonk]

Don't they design all spring training caps to be hideous, horrible, awful abomination?

I'm not sure that this is a 2012 phenomenon, folks.

[MFS62]

TransMonk wrote: Don't they design all spring training caps to be hideous, horrible, awful abomination?

That also goes true for the guy not wearing a cap in that picture.

Jeff Wilpon is like a Slinky - not good for very much, but it would bring a smile to your face if you rolled it down a flight of stairs.

Later

[G-Fafif]

Paul Lukas, as if eavesdropping, explores Spring Training caps.

[Gwreck]

I'm so glad you have the money for a helicopter trip to Miami and tickets to the Heat-Knicks but not Jose Reyes.

Yes, I know the cost is not the exact same.

[bmfc1]

Gwreck wrote: I'm so glad you have the money for a helicopter trip to Miami and tickets to the Heat-Knicks but not Jose Reyes. Yes, I know the cost is not the exact same.

You're right Gwreck. Mets management is tone deaf. If they really wanted to go, then hire a limo and leave from the hotel.

[metirish]

Yeah, sends the wrong message to fans like us that care about shit.




but hey, they scored some big money recently....