Bernard Madoff, the Mafia, and Naked Short Selling

[Magda Hassan]

[URL="http://www.deepcapture.com/bernard-madoff-the-mafia-and-naked-short-selling/"] Bernard Madoff, the Mafia, and Naked Short Selling

[/URL] January 19th, 2009 by Mark Mitchell
Bernard L. Madoff was once the chairman of the NASDAQ stock exchange. He was one of the most important market makers on Wall Street. And he managed what was, by some estimates, the largest hedge fund on the planet.
Yes, Bernard Madoff was an impressive man. That much was clear even before we learned that his $50 billion Ponzi scheme may have been orchestrated in cahoots with the most powerful, sophisticated, and indiscriminately murderous organized crime syndicate the world has ever known.
Charles Gasparino (citing “speculation” from investigators) reported last week on CNBC that the Russian Mafia might have been partners in Madoff’s larcenous fund business. Or perhaps the Mob had an even greater interest in Madoff’s market making operation, as some of our sources have told us in recent weeks.
Either way, there is a certain cachet.
But it wasn’t just pierogies and pistol-packing wiseguys in purple suits. Mr. Madoff was also a dedicated public servant, volunteering countless hours at the Securities and Exchange Commission.
Indeed, Madoff seems to have written many of the SEC’s rules. For example, Madoff was the principal author of an SEC rule that exempted market makers (i.e. Madoff) from various regulations governing short sellers (i.e. Madoff’s friends).
Madoff’s rule ensured that market makers (Madoff) could, among other things, engage in so-called “naked short selling.” To sell “naked” is to sell stock that one does not actually possess. That is “phantom stock,” according to the SEC Chairman and many others.
Sometimes, short sellers (who profit when shares lose value) offload massive amounts of phantom stock to drive down prices, destroy pubic companies, or even crash the market. That is why there used to be restrictions.
At any rate, I don’t think Madoff had an office at the SEC. He certainly was not employed there. But the SEC was glad to have Madoff write a rule exempting Madoff from the rules. The formal name of the rule is, “the option market maker exception to Rule 203(b)1,” but the SEC was so thankful that it named the rule after the great man himself.
It was called, “The Madoff Exception.”
After Madoff wrote that rule, market makers (e.g., Madoff) proceeded to “rent” their exemption to hedge funds (i.e. friends-of-Madoff).
It remained against the law for hedge funds to sell phantom stock to manipulate the markets. It was also against the law for market makers to help hedge funds orchestrate such schemes. But under the Madoff regulatory regime, unscrupulous short sellers (i.e. friends-of-Madoff) could engage in this illegal activity so long as they did so with the illegal connivance of a law-breaking market maker (i.e. Madoff).
A few months ago, this naked short selling was implicated–by numerous academics, the U.S. Chamber of Chamber of Commerce, the Secretary of the Treasury, the CEOs of Wall Street’s biggest banks, respected law firms, John McCain, Hillary Clinton, and numerous congressmen – in the near total collapse of the American financial system.
The SEC has not prosecuted anybody for this. After all, there is an “exception.”
It is unclear whether the SEC will continue to name this “exception” after a man who might have absconded with 50 billion dollars (a sum that exceeds the gross domestic product of Pakistan) in league with the Russian Mob, an organization that is said to be in the market for a nuclear bomb – in addition to narcotics, sex slaves and, yes, phantom stock.
In any case, the major news organizations seem to have lost interest.




http://www.deepcapture.com/bernard-madof...t-selling/

[Jan Klimkowski]

Charles Gasparino (citing “speculation” from investigators) reported last week on CNBC that the Russian Mafia might have been partners in Madoff’s larcenous fund business. Or perhaps the Mob had an even greater interest in Madoff’s market making operation, as some of our sources have told us in recent weeks.

Magda - Gasbag is in the same league as Cramer et al.

Every one of those crooks should be shot.

In my BBC2 Money Programme Special, "The Great Dot.Con", first broadcast in March 2001, almost a year before America's "60 Minutes" reported on the lies of the dotcom bubble, we interviewed then Bloomberg financial news anchor, Dylan Ratigan. Dylan was entirely honest about the way financial news channels - from Bloomberg to CNN to CNBC etc etc - work:

Dylan Ratigan, Presenter Bloomberg TV :

The bottom line is that a lot of people have made a lot of money in the stock market in America in the past 10 years. The intention and the promotion that was given to the coverage of this event was equivalent in many ways to a large sporting event. In other words I’m going to tune in every day to find out just how much more money I’ve made on whatever this particular little internet stock may be.

Bloomberg TV – Dylan Ratigan :

If an analyst makes an upgrade on a stock and than goes out on the television network or on a news wire and says they did an upgrade, they are going to drive the stock higher.


BBC Reporter :

And you can watch that happening ?


Dylan Ratigan :

Sure , you can literally sit there with an intern day chart . Again, whether it is on TV or anywhere, when you see a piece of news cross, whether it is an analyst upgrade or an earnings report, you can most certainly watch the stock change as before your eyes.

In a clip we didn't use, Dylan likened the ringing of the opening bell on Wall Street to the "off" in a horse race. The anchor's job was to communicate that sense of adrenaline rush to the small investor viewers at home. Because of business television, American bars were full of ordinary folk talking about share prices rather than football results.

Inevitably, the casino screwed the ordinary folk.

So, Gasbag speaks with forked tongue.

Russian Mafia? Niet.

I'll hazard a bunch of mobsters flying executive jets between Wall Street, Texas, Caribbean tax havens and Paraguay.

:bandit:

[David Guyatt]

Indeed, Madoff seems to have written many of the SEC’s rules. For example, Madoff was the principal author of an SEC rule that exempted market makers (i.e. Madoff) from various regulations governing short sellers (i.e. Madoff’s friends).

It's enough to make you weep. Banking Regulation is like a Star Trek Klingon. It's a charming story that doesn't exist in reality.

I can only add that that "Deep Capture" has opened my already cynical and jaundiced eyes wider than ever before.

In a clip we didn't use, Dylan likened the ringing of the opening bell on Wall Street to the "off" in a horse race. The anchor's job was to communicate that sense of adrenaline rush to the small investor viewers at home.

A really catching analogy, I thought.

[Jan Klimkowski]

In a clip we didn't use, Dylan likened the ringing of the opening bell on Wall Street to the "off" in a horse race. The anchor's job was to communicate that sense of adrenaline rush to the small investor viewers at home.

A really catching analogy, I thought.

Indeed.

The kind of frenzied "your children won't forgive you if you don't buy this stock it's a once in a lifetime opportunity" snakeoil salesman delivery, is taken to a truly maniacal extreme by many of the most visible business news anchors with - allegedly - some stimulating chemical help....

We all know who owns America's business TV channels. And business TV played a crucial part in encouraging ordinary Americans to put their life savings into the market - "which is rocketing to the moon" - only to lose the shirts on their backs...

Hence the verb which became popular during the dotcom era, to blodget a stock. :eviltongue:

[Peter Lemkin]

A pro-Wall Street investigative report, but nevertheless helps explain this arcane and criminal set-up
http://video.google.com/videosearch?q=ph...mb=0&aq=f#

[David Guyatt]

Strange Occurrences, and a Story about Naked Short Selling

January 27th, 2009 by Mark Mitchell

Evidence suggests that Bernard Madoff, the “prominent” Wall Street operator and former chairman of the NASDAQ stock market, had ties to the Russian Mafia, Moscow-based oligarchs, and the Genovese organized crime family.

Watch clip HERE

And, as reported by Deep Capture and Reuters, Madoff did not just orchestrate a $50 billion Ponzi scheme. He was also the principal architect of SEC rules that made it easier for “naked” short sellers to manufacture phantom stock and destroy public companies – a factor in the near total collapse of the American financial system.

Read more HERE

[David Guyatt]

http://madofffraud.boomja.com/Austria’s-...21358.html

The Russian mafia and Russian oligarchs are found to be large investors with Madoff. During the next few weeks, a well-known CNBC investigative reporter documents that the Russian oligarchs, certain members of the Russian mafia and several Colombian drug cartel families have invested and laundered more than $2 billion in Madoff's strategy through offshore master feeders and through several fund of funds. There are several unsuccessful attempts made on Madoff and/or his family's lives. With the large Russian investments in Madoff having gone sour and in light of the subsequent acts of violence against his family, U.S./Russian relations, which already were at a low point, are threatened. Madoff's lawyers disclose that he has cancer, and his trial is delayed indefinitely as he undergoes chemotherapy.
-- Doug Kass, The Edge, "20 Surprises for 2009"

[David Guyatt]

There is nothing new under the sun. It seems like a century ago I read "The First Circle" as part of the research I conducted on the Danny Cassolaro and the Octopus story.

**

http://www.deepcapture.com/

The latest:

Bernard Madoff, the Mafia, and the Friends of Michael Milken

February 3rd, 2009 by Mark Mitchell

In 2005, Patrick Byrne, the CEO of Overstock.com and future Deep Capture investigative reporter, began a public crusade against illegal naked short selling (hedge funds and brokers creating phantom stock to manipulate stock prices down). He said, over and over, that the crime was destroying public companies and had the potential to trigger a systemic meltdown of our financial markets.

Soon after, I began to investigate a network of short sellers, journalists, and miscreants. I concluded that many of the people in this network were connected to two famous criminals – “junk bond king” Michael Milken and his associate, Ivan Boesky. I also began taking a close look at the Mafia’s involvement in naked short selling.

In my last installment (click here to read), I described some of the strange occurrences that attended this investigation. Where the story left off, I’d recently been threatened in a bookstore, and then ambushed by three thugs who told me to stay away from this story. My unwitting employer had been bribed by short sellers, Patrick had been told by a U.S. Senator that his life was in danger, and a Russian matryoshka doll had appeared on the desk of an offshore businessman.

Inside this matryoshka doll was a slip of paper marked with the letter “F”…

* * * * * * * *

Soon after receiving the matryoshka doll, the offshore businessman invited Patrick Byrne to a greasy spoon diner in Long Island. Over the previous year, the businessman had provided Patrick with some information about the naked short selling scam, and the hope was that he might have something more to say.

But that day at the diner, all he had was a message.

“I’ll make this quick,” the businessman said, with two other witnesses present. “I have a message for you from Russia. The message is, ‘We are about to kill you. We are about to kill you.’ Patrick, they are going to kill you. If you do not stop this crusade [against naked short selling], they will kill you. Normally they’d have already hurt someone close to you as a warning, but you’re so weird, they don’t know how you’d react.”

In a later conversation with a colleague of Patrick’s the businessman said [verbatim]: “These things don’t happen to me anymore. I mean, I’ve been out of that world [the world of Mafia stock manipulation] for a dozen years or more. These…there are defined signals here that lead me to believe that they [the Mafia] have been disturbed. The only way they coulda been disturbed is if they own Rocker or if he is using them for leverage.”

Rocker. That’s David Rocker.

At the time, David Rocker was a “prominent” hedge fund manager specialized in short selling (betting that stock prices will fall). It was also the case that Rocker had spent the last couple decades insinuating to people on Wall Street that he was somehow tied to the Mob.

But Rocker was probably full of it. He didn’t have ties to the Mob. Perhaps he merely believed that his insinuations lent him a certain cachet.

* * * * * * * *

From 1973 to 1981, Rocker was a general partner in a short selling hedge fund managed by Michael Steinhardt, who is one of Wall Street’s most “prominent” investors, regularly hailed by The Wall Street Journal and CNBC as a genius and a font of wisdom.

Some years ago, Steinhardt belatedly acknowledged that he is the son of Sol “Red” Steinhardt, who was once a major player in the Genovese Mafia organization. Steinhardt, Sr. spent several years in Sing-Sing prison after a New York City prosecutor described him as the “biggest Mafia fence in America.”

Incidentally, experts concur that the Genovese Mafia family brought the Russian Mob to America.

* * * * * * * *

The largest investors in Steinhardt Jr.’s first hedge fund were associates of the Genovese Mafia (whose investments came in large sacks of cash), Marty Peretz (future founder, with Jim Cramer, of TheStreet.com), Marc Rich (future fugitive charged with tax evasion and illegal trading with Iran and Libya), and Ivan Boesky (later imprisoned on multiple counts, most of them involving stock manipulation schemes orchestrated with “junk bond king” Michael Milken).

By 1991, Steinhardt owned another hedge fund — JGM Management – with a “prominent investor” named James Marquez. The star employee at JGM was “prominent investor” Samuel Israel III.

A few years later, Israel and Marquez founded the Bayou Group, one of the biggest hedge fund frauds in history. A significant part of the Bayou fraud involved Israel “feeding” his investors’ money into a Ponzi scheme run by Robert Booth Nichols, who has been targeted by authorities as a business associate of the Genovese Mafia family.

When Israel was sentenced to prison last year, he briefly disappeared. His car was found on a bridge. Scrawled in the dust on the hood was a note: “Suicide is Painless.”

Authorities arrested Israel’s girlfriend, whom they suspected of harboring a fugitive. Shortly after, Israel rode a red motor scooter to a Boston police station and turned himself in. Apparently, he was not dead. He had tried to fool us.

Meanwhile, Israel had filed a lawsuit against Nichols, alleging that Nichols had ripped him off. Apparently, Israel (who could not be reached for this article) would like us to believe that he is not tied to Nichols or the Genovese Mafia.

Nonetheless, Israel has a certain cachet. So do Steinhardt and James Marquez.

Read more HERE

(my bolding).

Further on down in the above piece is this paragraph that for me stands out in its implications:

The Belzberg’s did not buy Crazy Eddie. Instead, just before the FBI arrived, the company was sold to another investor, Victor Palmieri. Robert A. Marmon, who was hired by Palmieri to run Crazy Eddie, told me that he arrived to find that the company’s top employees – the only people who had had direct access to the Antars – were all burly, armed thugs who claimed to be former employees of the Mossad, Israel’s secret intelligence agency.

(again my bolding)

**

On Robert Booth Nichols, members may wish to read the book length MS "The First Circle" about Michael Riconosciuto and the various connections that lead off from these characters. The book can be downloaded in its entirety HERE.

edit = Even further down in Mark Mitchell's article linked above he states this:

The second important partner of Felix Sater’s Bayrock Group is Apollo Real Estate Advisors, which is part of the empire controlled by a famous billionaire – Leon Black.

If Michael Milken were to name the ten people who are closest to him, Leon Black would surely be one of them. The two men have known each other since at least 1975, when “prominent investor” Carl Lindner, who was one of Milken’s key junk bond cronies, was acquiring shares in United Brands, formerly known as United Fruit, a company that has been accused of everything from bribing heads of state to funneling money to Latin American drug gangs.

Lindner eventually gained control over the company, but not before Eli Black — United Brands’ CEO and the father of Leon Black — crashed through a thick plate-glass window on the 44th floor of the Pan Am building, and plunged to his death.

They said Black broke through the plate glass window with his briefcase.

They said it was suicide.

Old timers like me remember United Fruit aka United Brands, aka Chiquita really well -- and, of course, their "Friendsters" who literally lead almost everywhere from the Marcos gold story (Del Mote), through to the Bush crime family (Zapata et al) and on through to the CIA (Allen Dulles et al). Quite a rogues gallery in fact.

http://www.politicalfriendster.com/showP...t-Company:

United Fruit Company's Friends
United Brands Company
UFC became United Brands in 1970

Sam Zemurray
Prinicple shareholder

Sullivan and Cromwell
Legal Representation

John Foster Dulles
UFC was a former law client of Dulles's

Allen Dulles
Dulles was on UFC's board of trustees

Ed Whitman
Whitman was UFC's top PR Man

Thomas Cabot
Cabot was president of UFC

Banana Republic
Some intelligent contribution for the public.

Marvin Bush
1998, Marvin Bush was appointed to the Board of Directors of Del Monte which purchased United brands, originally United Fruit Company (UFCO).

CIA
United Fruit had Allen Dulles, head of the CIA, on UFCO's board of trustees.

Dwight D. Eisenhower
Ed Whitman, UFCO's top public relations officer, was the husband of Ann Whitman, President Eisenhower's private secretary.

Mohammed Abu-Ghazaleh
Mohammed Abu-Ghazaleh is the CEO. He has placed several family members on the Board alongside Marvin Bush.

Stephen Way
A member of the UFCO Del Monte Board of Directors. Way is a major Bush fundraiser.

HCC Insurance
Stephen Way and Marvin Bush both sit on the Board of Directors of HCC and Del Monte/UFCO.

Zapata Petroleum
In 1969, Zapata bought the United Fruit Company of Boston, another company with strong CIA connections.

George H. W. Bush
Bush got money from Brown Brothers Harriman, Hugh and Bill Liedtke who formed Zapata Petroleum. Zapata bought UFCO in 1969.

Victor M. Cutter
From TIME "Nov. 25, 1929 A shrewd and able executive is Victor M. Cutter, onetime timekeeper and now President of United Fruit Co. Most famed North-Central American enterprise, U. F. C. is the large...

John McCloy
McCloy was a lead attorney and helped promote their "foreign interests". Along with Dulles they led a CIA Coup in Guatemala creating a UFC "Banana Republic".

RCA Radio Corporation of America
Radio Corporation of America (RCA) is created. RCA is formed after the U.S. Government gives control of the wireless industry back to the public sector following World War I. RCA gains the assets of ...

Richard Bissell Jr.
The Bissell-Helms-CIA Directorate for Plans was responsible for what became known as the CIA's Black Operations. This involved a policy that was later to become known as Executive Action (a plan to r...

Richard Helms
The Bissell-Helms-CIA Directorate for Plans was responsible for what became known as the CIA's Black Operations. This involved a policy that was later to become known as Executive Action (a plan to r...

Council on Foreign Relations
Joseph Coolidge: his Augustine Heard agency got $10 million yearly as surrogates for the Scottish dope-runners Jardine Matheson during the fighting in China; his son organized the United Fruit Compan...

Crimes and Lawbreakers
1954 - Guatemala — CIA overthrows the democratically elected Jacob Arbenz in a military coup. Arbenz has threatened to nationalize the Rockefeller owned United Fruit Company, in which CIA Director Al...

The Rockefeller Family
1954 - Guatemala — CIA overthrows democratically elected Jacob Arbenz in a military coup. Arbenz has threatened to nationalize the Rockefeller-owned United Fruit Company, in which CIA Director Allen ...

Robert Haigh Gow
Gow joined Zapata Corporation and in 1966 became president of Zapata Oil after George H. W. Bush sold his shares. In 1969 Zapata made a tender for United Fruit Company. His father Ralph Gow was on th...

Smedley Butler
" I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. "

Guatemala
A UFCO public relations official later observed that his firm helped condition North American readers to accept the State Department's version of the Arbenz regime as Communist-controlled and the U....


Del Monte
United Fruit's, banana republics business was sold to Del Monte.


East India Company
These New England merchant families founded the United Fruit Company and the Bank of Boston.

Skull & Bones
These New England merchant families founded the United Fruit Company and the Bank of Boston. The founding families of Skull & Bones included the Russell and Perkins families, Over several generations...

[Jan Klimkowski]

David - fascinating to see Robert Booth Nichols in there. Like you, I've spent some time exploring the whole Casolaro/Riconosciuto/Octopus spider's web.

However, the Scum from Del Monte are not such unexpected puppet masters.

Part of me does expect to wake up one morning and learn that the entire Bush crime family has relocated to its very own sovereign Paraguayan Colonia Dignidad.

Despite the denials, Barbara Bush doubtless articulated the beliefs of her mob compadres, after Katrina:

As President Bush battled criticism over the response to Hurricane Katrina, his mother declared it a success for evacuees who "were underprivileged anyway," saying on Monday that many of the poor people she had seen while touring a Houston relocation site were faring better than before the storm hit.

"What I'm hearing, which is sort of scary, is they all want to stay in Texas," Barbara Bush said in an interview on Monday with the radio program "Marketplace." "Everyone is so overwhelmed by the hospitality."

"And so many of the people in the arena here, you know, were underprivileged anyway," she said, "so this is working very well for them."

http://www.nytimes.com/2005/09/07/nation...rbara.html

[Magda Hassan]

http://www.namebase.org/cgi-bin/nb06?_NI...BERT_BOOTH