| HeraldNet - Snohomish County's online news source |
 WEDNESDAY, FEBRUARY 10, 2010 5:54 am |
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Madhoff's missing $50 billion hard to track, investigators say NEW YORK -- It has become the biggest mystery to emerge from the $50 billion Bernard Madoff scandal: Where did all the money go?Federal investigators are likely to take months trying to answer that question as they dig through the disgraced investor's records and attempt to unravel what may be the biggest financial fraud in history. But several theories are being discussed among financial experts and at Wall Street watercoolers, Palm Beach Country clubs and the offices of university accounting professors. Among the theories: Madoff lost a bundle in bad investments; paid some of the money out to investors; stashed cash in foreign banks; and spent some on his lavish lifestyle. There is also the possibility he inflated his claim of $50 billion in losses. "He has plenty of houses and yachts, but not certainly enough to account for all this money," said Aswath Damodaran, a professor of finance at New York University. "It is tough to really lose 100 percent." Madoff, 70, a former Nasdaq stock market chairman, has become one of the most vilified people in America since news broke Dec. 11 that he allegedly had been running a giant Ponzi scheme, paying returns to certain investors out of the principal received from others. The scam included a global roster of investors, including retirees on Long Island, charities around the world and even the International Olympic Committee. So far, investors have said that they have lost more than $30 billion, according to an Associated Press calculation. Here are some possible scenarios: Traded away. What's unclear at this point of the investigation is when the scheme began, but reports have indicated that it had been going on for decades. In the criminal complaint against Madoff, he told investigators that he "had personally traded and lost money for institutional clients, and that it was all his fault." That suggests he may have blown investors' money through a failed trading strategy, and at some point felt compelled to cover up the mistakes. Lost in the meltdown. Madoff's scheme was partly undone by this year's crisis in the stock and credit markets. The Dow has lost nearly 36 percent since the start of this year, and the credit market has largely been frozen. In the complaint, Madoff said that investors were seeking approximately $7 billion in redemptions. Madoff boasted of producing returns of about 10 percent for years, so individual investors who were getting battered in other parts of their portfolio might have taken some of those purported Madoff profits off the table. Went to the lifestyle. Madoff could have spent some of the money on his lifestyle, which included multiple homes and yachts and memberships at some of the nation's most prestigious country clubs. His three U.S. homes -- a Manhattan penthouse, a beachfront mansion in the Hamptons and a home in Palm Beach, Fla. -- together have an estimated market value of more than $30 million, according to real estate experts. The white-glove co-op in Manhattan where he lives requires residents to have at least $100 million in liquid assets so that they can cover any expenses even if their business goes bust or the market is hit with declines, said Faith Hope Consolo, chairwoman of the real estate firm Prudential Douglas Elliman's retail leasing sales division. The firm has leased retail space in that building, and she said it is "the epitome of luxury." The office rented by Madoff's firm was in New York City's Lipstick Building, where rents command about $3 million to $5 million annually for the space Madoff had, Consolo said. There is also speculation that the money could show up in other spots -- maybe in offshore bank accounts, in family members' names or elsewhere. "A lot of people have doubts about the family," said Jerry Reisman, a Garden City, N.Y., attorney representing 10 Madoff investors. "We don't know to what extent his wife benefited. She certainly benefited. She lived a Gatsby-style life." |
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- County archive software paid for but waiting for set-up
- Ruling expected on Sultan beating statement
- ‘Roadkill’ caucus seeks a voice for centrist Democrats
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- Ex-Boeing engineer jailed for espionage
- Morning mystery: What happened to House Bill 3181?
- Lynnwood sets height limit on grass: 8 inches
(10) - State Senate votes to toss I-960's tax-raising hurdle (9)
- School levies in Snohomish County all passing, Marysville bond failing (6)
- A tidy lawn could be law in Lynnwood (4)
- County archive software paid for but waiting for set-up (3)
- Vote on school levies by Tuesday (3)
- Two suspects sought in Everett shooting that injured two (3)
- Schools do well in levy elections (3)
- Lynnwood makes law against too tall lawns (3)
- North Sound Christian girls winning with just six players (2)
- Jackson girls outlast Meadowdale owdale
- OBT raises barre in children’s program
- Junior firefighters
- School levies passing
- Mavericks topple Wolfpack
- Get a second look at Second City Feb. 13
- Sports Briefs
- Warriors advance 11 to regional meet
- Arlington's Cascade Valley Hospital celebrates expansion, national award and 100 years of service
- Business Licences Feb. 2010
- Technology tips for launching your own business
- Business Events Feb. 2010
- Tech Talk: No excuse today for going without a Web site
- State already raising fees and rates that restrict business growth
- Some legislators again targeting people’s initiative petition rights
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