Mini-Madoff scheme

[James A. Landau <JJJRLandau@netscape.com>]

from http://www.cnbc.com/id/29041349

<quote>
Thursday, 5 Feb 2009  6:24 PM ET

Whistleblower Exposes A Mini-Madoff Scheme, Still Underway

Posted By: Lee Brodie

In breaking news, CNBC's Scott Cohn reveals that whistleblower Harry Markolpolos, whose warnings about the Madoff scandal fell on deaf ears at the Securities and Exchange Commission for years, has provided the SEC's Inspector General with new information about an alleged "mini-Madoff" fraud that is still underway.

During his testimony on Wednesday before a House subcommittee, Markopolos told members of Congress that he had information about a $1 billion Ponzi scheme similar to Madoff's, and that he planned to give it to SEC Inspector General David Kotz.

Markopolos also promised to deliver information about a dozen European feeder funds that could be implicated in the Madoff scandal.

Kotz tells CNBC that Markopolos did, in fact, provide the information today, and that by special arrangement, the information would be delivered directly to SEC Chairwoman Mary Schapiro--not to the SEC's Division of Enforcement.

Kotz would not disclose any of the names involved in the new fraud or the feeder funds. He says he met with Markopolos and his attorneys for seven hours on Thursday, describing the meeting as "very valuable."

Kotz, who is conducting his own investigation of the SEC's conduct in the Madoff scandal, says Markopolos gave him "detailed information about his communications with the SEC."
</quote>

A couple of comments:

- "mini-Madoff scheme" implies that there is the term "Madoff scheme", but how a Madoff scheme differs from any other Ponzi scheme is not known.

- How large was Madoff's scheme?  Most news articles say "$50 billion" but that figure was given by Madoff, who by now has been proven to be a liar.  Recent estimates are that Madoff took in somewhere between $10 and $20 billion.  How then would you classify the fraud at the Stanford financial operations, which seems to have been 8 billion dollars?  It is "mini" compared to $50G, but is it "mini" compared to $10G-$20G?

- Whatever that $1G scheme that Markopolos described was, it has not yet been identified in the news.

           James A. Landau
           test engineer
           Northrop-Grumman Information Technology
           8025 Black Horse Pike, Suite 300
           West Atlantic City NJ 08232 USA
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