Apr 07 2009

Our Two Favorite Investment Geniuses

Published by at 9:30 pm under Investing,Managing Money

“I will die and go to hell if it’s a Ponzi scheme – it’s no Ponzi scheme…if it is a Ponzi scheme, why are they finding billions and billions of dollars all over the place?” – R. Allen Stanford


Well, I didn’t do very well last month with only one post, so I will try to do better in April.  I thought it was about time we revisited the status of Messrs. Madoff and Stanford.  As most of you probably noticed, there has been a good deal of continuing coverage on Mr. Madoff, but Mr. Stanford hasn’t received much national coverage since the initial story broke.  I say lucky Mr. Stanford – right?  Unfortunately for him and his business associates, just because the media has other fish to fry doesn’t mean the SEC does – but more on that in a minute.


It shouldn’t be such a surprise to Mr. Bernard Madoff or his family and business associates that when you deceive a whole slew of powerful people and institutions and oh, by the way, burn through $50 billion of other peoples’ money – you might just be sued by some of the victims.  This of course is exactly what is happening and let me just add that those doing the suing are going after every penny or any asset with tangible value.  Madoff started transferring assets and sending money to family members almost immediately, but he has clearly been found out – so the lawsuits will ensure that what remains will probably mostly end up with the lawyers – but better than Madoff or anyone he wants to have it.  Bernard’s brother Peter recently received some bad news when he learned that he had to return the vintage Aston Martin that was purchased for him last year – if this was only his biggest problem.


As for Mr. Stanford, he vehemently denies any wrongdoing and maintains that the SEC decided to make his company the scapegoat after completely missing the Madoff scam for two decades or longer.  Apparently, while there are some shady things that went on at Stanford Financial, they hadn’t yet spent the entire $8 billion that they brought in with high-yield CDs and there is some indication that significant assets are still held by the firm.  This hasn’t discouraged the SEC and according to spokesman John Nester, “We stand by our allegations.”  And there you have it.  I bet James M. Davis and Laura Pendergest-Holt are hoping all the money can be accounted for – or they will be joining R. Allen in the pokey for a long time!



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