[R-G] [BillTottenWeblog] Bernard Madoff

[Bill Totten]

Wall Street Swindler Strikes Powerful Blows for Social Justice

Wall Street broker Bernard ('Bernie') Madoff, former president of
NASDAQ, revered and respected investor confessed to pulling off the
biggest fraud in history, a $50 billion dollar scam. Bernie was known
for his generous philanthropy, especially to Zionist, Jewish and Israeli
causes.

by James Petras

The James Petras Website (December 19 2008)

"We never thought he would do this to us, he was one of our people".
-- member of Palm Beach Country Club.


An Introduction to the Mega-Swindle

Wall Street broker Bernard ('Bernie') Madoff, former president of
NASDAQ, revered and respected investor confessed to pulling off the
biggest fraud in history, a $50 billion dollar scam. Bernie was known
for his generous philanthropy, especially to Zionist, Jewish and Israeli
causes. A one time life-guard on Long Island in the 1960s, Bernie
launched his financial career by raising money from colleagues, friends
and relatives among wealthier Jews in the Long Island suburbs, Palm
Beach, Florida and in Manhattan, promising a modest, steady and secure
return of between ten to twenty percent, covering any withdrawals in
typical Ponzi fashion by drawing on funds from new investors who
literally pleaded for Bernie to fleece them. Madoff personally managed
at least $17 billion dollars. For almost four decades he built up a
clientele, which came to include some of the biggest banks and
investment houses in Scotland, Spain, England and France; as well as
major hedge funds in the United States. Madoff drew almost all of the
funds from high net-worth private clients who were recruited by brokers
working on commission. Bernie's clients included many multi-millionaires
and billionaires from Switzerland, Israel and elsewhere, as well as the
US's largest hedge funds (RMF Division of the Man Group and the
Tremont). Many of the swindled super-rich clients forced their money on
Madoff, who sternly imposed rigorous conditions on potential clients: He
insisted they have recommendations from existing investors, deposit a
substantial amount and guarantee their own solvency. Most considered
themselves lucky to have their funds taken by the highly respected Wall
Street ... swindler. Madoff's standard message was that the fund was
closed ... but because they came from the same world (board members of
Jewish charities, pro-Israel fund raising organizations or the 'right'
country clubs) or were related to a friend, colleague or existing
clients, he would take their money.

Madoff set up advisory councils with distinguished members, contributed
heavily to museums, hospitals and upscale cultural organizations. He was
a prominent member of exclusive country clubs in Palm Beach and Long
Island. His reputation was enhanced by his funds record of never having
a losing year - a big selling point in luring millionaire investors.
Madoff shared with his super-rich clients (Jews and Gentiles) a common
upper class life style, and mix of cultural philanthropy with low key
financial profiteering. Madoff 'played' his colleagues with a
soft-spoken, but authoritative, appearance of 'expertise', covered by a
veneer of upper class collegiality, deep commitment to Zionism and
long-term friendships.

Bernie's mega-fund shared many signs with recent high level scams: The
constant high returns, unmatched by any other broker; a lack of third
party oversight; a backroom accounting firm physically incapable of
auditing the multi-billion dollar operation; a broker-dealer operation
directly under his thumb and the total obfuscation of what he was
actually investing in. The obvious similarity of signs with other
fraudsters were overlooked by the rich and famous, the sophisticated
investors and high paid consultants, the Harvard MBAs and the entire
army of regulators from the Security and Exchange Commissions (SEC)
because they were totally embedded in the corrupt culture of 'take the
money and run' and 'if you're making it, don't ask questions'. The
reputation of the superior wisdom of a seemingly successful Jewish Wall
Streeter fed into the self-delusions of the wealthy and the stereotypes
held by millionaire Gentiles.

The Big Swindle

Madoff's investment fund only dealt with a limited clientele of
multi-millionaire and billionaires who kept their funds in for the long
haul; the occasional withdrawal were limited in amount and were easily
covered by soliciting new funds from new investors fighting to have
access to Madoff's money management. The long-term big investors looked
toward passing their investments to their kin or eventual retirement.
The wealthy lawyers, dentists, surgeons, distinguished Ivy league
professors and others who might need to draw from their funds for an
occasional fancy wedding or celebrity-studded bar-mitzvah, could draw
from their funds because Madoff had no problem covering the withdrawal
by attracting funds from rich owners of sweat shop garment factories,
dangerous meat packing outfits and slumlords. Madoff was no Robin Hood,
his philanthropic and charity contributions facilitated access to the
rich and wealthy who served on the boards of the recipient institutions
and proved that he was 'one of them' a kind of super-rich 'intimate' of
the same elite class. The shock, awe and heart attacks that followed
Madoff's confession that he was 'running a Ponzi scheme' drew as much
anger for the money lost and the fall from the moneyed class as for the
embarrassment of knowing that the world's biggest exploiters and
smartest swindlers on Wall Street, were completely 'taken' by one of
their own. Not only did they suffer big losses but their self-image of
themselves as rich because they are so smart and of 'superior stock' was
utterly shattered: They saw themselves as suffering the same fate as all
the schmucks they had previously swindled, exploited and dispossessed in
their climb to the top. There is nothing worse for the ego of a
respectable swindler than to be trumped by a bigger swindler. As a
result, a number of the biggest losers have so far refused to give their
names or the amount they lost, working instead through lawyers fighting
off other losers.

The Positive Side of Madoff's Mega-Swindle (The Inadvertent Hand of Justice)

While it is understandable that the super-rich and wealthy, who have
lost a large portion of their retirement and investment funds are
unanimous in their condemnation and cries of betrayal of trust, and the
editorials of all the prestigious newspapers and weeklies have joined
the chorus of moral critics, there is much to praise in Madoff's deeds,
even if such praise was not at the heart of his fraudulent endeavor.

It is worthwhile to list the inadvertent positive outcomes of Madoff's
mega-swindle. First of all the swindle of $50 plus billion dollars may
make a big dent on US Zionist funding of illegal Israeli colonial
settlements in the Occupied Territories, lessen funding for AIPAC's
purchase of Congressional influence and financing of propaganda
campaigns in favor of a pre-emptive US military attack against Iran.
Most investors will have to lower or eliminate their purchase of Israel
bonds, which subsidize the Jewish State's military budget.

Secondly, the swindle has further discredited the highly speculative
hedge funds already reeling from massive withdrawals because of deep
losses. Madoff's funds were one of the last 'respected' operations still
drawing new investors, but with the latest revelations it may accelerate
their demise. The dismissed promoters may finally have to perform an
honest, productive day's work.

Thirdly, Madoff's long-term, large-scale fraud was not detected by the
Securities and Exchange Commission (SEC) despite its claims of at least
two investigations. As a result, there is a total loss of credibility.
More generally, the SEC's failure demonstrates the incapacity of
capitalist government regulatory agencies to detect mega frauds. This
failure raises the question of whether alternatives to investing in Wall
Street are better suited to protect savings and pension funds.

Fourthly, Madoff's long-term association with NASDAQ, including his
chairmanship, while he was defrauding his clients of billions, strongly
suggests that the members and leaders of this stock exchange are
incapable of recognizing a crook, and are prone to overlook felonious
behavior of 'one of their own'. In other words, the investing public can
no longer look to holders of high posts in NASDAQ as a sign of probity.
After Madoff it may signal time to look for a king-size mattress for
safe keeping of what remains of a family's wealth.

The fifth point is that the investment advisors from top banks in
Europe, Asia and the US managing billions of funds did not carry out the
most elementary due diligence of Madoff's operation. Apart from severe
bank losses, tens of thousands of influential, affluent and super-rich
lost their entire accumulated wealth. The result is total loss of
confidence in the leading banks and financial instruments as well as the
general discrediting of 'expert knowledge'. The result is a weakening of
the financial stranglehold over investor behavior and the demise of an
important sector of the parasitic 'rentier' class, which gains without
producing any useful commodities or providing needed services.

The sixth point is that since most of the money stolen by Madoff came
from the upper classes around the world, his behavior has reduced
inequalities - he is the 'greatest leveler' since the introduction of
the progressive income tax. By ruining billionaires and bankrupting
millionaires, Madoff has lessened their capacity to use their wealth to
influence politicians in their favor - thus increasing the potential
political influence of the less affluent sectors of class society ...
and inadvertently strengthening democracy against the financial oligarchs.

A seventh point can be made that by swindling life-long friends,
self-same ethno-religious investors, narrow ethnically defined country
club members and close family members, Madoff demonstrates that finance
capital shows no respect for any of the pieties of everyday life: Great
and small, holy and profane, all are subordinated to the rule of capital.

Eighth, among the many ruined investors in New York and New England,
there are a number of mega slumlords (real estate moguls), sweatshop
owners (fancy name-brand clothes and toy manufacturers) and others who
barely paid the minimum wage to their women and immigrant laborers,
evicted poor tenants and swindled employees out of their pensions before
moving their operations to China. In other words, Madoff's swindle was a
kind of secular 'divine' retribution for past and present crimes against
labor and the poor. Needless to say, this 'unconscious Robin Hood' did
not redistribute the money fleeced from the employers to their workers,
he reinvested part of it in charities which enhanced his philanthropic
image and to payout to some of his early investors so sustain the
overall Ponzi scam.

Point number nine is that Madoff struck a severe blow against
anti-Semites who claim that there is a 'close-knit Jewish conspiracy to
defraud the Gentiles', laying that canard to rest once and for all.
Among Bernard Madoff's principle victims were his closest Jewish friends
and colleagues, people who shared Seder meals and frequented the same
upscale temples in Long Island and Palm Beach.

Bernie was discriminating in accepting clients, but it was on the basis
of their wealth and not their national origin, race, religion or sexual
preference. He was very ecumenical and a strong backer of globalization.
There was nothing ethnocentric about Madoff: He defrauded the
Anglo-Chinese bank HSBC of $1 billion dollars and several billions from
the Dutch arm of the Belgian bank Fortes. $1.4 billion was from the
Royal Bank of Scotland, the French bank BNP Paribas, the Spanish bank,
Banco Santander, the Japanese Nomura; not to mention hedge funds in
London and the US, which have admitted holdings in Bernard Madoff
Investment Securities. Indeed Bernie was emblematic of the modern
up-to-date, politically correct, multicultural, international ...
swindler. The ease with which the super rich of Europe forked their
fortunes over caused one Madrid-based business consultant to observe
that, "picking off Spain's wealthiest was like clubbing seals ..."
(Financial Times, December 18 2008 page 16)

The tenth point is that Madoff's swindle will likely promote greater
self-criticism and a more distrustful attitude toward other potential
confidence people posing as reliable financial know-it-alls. Among
self-critical Jews, they are less likely to confide in brokers simply
because they are zealous backers of Israel and generous contributors to
Zionist fund drives. That is no longer an adequate guarantee of ethical
behavior and a certificate of good conduct. In fact it may raise
suspicion of brokers who are excessively ardent boosters of Israel and
promise consistent high returns to local Zionist affiliates - asking
themselves whether this business about 'what is good for the ...' is
really a cover for another scam.

The final and 11th point is the demise of Madoff's enterprise and his
wealthy liberal Jewish victims will adversely affect contributions to
the 52 Major Jewish American Organizations, numerous foundations in
Boston, Los Angeles, New York and elsewhere, as well as the
Clinton/Schumer militarist wing of the Democratic Party (Madoff
bankrolled both of them as well as other unconditional Congressional
supporters of Israel). This may open Congress to greater debate on
Middle East policy without the usual high volume attacks.

Conclusion

Madoff's swindle and fraudulent behavior is not the result of a personal
moral failure. It is the product of a systemic imperative and the
economic culture, which informs the highest circles of our class
structure. The paper economy, hedge funds and all the 'sophisticated
financial instruments' are all 'Ponzi schemes' - they are not based on
producing and selling goods and services. They are financial bets on
future financial paper growth based on securing future buyers to pay off
earlier cash ins.

The 'failure' of the SEC is totally predictable and systemic: The
regulators are selected from the regulatees, are beholden to them and
defer to their judgments, claims and audit sheets. They are structured
to 'miss the signs' and to avoid 'over-regulating' their financial
superiors. Madoff operated in a milieu of a Wall Street where everything
goes, where impunity for mega-bailouts for mega swindlers is the norm.
As an individual swindler, he out-defrauded some of his bigger
institutional competitors on the Street. The whole system of rewards and
prestige goes to those best able to juggle the books, to cover the paper
trails and who have willing victims begging to get fleeced. What a
mensch, this Madoff!

In a few days, one individual, Bernard Madoff, has struck a bigger blow
against global financial capital, Wall Street and the US Zionist
Lobby/Israel-First Agenda than the entire US and European left combined
over the past half century! He has been more successful in reducing vast
wealth disparities in New York than all the white, black, Christian and
Jewish, reform and mainline Democratic and Republican governors and
Mayors over the past two centuries.

Some right-wing conspiracy theorists are claiming that Bernie is a
secret Islamic-Palestinian agent (from Hamas) who set out to
deliberately undermine the financial base of the Jewish State of Israel
and its most powerful, affluent and generous US backers and foundations.
Others claim that he is a closet Marxist whose swindles were carefully
designed to discredit Wall Street and to funnel billions into
clandestine radical organizations - after all ... does anyone know where
the lost billions have gone? Unlike the leftist pundits, bloggers and
protest marchers, whose earnest and public activities have had no effect
on the rich and powerful, Madoff has aimed his blows where it hurts the
most: Their mega-bank accounts, their confidence in the capitalist
system, their self-esteem and, yes, even their cardiac well-being.

Does that mean we on the left should form a Bernie Madoff Defense
Committee and call for a bailout in line with Paulson's bailout of his
Citibank cronies? Should we proclaim "Equal bailout for equal
swindlers!"? Should we advocate his flight (or his right of return) to
Israel to avoid a trial? It might not fly with his many Jewish victims
to make the case for an Israeli retirement for Bernie.

There is no reason to mount the barricades for Bernard Madoff. It's
enough to recognize that he has inadvertently rendered an historic
service to popular justice by undermining some of the financial props of
a class-ridden injustice system.

Postscript

Was it out of sheer admiration or because of some covert linkages with
Madoff that our current Attorney General Michael Mukasey is removing
himself from the investigation? Others of equal importance and influence
are most certainly tied in the Madoff Affair, and not just the
'victims'. We are facing a serious case of matters of State ... No one
can believe that a single person could by himself pull off a scam of
this size and duration. Nor can any serious investigator believe that
$50 billion dollars has simply 'disappeared' or been squirreled into
personal accounts.

http://www.lahaine.org/petras/index.php?p=1769&c=1


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