British authorities expect to file charges against others, believing that Madoff's UK operations played a significant role in the operation of Madoff's Ponzi scheme.

Madoff's U.K. Business 'Played Significant Role' in Operation

Investor Freezes Madoff's Brother's Assets

A state judge in NY has frozen Peter Madoff's assets, at the request of a law student who claims that his trust fund was depleted by the payment of fictitious returns to other Madoff investors.

The complaint alleges that Peter Madoff had "full knowledge that it was a fraudulent Ponzi-scheme and nothing more than an unprecedented fraud."

Justice Stephen A. Bucaria of Nassau County Wednesday ordered that Peter Madoff be "prohibited and restrained from removing any funds" from any of his accounts, pending an April 3 hearing.

Apparently this is only a temporary restraining order, which will expire at the April 3 hearing, where the court will hear arguments from both sides. TROs that freeze assets are tough to get, so this law student must have some decent evidence of Peter Madoff's involvement in the Madoff fraud. We will see what happens on the 3rd.

The full story is at Law.com.

Dreiert Trustee Recovers $100 Million in Assets

In his report to the court, the Dreier Trustee says that he has recovered over $100 million in assets, including an 18 million dollar yacht and 39 million in artwork.

The story is at DealBook, take a look at this lifestyle, apparently all financed by selling fraudulent notes. The interesting part is that the theory is that he kept selling the notes to continue the lifestyle! How about selling the 39 million in art work?

Well, the New York Times gets it. We have much bigger problems than the AIG bonuses.

And why do Merrill executives get to keep their bonuses when everyone else is going to have it taxed away? Because they were paid in December. Another piece of lunacy of the AIG bonus bill.

The Problem With Flogging A.I.G

Congressional Pandering and the 100% Income Tax on Compensation

Congress does a number of things very well. Pandering to the populace is one of them, and nothing demonstrates this as well as the House's attempt to punish AIG. The other thing they do well is pass a bill that has popular appeal, and then hope that someone else stops them, or there is a presidential veto, or the courts strike it down. Then they get to say "we tried to fix it but the [opposing party][the President][the Courts] wouldn't let us!"

We all know that Congress screwed up on the AIG bonuses. They prevented the use of bailout funds for bonuses, but exempted any bonus payable pursuant to a contract that existed prior to February 2009. That might not have been a screwup, on some levels, it makes sense. However, as we all know, there was a huge backlash from the public, since the bailout money was going to pay "executive bonuses." Congress, in its usual pandering, fueled that fire. Ignoring the fact that they expressly permitted those bonuse payments, they began railing against "bonuses" to "executives" at AIG too.

Mixing terminology is another thing Congress does well, since those "bonuses" are not really "bonuses" and the majority of people getting those bonuses are not "executives" but rather technical staff, analysts, assistants, in-house counsel, etc.

Then the House passed legislation on Thursday to impose a 90% surtax on bonuses granted to employees with household income of more than $250,000 at companies that received at least $5 billion from the government's financial rescue program.The Senate is considering a similar plan that could be up for a vote as soon as next week.

Let's follow the bouncing ball. First, the tax is on HOUSEHOLD incomes over $250,000. That covers a whole host of families. Two professionals, a nurse and a lawyer; a stock broker and a teacher.

Second, almost everyone on Wall Street has a compensation package that is salary plus "bonus." Wall Street structures its compensation packages this way intentionally. You see, they don't pay the "bonus" until March of the following year. Not only do they keep the float on the employee's money for the extra months, if you are not at the firm when the "bonus" is paid, you don't get it. So, folks stay until bonuses are paid in March. By then, the employee has worked three months, receiving a vastly reduced "salary" and is 1/4 of the way towards earning next year's bonus. Makes it hard to quit, since you will lose 1/4 of your compensation if you do. And round and round it goes.

Back to the tax. The tax applies to any bonus paid to any employee of any company who received more than $5 billion from the TARP funds, which includes Citi, JPMorgan, BofA, Goldman Sachs Group Inc., Morgan Stanley, PNC Financial Services Group Inc. and U.S. Bancorp.

Morgan Stanley staff gets paid salary plus bonus. Secretaries, IT folks, internal accountants, attorneys, all get bonuses as part of their overall compensation. It is almost guaranteed that most of those folks who are married with a working spouse make over $250,000 a year, combined. It's relatively easy, given the cost of living in a major city these days. An in-house attorney makes something on the order of $200,000. Her husband probably makes over $100,000 and BAM, they get hit with a 90% tax on her bonus, and she has absolutely nothing to do with the bank's current problems. Some of the IT professionals make over $200,000. Same situation. There are assistants who make significant amounts of money working at these firms, who get paid with a bonus, and the government is going to tax them too at 90%.

Congress cannot possibly justify this. They have created this mess and they are now pandering to the public. AND, they are too lazy to write a bill that actually addresses what they are trying to address. While I wouldn't agree with it, if you want to get the bonuses that were paid to executives, use the power of additional TARP funds to do it, not the tax code.

If you want to use the tax code, then apply the tax to bonuses over one million dollars. I would still have a huge problem with that, but you would not be taking money from the innocent secretary, bookkeeper and IT guy.

Don't believe it? Read it yourself, it's only one page long - The House Bonus Bill

Madoff's accountant has been charged with securities fraud and related charges arising from an alleged failure to conduct audits.

They are NOT charging him with knowing of the scheme, but rather for falsely certifying that he audited the financial statements.

Interesting legal distinction, undoubtedly the same punitive result, cumulative maximum sentences are 105 years.

The SEC also filed a civil suit against him.

Accountant Charged in Madoff Ponzi Scheme

Dreier’s Lawyer Expects Guilty Plea

Enough with AIG, Dodd, politicians and Madoff.

Various news sources are reporting speculation that Marc Dreier is going to plead guilty to money laundering charges, and that creditors are contemplating suits against Dreier's "partners."

Dreier’s Lawyer Expects Guilty Plea; Firm Lawyers at Risk in Bankruptcy Case

Liddy Says Geithner Knew About Bonuses

AIG Chief Edward Liddy says that Geithner knew about the pending bonuses to its employees as far back as November 2008 when he was the Federal Reserve Chairman. This directly contradicts the timeline put forward by Geithner and the Administration,who claims that they only found out this month.

OK, which one is it. Did Geithner know about the bonuses in November, and is simply conducting an outrageous diversion for the public's amusement, or is he a dolt who didn't know until last month. Either one is not good, but if we are going to get into a situation where another Administration starts lying to us, there is going to be a severe collapse of confidence by the American public, the likes of which we have never seen.

The reality is that Geithner screwed up. I understand, or as our President says "I get it." There are thousands of employees at AIG, thousands of employees with different compensation packages. What undoubtedly happened is during the original TARP discussions and Geithner's involvement under the Bush Administration, the focus was on the "big" compensation packages, not the hundreds of others. (Keep in mind that the $165 million we are talking about, while a huge amount of money, is less than 1% of the 170 billion that AIG has received),

I get it. You were not looking at compensation packages that constituted less than 1% of the total bailout. I understand. In the grand scheme you were saving the country and the economy, and in context, $165 million was not a big deal. Completely understandable.

So why are you now screaming about AIG taking the bonuses, when you have already acknowledged that the amount of the bonuses is insignificant in the grand scheme of things?

You are not a liar, you are a politician doing what politicians do far too often. Pandering.

USNews.com has the details - AIG Chief, White House Statements At Odds?

Naked Short Sales Hint Fraud in Bringing Down Lehman

As many as 32 million shares of Lehman were sold and not delivered as of the day of Lehman's demise, indicating the potential for a massive naked short of the stock.

Naked shorting is illegal. While shorting a stock (selling it without owning it) is legal, the seller must borrow the stock from someone else, and deliver the stock that he sold to the borrower.

Unfortunately, those who complain about naked short selling have become the boy who cried wolf, since so many CEOs claim it is occurring, but are never able to prove that it is occurring.

However, with Lehman, the proof may be available. According to Bloomberg News, the 32 million fails to deliver were more than a 57 fold increase over the prior year's peak in fails.

Naked Short Sales Hint Fraud in Bringing Down Lehman - Bloomberg.com

AIG Executive Start Returning Bonuses

Good for them. More honorable than the politicans...."Under intense pressure from the Obama administration and Congress, the head of bailed-out insurance giant AIG declared Wednesday that some of the firm's executives have begun returning all or part of bonuses totaling $165 million."


http://news.yahoo.com/s/ap/20090319/ap_on_go_co/aig_outrage_168