# Bernie Madoff died behind bars



## james4beach (Nov 15, 2012)

Madoff died at 82 while serving his 150 year prison term.

Meanwhile the creators of Bitcoin and other crypto scams continue to roam free! And the mainstream media even advertises their schemes and participates in the "pump".


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## sags (May 15, 2010)

Bitcoin is the biggest scam of all time.

No.....it isn't a ponzi scheme. It isn't a pyramid scheme. It is a straight out fraudulent scam.


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## ian (Jun 18, 2016)

Madoff had bad luck and too much publicity. Most of the ponzi schemers where we live did 3 years at most in jail before parole. In a medium or minimum security environment prison to boot And ruined the retirement of hundreds.

Just goes to show....don't hold up a 7-11 or boost a car. Do it right. Buy a good suit and steal millions. You will be out in no time. Just stash the money somewhere safe out of the country.

Or...if you happen to wear a dog collar or are in the holier than thou group you might get away with only a securities commission fine and a wrap on the knuckles.


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## bigmoneytalks (Oct 3, 2014)

sags said:


> Bitcoin is the biggest scam of all time.
> 
> No.....it isn't a ponzi scheme. It isn't a pyramid scheme. It is a straight out fraudulent scam.


Please explain how it's a scam? I see it as an alternative to gold and the ability to move the world towards the digital era.


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## sags (May 15, 2010)

It is easier to explain why people buy crypto. They want to make money off it.....and that is about it.


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## :) lonewolf (Feb 9, 2020)

james4beach said:


> Madoff died at 82 while serving his 150 year prison term.
> 
> Meanwhile the creators of Bitcoin and other crypto scams continue to roam free! And the mainstream media even advertises their schemes and participates in the "pump".


The fed is public enemy number one. Those that control the money supply rule over the world including Kings, Presidents & armies. The fed is using the scamdemic to kill the world economy flood the world with debt so they can own it all


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## ian (Jun 18, 2016)

Madoff is the exception. In Canada, most of them are back on the street after two or three years.

It is easy pickins'. There will always be people who fall for the no risk 20-30 and more percent 'guaranteed' return on their life savings.


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## MrMatt (Dec 21, 2011)

bigmoneytalks said:


> Please explain how it's a scam? I see it as an alternative to gold and the ability to move the world towards the digital era.


It's only an alternative as long as people believe in it, just like any fiat currency.
When people stop believing, it will fail.

The argument for why it's better is that the amount in circulation is known, and there is nobody deciding to suddenly print themselves a bunch of money (like governments do). So arguably it's better than fiat currencies, and in theory I actually agree. However practically in the short term, Canadian dollars, as illusory as their value is, are a more practical tool for me.

I don't see the case to value Bitcoin. Though I have used Litecoin to make purchases and honestly, it has been very nice and well executed IMO. 

I think the platform coins (ADA, ETH) are more interesting, and more valuable.
I think Monero is an interesting privacy coin, but that's the one regulators are gunning for (because it's private)


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## :) lonewolf (Feb 9, 2020)

ian said:


> Madoff is the exception. In Canada, most of them are back on the street after two or three years.
> 
> It is easy pickins'. There will always be people who fall for the no risk 20-30 and more percent 'guaranteed' return on their life savings.


The trials need to be outside of New York. How many times has JP Morgan been caught rigging the metals market? No one ever goes to jail just fined for the cost of doing business.


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## james4beach (Nov 15, 2012)

ian said:


> Madoff is the exception. In Canada, most of them are back on the street after two or three years.
> 
> It is easy pickins'. There will always be people who fall for the no risk 20-30 and more percent 'guaranteed' return on their life savings.


It's true. Canada is terrible in prosecuting financial criminals. Partly it's because we don't have a good national securities regulator but there's probably more to it.


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## Ponderling (Mar 1, 2013)

Interesting case updated a few days ago in TGAM about Toronto area finance fraud - two promoters did not get the residential developments they were hyping money for under way, and now the investment co (maybe serialized mortgage co ) are suing saying if no developments where did the money go. 

Request for document exploration has been ignored, so judge said a few months ago lets get this going, and I will be involved. 

Now still no progress so judge fines these two jokers the 9M they are being sued for to try to light a fire on getting them to stop stone walling the case, and has I believe has also also threatened jail time if the fine is not paid.


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## nathan79 (Feb 21, 2011)

james4beach said:


> It's true. Canada is terrible in prosecuting financial criminals. Partly it's because we don't have a good national securities regulator but there's probably more to it.


It's hard to prosecute them when they're in charge of the government (Trudeau) and the BoC (Tiff Macklem).


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## kcowan (Jul 1, 2010)

I consider all stocks not supported by their earnings to be in the pump category. As long as there are more willing buyers, the price goes up.,I have participated in a few when working. Now I even stay out of gold!


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## james4beach (Nov 15, 2012)

I've been reading some of the old stories about Madoff. It really makes you worry. He built his firm (the fund company) into a very large company, with $65 billion in assets under management. He worked with a major US bank. Many wealthy and intelligent people had bought his funds.

How would we know if some place like Mawer or Beutel Goodman, mid sized private investment firms, might be a fraud? Yes they have billions of dollars in the funds, but that doesn't matter.

Has anyone here noticed any warning signs, whatsoever? I think it's very worthwhile being vigilant about this. We _should_ think hard about this stuff.

Mawer claims that the fund assets are held with the custodian, State Street Trust Company of Canada. *How can an investor verify that this is true?* I would love to know if State Street can verify that yes, they do hold $X billion in AUM for Mawer funds.

And yes it absolutely is worth verifying this! Madoff's funds were supposed to be held with a custodian called Westport National, which is a real bank. And yet... there were no stocks! The custodian didn't check up on Madoff and said it wasn't their job to keep on top of this. It's shocking but it happened in the US and can obviously happen in Canada.

So what kind of things might be worth checking into? To start with, I'd like to find out if State Street Trust Company of Canada _actually holds_ the assets they should be holding for the Mawer funds. I'd like to make sure that they aren't pulling a Westport National.

I want to remind everyone that CIPF does not protect us against fraud.

Is it possible to contact KPMG, the auditor for the Mawer funds, and ask them whether they verified that the stocks & bonds exist with the trustee? Maybe a lawyer can make an inquiry like this?

Also remember that all the major auditing firms, KPMG, PricewaterhouseCoopers, BDO, had all looked at and approved Madoff funds. This shows us that auditors are actually pretty useless, and don't really put any effort into verifying records. Just shocking.


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## james4beach (Nov 15, 2012)

Ideally it would be good to look up every Mawer employee in a Canadian database relating to financial fraud or complaints (including things like industry-specific complaints or actions), plus searching for any previous criminal or civil charges, and of course any convictions.

The only thing I found so far is a lawsuit where a Mawer executive sued a municipality over a personal property assessment, which obviously is fine. But that's the kind of thing I would like to dig up, to see if any of their employees (especially management) have been involved in shady activities or have had any legal trouble in their past.

If anyone wants to try this, some places to google for financial crooks are:
fpcanada.ca
mfda.ca
IIROC


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## Beaver101 (Nov 14, 2011)

james4beach said:


> I've been reading some of the old stories about Madoff. It really makes you worry. He built his firm (the fund company) into a very large company, with $65 billion in assets under management. He worked with a major US bank. Many wealthy and intelligent people had bought his funds.
> 
> How would we know if some place like Mawer or Beutel Goodman, mid sized private investment firms, might be a fraud? Yes they have billions of dollars in the funds, but that doesn't matter.
> 
> ...


 ... you do realize that the above exercise(s) *could *open a GIGANTIC can of worms, if fraud is found. Never mind about your average investor's concerns, the pensioners first are going to flip out.


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## gardner (Feb 13, 2014)

james4beach said:


> Canada is terrible in prosecuting financial criminals.


Is that really true? Compared to, say, Germany or New Zealand?

It's not reasonable to compare to the US, even if that is your instinct. The US leads the world in incarceration rates per capita, even beating out Russia, Cuba, China and Thailand. And not by just a little. Maybe the justice system for white collar crime in the US is a little more sensible than for drugs or violence, but it's certainly still more draconian than in most places. The fact that Madoff got a long sentence probably speaks more to the lobbying power of private prisons than to any intrinsic justice gap with the civilised world.


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## james4beach (Nov 15, 2012)

Beaver101 said:


> ... you do realize that the above exercise(s) *could *open a GIGANTIC can of worms, if fraud is found. Never mind about your average investor's concerns, the pensioners first are going to flip out.


Can of worms or not, it's far better to do some checking and make sure we're on solid ground, instead of "taking it on faith" like Madoff investors did.

Some of my family members have invested a lot of money with Mawer. Personally I think it's worth poking around to find out if there are any warning signs. I have not seen any warning signs myself, but it remains a concern in my mind.

I would think others on here share similar concerns, with how many of us around here hold Mawer funds. I have the same concern about any mid sized fund house, such as Beutel Goodman.


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## Beaver101 (Nov 14, 2011)

james4beach said:


> Can of worms or not, it's far better to do some checking and make sure we're on solid ground, instead of "taking it on faith" like Madoff investors did.
> 
> Some of my family members have invested a lot of money with Mawer. Personally I think it's worth poking around to find out if there are any warning signs. I have not seen any warning signs myself, but it remains a concern in my mind.
> 
> I would think others on here share similar concerns, with how many of us around here hold Mawer funds. I have the same concern about any mid sized fund house, such as Beutel Goodman.


 ... looking for a "volunteer" (or a team) will be like finding that impossible needle in a haystack. And I'm willing to bet a TH donut that there'll be a lawyer (or team) who would be remotely even be interested in doing this ... even on a contingency basis.


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## james4beach (Nov 15, 2012)

Beaver101 said:


> ... looking for a "volunteer" (or a team) will be like finding that impossible needle in a haystack. And I'm willing to bet a TH donut that there'll be a lawyer (or team) who would be remotely even be interested in doing this ... even on a contingency basis.


I'm just brainstorming for ideas. It's not easy to know if we're investing in a legit place. It's an incredibly difficult problem... I'm just suggesting we share some ideas of what things a person might look into, if they want to know that their fund/firm is legit.

If this was easy to figure out, then people would have uncovered the Madoff scam long ago. Nobody did. This is obviously an incredibly difficult problem, because con artists and fraudsters hide in plain sight and are trusted.

My dad lost a lot of money to the Crocus Fund scam in Manitoba. My aunt lost a lot of money to the Bre-X scam. Now I have other family members heavily invested in Mawer. I don't want to have another one of these things happen to our family.


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## Beaver101 (Nov 14, 2011)

^


> ... My dad lost a lot of money to the Crocus Fund scam in Manitoba.


 ... if there's anything positive(s) that came out from that fund (including all LVSCC) are the (immediate) qualifying tax credits and the fact that investors of that fund were "supporting" legit businesses in its province. Like any business survival, its how management handles the business that makes all the difference IMO or from the bottom quote of this link:


> Crocus Investment Fund - Wikipedia
> 
> _By all reasonable measurements, Crocus was an unparalleled success story that created jobs and wealth in Manitoba…. *When it ran into trouble, there were more than enough people willing to turn their backs and let it slide into oblivion.*
> 
> Because in this town, that’s apparently what happens to successful people._[15]





> My aunt lost a lot of money to the Bre-X scam.


 ... and who was she listening to invest in that scam? This is no different from the recent frenzy of GME, Bitcoin resurrection, lithium stocks, and countless others.




> Now I have other family members heavily invested in Mawer. I don't want to have another one of these things happen to our family.


 ... I don't think you would be the only one concerned but as a "tiny" potato-chip, what can you actually do? [Not that there is anything wrong about brain-storming for ideas.] I think this is *beyond* a "David taking on Goliath" task.


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## GreatLaker (Mar 23, 2014)

One of the tells that Madoff was a scam was its returns were very stable, always on a steady upward trend no matter what the market did. I imagine newer ponzi schemers are more sophisticated, to avoid detection.

Harry Markopolos


> From 1999 to 2008, Markopolos uncovered evidence that suggested that Bernie Madoff's wealth management business was a huge Ponzi scheme. In 2000, 2001, and 2005, Markopolos alerted the U.S. Securities and Exchange Commission (SEC) of his views, supplying supporting documents, but each time the SEC ignored him or gave his evidence only a cursory investigation
> 
> When Markopolos obtained a copy of Madoff's revenue stream, he spotted problems. The biggest red flag, he believed, was that the return stream rose steadily with only a few downticks — represented graphically by a nearly perfect 45-degree angle. According to Markopolos, anyone who understood the underlying math of the markets would have known that such a return stream "simply doesn't exist in finance," since the markets were too volatile even in the most favorable conditions for this to be possible. Based on this and other factors, Markopolos eventually concluded that Madoff could not mathematically deliver his purported returns using the strategies he claimed to use. As he saw it, there were only two ways to explain the figures: Madoff was either running a Ponzi scheme (by paying established clients with newer clients' money) or front running (buying stock for his own and the hedge fund's accounts, based on insider knowledge about market impacts from about-to-be-executed client orders at his company's unrelated broker-dealer business).


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## james4beach (Nov 15, 2012)

Beaver101 said:


> ... and who was she listening to invest in that scam? This is no different from the recent frenzy of GME, Bitcoin resurrection, lithium stocks, and countless others.


This one was similar to Bitcoin kind of scams. She listened to stupid ideas from coworkers.



Beaver101 said:


> ... I don't think you would be the only one concerned but as a "tiny" potato-chip, what can you actually do? [Not that there is anything wrong about brain-storming for ideas.] I think this is *beyond* a "David taking on Goliath" task.


One person (me) doing some investigation might find something, but it's unlikely. 10 people doing some investigating has a better chance of finding something. But if you get 100 people doing some digging around, some of who actually have connections and resources in Calgary, perhaps you'd actually find something.

The next time I can get to Calgary, I plan to visit their offices and sniff around in person a bit. I'll meet some people and try to get a read on them.

I can give you a great example of why this is worthwhile. There was a crypto currency scam in Canada called QuadrigaCX that was mentioned at CMF a few years ago. One night after work, I went digging and investigating entirely on my own. I found that they had a presence in a Caribbean island. I discovered that they used a bogus address in Vancouver, and I shared my findings that they "raise all the red flags" and fail the "sniff test". It turned out to be a huge scam. Here was my initial poking around a year before it was exposed as a con. Am I good or what?

The RCMP and FBI have been looking into them ever since. Police are reactive, and come after the fact. You've got to put in extra work and be proactive, to avoid scams in the first place.

I continue to do my own digging and hope that others here will too. It's in all of our interests to make sure the firms we deal with are legitimate. Most likely, Mawer is perfectly legit in which case there is nothing to be found.


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## james4beach (Nov 15, 2012)

Related: Victims of Ponzi scheme call for reopening of probe into offshore money transfers

This was a $500 million fraud out of Montreal. It used Canadian shell companies operating in a foreign tax haven. There's an allegation that KPMG was involved in helping set up offshore companies, but KPMG disputes that claim.

The article notes that the RCMP is not equipped to handle investigations like this, and accounting firms like KPMG can't be relied on. A similar problem happened with Enron and Madoff as well, where major accounting firms were involved, looked at the frauds, but did not identify or stop them.

What 'keeps me up at night' is that law enforcement isn't great at catching these, and auditing firms seem to be pretty useless (or even complicit in crimes). So there really are very few safeguards and a lot of these criminals end up escaping.

To a large extent, investing is a "caveat emptor" situation.


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## Beaver101 (Nov 14, 2011)

^ Will get back to you on above posts, particularly #23.

Not forgotten. 

Am I surprised with the minimal response on this topic considering how many industry professionals would be reading it. Maybe this thread is on their ignore list.


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## andrewf (Mar 1, 2010)

ian said:


> Madoff is the exception. In Canada, most of them are back on the street after two or three years.
> 
> It is easy pickins'. There will always be people who fall for the no risk 20-30 and more percent 'guaranteed' return on their life savings.


Madoff preyed on other wealthy individuals, rather than the usual middle class victims. That was unforgiveable.


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## :) lonewolf (Feb 9, 2020)

Hope the right people being put in prison & not their clones.


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## james4beach (Nov 15, 2012)

Beaver101 said:


> ^ Will get back to you on above posts, particularly #23.
> 
> Not forgotten.
> 
> Am I surprised with the minimal response on this topic considering how many industry professionals would be reading it. Maybe this thread is on their ignore list.


I'm also surprised with the minimal response. Many people here invest with Mawer and I would think they share this concern. Or maybe people are just confident that all is well & good?

Given the history of white collar crimes and investment scams in Canada, I still think it's worthwhile to do a little extra digging and be extra cautious. Usually there are warning signs of one form or another.

Myself, I haven't seen any warning signs at all, but I'm continuing to dig and am debating hiring a Private Investigator. I'm just asking that others keep their eyes & ears open as well and don't just assume everything is fine. Same for other smallish companies like Beutel Goodman, Leith Wheeler, Steadyhand.

One thing we do know from history is that investment scams usually benefit from personal recommendations. Someone else endorses it, the new investor feels at ease, and then lets down their guard. When frauds like Madoff exist, they exploit this "social network" of personal recommendations. Let's just make sure this isn't happening here.


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## james4beach (Nov 15, 2012)

One of my friends is a retired investigator with the SEC, and I had a chance to talk with him recently about this. He doesn't know the Canadian system but he gave me some neat ideas to try.

Here's a simple one that I thought was pretty nifty. To help verify that a fund or institution does actually own what they claim, one can look through their fund holdings and find large positions. Then, one can cross-check this by looking at the ownership data of those stocks. For example, Mawer Canadian Equity reports that they have a large position in Finning International, based on their fund's financial statements.

I then checked in the reverse direction, for example here, which indeed shows Mawer as a major holder. I spot checked several of Mawer's large stock holdings and confirmed that the reverse direction matches up, and that the # of shares is consistent as well.

Does anyone know of another reliable source for Canadian stock ownership data, besides Morningstar? Does SEDAR track major holders?


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## Beaver101 (Nov 14, 2011)

^ That would be one "*major"* screw-up if the annual reports don't declare/reveal holdership/ownership of each other. 

I think to start with one needs an accounting PHD to first sniff "raise" the red flags, and then a legal license (aka a practising lawyer) before taking any action. And throughout, one has to have a tenacity to remain as a pariah.


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## kcowan (Jul 1, 2010)

J4B thanks for the shallow dive on MAW. I do not hold them but know some forum members who,do.


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## james4beach (Nov 15, 2012)

kcowan said:


> J4B thanks for the shallow dive on MAW. I do not hold them but know some forum members who,do.


Thanks. I'll keep digging, because of the interests of some family members. Everything looks solid as far as I can tell.


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