As Koch brothers cling to Madoff cash, a new legal battle arises

[meow2u3]

Billionaire brothers Charles and David Koch have made plenty of good business decisions over the years. Placing millions of dollars with Ponzi-scheme mastermind Bernard Madoff may have been one of them.

Koch Industries Inc. invested an unknown sum with the con man's now-defunct securities firm years ago, and walked away with $21.5 million in profits before Madoff's arrest in 2008. But since 2012 the company run by the conservative-activist brothers, worth today a combined $109 billion, has refused legal demands to return the money.

Irving Picard, the trustee liquidating Madoff's firm, contends in a suit that the cash is fraudulent proceeds of the fraud and should be shared among the thousands of victims. Koch Industries, and dozens of other early investors named in 87 other lawsuits, argue the company can keep the profits because the money was sent overseas and is beyond U.S. jurisdiction. At stake: a total of $2 billion.

http://www.chicagotribune.com/business/ct-koch-brothers-madoff-20160603-story.html

The Kochs belong in prison, just like Madoff, because if this can be proven, they're accessories to Madoff's Ponzi scheme. Let's hope this can bring them down and expose them as the criminals they are.

[laserhaas]

1. This is why the Caymans were known as an organized criminal cash haven

But that was prior to the digital age.

Courts don't have jurisdiction (unless granted by the sovereign) over what may lay in a foreign land;
but Article III courts always has jurisdiction in the U.S. - and can order the Kochs to cough up

or they cannot pass any go's - except to jail

[leveymg]

2. The Koch Brothers cashed out of Bernie Madoff's scheme in 2005 before the scam imploded

Last edited Sat Jun 4, 2016, 11:28 AM - Edit history (3)

So, what did the Right-wing Uber funders know about Bernie Madoff's scam that other investors, some of whom lost their life savings, didn't? This is interesting.

Koch Industries Inc. invested an unknown sum with the con man's now-defunct securities firm years ago, and walked away with $21.5 million in profits before Madoff's arrest in 2008. But since 2012 the company run by the conservative-activist brothers, worth today a combined $109 billion, has refused legal demands to return the money.

Irving Picard, the trustee liquidating Madoff's firm, contends in a suit that the cash is fraudulent proceeds of the fraud and should be shared among the thousands of victims. Koch Industries, and dozens of other early investors named in 87 other lawsuits, argue the company can keep the profits because the money was sent overseas and is beyond U.S. jurisdiction. At stake: a total of $2 billion.

http://www.chicagotribune.com/business/ct-koch-brothers-madoff-20160603-story.html

Contrary to the Koch spokesman misinformation reported vebatim in the Tribune report, but not corrected, Madoff's scam was already known to some in the SEC, which took no public action, and to well-connected hedge funds on Wall Street.

Koch Industries has said the suit lacks merit. "The Koch entity involved made an investment in an entirely separate fund," Koch spokesman Rob Carlton said in an email. "That Koch entity no longer exists, and its investment was redeemed in 2005, long before anyone knew of Madoff's fraud." The Koch brothers are controlling shareholders in the company, and have other investors.

Gotta wonder if the Koch fund that was moved safely off-shore is one of these hedge funds, and what the Koch and others knew early on about Madoff and the crooked balance sheets of other money managers.

Here's a report from the WSJ about that: http://www.wsj.com/articles/SB125211472134588207

SEC Caught Madoff in Lies in 2005 Exam
By Kara Scannell
Updated Sept. 4, 2009 9:46 p.m. ET

The Securities and Exchange Commission caught Bernard Madoff in lies during a 2005 examination and found him belligerent, but didn't pursue details that could have uncovered his fraud, an inspector general's report found.

The examination, prompted by suspicions raised by a hedge fund, was one of the most extensive looks by regulators at Mr. Madoff's money-management firm. It is one of the missed opportunities discussed in a report released Friday by the SEC's inspector general, David Kotz.
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Examiners spent two and a half months working inside Mr. Madoff's firm on the 16th floor of a Midtown Manhattan office tower known as the Lipstick Building. Their sole contact was Mr. Madoff, even though his firm had several compliance officers.
Read the Report

Read the SEC's 477-page internal audit at SEC.gov (4 MB)

More

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Complete Coverage: WSJ.com/Madoff

The report says SEC examiners from the New York office found this "odd" and also recalled that Mr. Madoff was trying to manipulate the investigation and its focus.

At times, the money manager was a good storyteller, while at other times he grew frustrated, according to the report. One examiner recalled that Mr. Madoff's veins were popping out of his neck.

Mr. Madoff operated his business on the 16th and 17th floors. The SEC examiners said they spent all of their time on the 16th floor where Mr. Madoff's market trading business operated. Examiners said they never knew that Mr. Madoff used the 17th floor to run the firm's money management business, and instead thought it was a back office, the report said.

The SEC examiners never asked to go to the 17th floor and never asked to speak with anyone responsible for the money management business, the report said.

During the examinations, Mr. Madoff told the SEC he wasn't managing any money, yet two news articles said that he was managing money for hedge funds.