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The Vast Amount That We Don't Know About The Madoff Matter.

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Where did all the money go? This is another unknown. It was said at the hearing that the Probation Office, which submitted a lengthy but confidential report prior to sentencing, claimed the money was used up in redemptions. But how can we be confident the Probationary Office knows anything. Its report was the same one that recommended Madoff be given only 50 years -- bah. More to the point, it also said, according to statements at the sentencing hearing, that only 13 billion dollars was lost -- even Judge Chin did not believe that. He said he thought the Probationary Office had ignored money invested through feeder funds.

So where did the money go? The government made clear last week its belief that over the years 170 billion dollars had moved through Madoff. This obviously is a staggering sum of money. Supposedly (at least according to the Probation Office), it was all redeemed, except for what Madoff kept for himself and what little was left at the end. Maybe that is what happened, but who is going to believe it until it is proven to be the case? If you ask me, it is more likely that there was someone else involved in the deal who got a lot of the money -- some think the American mafia, some think the Russian mafia, some think the Mossad and/or the CIA, some think others. Some think a lot of the money is still in banks overseas and one wonders about all the excess billions withdrawn by Picower -- where, or to whom, did that money go. The only fact currently known is that we dont know what happened to all the money. And we are not going to know until a lot more information becomes public.

Then there are the questions of how did Madoff get the SEC and the IRS to play ball with him, not to mention FINRA and, before that, FINRAs predecessors. The SEC not only ignored Markopolos, as well as warnings issued, we are learning, by some of its own lawyers, but, in an act which securities lawyers tell me it never commits, the SEC also announced publicly in 1992 that there was nothing to indicate fraud. Securities lawyers say the SEC never does this; rather it merely closes investigations and, if someones reputation has been harmed because the existence of an investigation leaked out, it may give the person a no action letter which he can then use as he wishes. So how and why did the SEC -- what did Madoff do to get the SEC -- to publicly say there is nothing to indicate fraud. That public statement sucked in people (myself included) ever afterwards: it sucked in people when they transferred money from Avellino and Bienes to Madoff in 1992 and 1993, when they subsequently invested with Madoff for the first time, when they added money to their accounts in later years, when people later decided to leave money in Madoff rather than investing at least part of it elsewhere (all of which is of no consequence to mainstream media anti-victim bigots like Joe Nocera). To some people, the SECs public statement was so important that, as they have said in affidavits being submitted to the SECs Inspector General, they marked up, kept and/or still have the 1992 newspaper articles detailing the clean bill of health given Madoff by the SEC. But how Madoff procured this false, unprecedented, unique, and crucially important statement of a clean bill of health from the SEC is something we do not know.

Nor do we know where Madoff, in 1992 (over a weekend, one gathers), got the money -- over 400 million dollars -- that he allegedly would return to customers of Avellino and Bienes if the customers ultimately wished the return of their money, nor how many of the customers did not wish this but instead, because of the SECs statement of a clean bill of health, transferred their accounts from Avellino and Bienes to Madoff himself.

Perhaps the SECs Inspector Generals Report will answer these questions. It remains to be seen.

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Lawrence R. Velvel is a cofounder and the Dean of the Massachusetts School of Law, and is the founder of the American College of History and Legal Studies.
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