http://wsws.org/articles/2010/dec2010/mado-d18.shtml
Madoff lawsuits charge JPMorgan and HSBC with complicity in Ponzi scheme
By Andre Damon
18 December 2010
Two years after the arrest of Bernard Madoff, ample evidence has emerged that a substantial number of major financial institutions profited from and knowingly facilitated his Ponzi scheme.
Irving H. Picard, the trustee for the investors who were defrauded by Madoff, filed a lawsuit against JPMorgan Chase on December 2 alleging that the bank knew that Madoff’s transactions were fraudulent but continued doing business with him.
“While many financial institutions enabled Madoff’s fraud, JPMC [JPMorgan Chase] was at the very center of that fraud and thoroughly complicit in it,” said David J. Sheehan, an attorney for Picard and a partner at Baker & Hostetler LLP, the trustee’s court-appointed counsel.
Madoff pled guilty on March 12, 2009 of operating a Ponzi scheme for more than a decade that masqueraded as an investment firm. He admitted that for years he had not invested the money of his clients. Instead, in classic Ponzi fashion, he paid dividends from funds provided by new investors. Madoff, 71, is currently serving a 150 year sentence.
The total in losses from his scam is now estimated at $20 billion.
Picard had a deadline of December 15 to present all of his charges. He had spent the previous two years gathering information to support the lawsuits.
Instead of making trades with the money he received from investors, Madoff simply deposited the funds in an account at JPMorgan Chase, from which he paid dividends. He was able to maintain the scheme as long as he continued attracting investors. This inflow, however, fell off sharply after the September 2008 financial panic, making it impossible for Madoff to keep paying his clients.
“JPMC was BLMIS’ [Bernard L. Madoff Investment Securities’] primary banker for more than 20 years and was responsible for knowing the business of its customers—in this case, a very large customer,” said Sheehan. “Madoff would not have been able to commit this massive Ponzi scheme without this bank. JPMC should pay the price for its central role in enabling Madoff’s fraud.”
Picard alleges that JPMorgan made $1 billion in fees and profits from its role as Madoff’s main banker and is seeking to recover an additional $5.4 billion in damages as part of the lawsuit.
In a press release issued earlier this month, Picard wrote: “JPMC had clear, documented suspicions about the legitimacy of BLMIS’ operations. Instead of acting on that information, it simply continued to collect fees and profit from the fraud.”
Picard has filed the complaint with the bankruptcy court but it has not been publicly released because JPMorgan claims it contains confidential information. “While JPMC may want to hide the full extent of its significant role in the Madoff fraud from the public, we intend to move to have the complaint made public as soon as possible,” Picard said.
Picard also filed a $9 billion lawsuit against London-based HSBC on December 5, claiming that HSBC “enabled Madoff’s Ponzi scheme through the creation, marketing and support of an international network of a dozen feeder funds based in Europe, the Caribbean and Central America.”
The bank “earned hundreds of millions of dollars by selling, marketing, lending to and investing in financial instruments designed to substantially assist Madoff by pumping money into BLMIS and prolonging the Ponzi scheme,” according to Picard.
Although the complaint against JPMorgan Chase remains under seal, elements of its likely contents emerged earlier this year in the form of 500 internal JPMorgan documents leaked to the French weekly L’Expresse.
Among the documents is a report, dated October 2008, in which the bank notes that “the investment performance achieved by it’s [Madoff’s] funds, which is so consistently and significantly ahead of its peers year-on-year, even in the prevailing market conditions, appears too good to be true, meaning it probably is.”
The report was filed with the UK’s Serious Organized Crime Agency in October 2008 after employees of a JPMorgan subsidiary in Europe were threatened with violence for attempting to withdraw holdings from a Madoff-related fund. A representative of Aurelia Finance, a Geneva firm acting as an advisor to one of Madoff’s feeder funds, said that its “Colombian friends” would “create havoc” if the JPMorgan employees withdrew the money. JPMorgan did not file a similar report with US regulators.
Last year, a Palm Beach, Florida partnership that lost $12.8 million in Madoff investments filed a lawsuit claiming that JPMorgan “quietly liquidated its entire $250 million cash position” with Madoff before his fraud became public, while helping him to continue to defraud investors.
“Rather than protect other victims of Madoff’s fraud as it had already protected itself, Chase chose not only to protect Madoff but to partner with him in the fleecing of his victims by providing exactly the same range of services, for substantial fees, after learning of his criminal enterprise,” the Florida firm said in a press release.
The case was thrown out by US District Judge Barbara S. Jones in New York, who said the “plaintiff alleges no facts to demonstrate” that JPMorgan did actually make a discovery of fraud. The ruling is contradicted by evidence presented by L’Expresse and other news sources that JPMorgan strongly suspected Madoff’s business was fraudulent.
Particularly striking is the fact that the bank account in which Madoff held investors’ funds nearly hit zero several times in 2008, a fact that JPMorgan could not have failed to notice, considering that the account had previously held billions.
JPMorgan Chase and HSBC are only two of many banks and hedge funds that suspected Madoff was perpetrating a fraud but continued to direct investors to his operation, raking in fees on his returns.
The suits filed against JPMorgan Chase and HSBC vindicate the analysis of the Madoff scandal made by the World Socialist Web Site from the time of Madoff’s arrest. While the media depicted the big Wall Street firms as shocked and entirely innocent bystanders, the WSWS wrote on December 16, 2008:
“Madoff’s scam could not have been carried out without the complicity of the highest echelons of the financial elite and the government… What is being widely reported as the largest financial fraud in history goes far deeper and extends far wider than the machinations of a single broker and fund manager… To a great extent, the entire economy has been transformed into a giant Ponzi scheme. The collapse of trillions in paper assets will assume ever more malignant forms.”
It is now clear that a decision was made, under conditions of mounting public outrage over the machinations of Wall Street and the government bailout of the banks, to make Madoff, a relative small fry in comparison to the likes of JPMorgan Chase and Goldman Sachs, a sacrificial lamb. It was decided to “throw Bernie to the wolves” in order to focus public anger on him and divert attention from those whose swindling was on a far greater and even more destructive scale.
To this day, Madoff is the only significant Wall Street figure to have been imprisoned as a result of the financial crisis. Angelo Mozilo, the former Countrywide Financial CEO charged with insider trading and securities fraud, recently reached a settlement with the Securities and Exchange Commission requiring only that he pay a fine of $67.5 million, one seventh of his lifetime compensation as head of the country’s biggest purveyor of sub-prime mortgages.
Showing posts with label Bernard Madoff. Show all posts
Showing posts with label Bernard Madoff. Show all posts
Tuesday, December 28, 2010
Thursday, September 3, 2009
How to Smell a Rat
http://www.smell-a-rat.comDid you know that nearly every financial scam, including Bernard Madoff’s $65 billion Ponzi scheme, could have easily been avoided?
Ken Fisher’s bestselling book, How to Smell a Rat, arms you with five simple signs that can alert you to possible scams and help insulate you against financial fraud.
How to Smell a Rat is an informative look at recent and historic examples of fraudsters, how they operated, and how their scams could have been avoided. Page by page, Ken Fisher highlights various features of potential frauds and provides you with an insider’s view on how to spot financial disasters before you become a part of them.
Most investment scams can be easily detected and more easily avoided. While Bernard Madoff may be a criminal, the greater crime is that investors continue to be swindled for no reason. Pick up Ken Fisher’s How to Smell a Rat, and learn how to protect yourself as best you can from financial fraud.
Author: Ken Fisher with Lara Hoffmans
Hardcover: 224 pages
Publisher: Wiley (July 27, 2009)
Language: English
ISBN-10: 047052653X
ISBN-13: 978-0470526538
Wednesday, January 21, 2009
Florida Fund Manager Missing
http://www.bloomberg.com/apps/news?pid=20601087&sid=ampER7T1cKcM
Florida Fund Manager Missing; Clients Say Money Gone
By Saijel Kishan and Susan Decker
Jan. 17 (Bloomberg) -- Arthur Nadel, a hedge-fund manager in Sarasota, Florida, has disappeared and clients are concerned they may have lost hundreds of millions of dollars, according to law enforcement officials.
Nadel, 76, is president of Scoop Management Inc., which oversees funds including Valhalla Investment Partners LP. He was reported missing three days ago after he called his stepson, Geoff Quisenberry, and told him to go to his house where he had left a note, Lieutenant Chuck Lesaltato of the Sarasota County Sheriff’s Office said yesterday in a telephone interview.
Nadel’s wife, Peg, and Quisenberry, were “concerned about his welfare,” Lesaltato said. Nadel had sounded “distraught,” Lesaltato said, citing the note. Nadel’s partner, Neil Moody, said today he believes Nadel is alive and has spoken to his wife since then.
Scoop may have managed as much as $350 million, although “that may be high because performance results were exaggerated,” Moody said in an interview. He said he contracted with Nadel to manage three funds on his behalf, while Nadel alone had three others and did the trading for all six. Moody said he didn’t know anything was wrong until Nadel was reported missing Jan. 14.
Suicide Note
Moody called his broker “and the amount did not jibe with what Mr. Nadel said we had.” As much as $12 million of the Moody family’s money may be lost and how much remains is not known. “It looks very bleak,” Moody said.
Moody said he has sent notes to investors in his three funds alerting them to the possible missing funds.
The note left by Nadel “could be construed as a suicide note, but he’s still alive,” Moody said. “He called his wife a couple of times.” Moody hasn’t read the note and didn’t know the details of the calls between Nadel and his wife.
Nadel was last seen by his wife at 8:45 a.m. on Jan. 14 when he left for work, Lesaltato said. Peg Nadel didn’t answer her home or mobile phone.
Sarasota police opened an investigation yesterday after receiving calls alleging “hundreds of millions of dollars” are missing, Captain William Spitler said in a telephone interview.
Social Circles
The Federal Bureau of Investigation and Securities and Exchange Commission have been called in to investigate, said Sarasota Police Lieutenant Stanley Beishline. The officer said he believes Nadel is alive.
“I think he is, at least until a couple of investors find him,” Beishline said in an interview.
The Herald-Tribune in Sarasota yesterday on its Web site described Nadel as a “prominent player in Sarasota social and philanthropic circles.”
Nadel, who graduated from New York University Law School, was a real estate developer during the 1960s, according to marketing documents for the Valhalla fund, which was incorporated in 1999. The Nadels and others started a firm two years earlier that used computer-generated investment and trading programs, according to the documents. Calls to Scoop’s offices were answered by voice mail.
Scoop provided trading services for Valhalla, Viking and Viking IRA funds under a contract with Moody. Scoop also handled trading for three Nadel funds: Victory, Victory IRA and Scoop Real Estate, Moody said. Moody holds no position in Scoop Management, and was a partner with Nadel only on the Vahalla and two Viking funds.
Fraud
The disappearance of Nadel comes more than a month after Bernard Madoff, 70, was arrested for securities fraud after allegedly using billions of dollars from new investors to pay off older ones.
Madoff told authorities that investors may have lost $50 billion in a “giant Ponzi scheme,” prosecutors said.
Indiana investment adviser Marcus Schrenker was taken into custody by police in Gadsden County, Florida, earlier this week after he allegedly attempted to fake his death in a plane crash and use a motorcycle to escape. Authorities said Schrenker may have defrauded investors through three companies he owns in a suburb of Indianapolis, CNN reported yesterday.
To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net.
Florida Fund Manager Missing; Clients Say Money Gone
By Saijel Kishan and Susan Decker
Jan. 17 (Bloomberg) -- Arthur Nadel, a hedge-fund manager in Sarasota, Florida, has disappeared and clients are concerned they may have lost hundreds of millions of dollars, according to law enforcement officials.
Nadel, 76, is president of Scoop Management Inc., which oversees funds including Valhalla Investment Partners LP. He was reported missing three days ago after he called his stepson, Geoff Quisenberry, and told him to go to his house where he had left a note, Lieutenant Chuck Lesaltato of the Sarasota County Sheriff’s Office said yesterday in a telephone interview.
Nadel’s wife, Peg, and Quisenberry, were “concerned about his welfare,” Lesaltato said. Nadel had sounded “distraught,” Lesaltato said, citing the note. Nadel’s partner, Neil Moody, said today he believes Nadel is alive and has spoken to his wife since then.
Scoop may have managed as much as $350 million, although “that may be high because performance results were exaggerated,” Moody said in an interview. He said he contracted with Nadel to manage three funds on his behalf, while Nadel alone had three others and did the trading for all six. Moody said he didn’t know anything was wrong until Nadel was reported missing Jan. 14.
Suicide Note
Moody called his broker “and the amount did not jibe with what Mr. Nadel said we had.” As much as $12 million of the Moody family’s money may be lost and how much remains is not known. “It looks very bleak,” Moody said.
Moody said he has sent notes to investors in his three funds alerting them to the possible missing funds.
The note left by Nadel “could be construed as a suicide note, but he’s still alive,” Moody said. “He called his wife a couple of times.” Moody hasn’t read the note and didn’t know the details of the calls between Nadel and his wife.
Nadel was last seen by his wife at 8:45 a.m. on Jan. 14 when he left for work, Lesaltato said. Peg Nadel didn’t answer her home or mobile phone.
Sarasota police opened an investigation yesterday after receiving calls alleging “hundreds of millions of dollars” are missing, Captain William Spitler said in a telephone interview.
Social Circles
The Federal Bureau of Investigation and Securities and Exchange Commission have been called in to investigate, said Sarasota Police Lieutenant Stanley Beishline. The officer said he believes Nadel is alive.
“I think he is, at least until a couple of investors find him,” Beishline said in an interview.
The Herald-Tribune in Sarasota yesterday on its Web site described Nadel as a “prominent player in Sarasota social and philanthropic circles.”
Nadel, who graduated from New York University Law School, was a real estate developer during the 1960s, according to marketing documents for the Valhalla fund, which was incorporated in 1999. The Nadels and others started a firm two years earlier that used computer-generated investment and trading programs, according to the documents. Calls to Scoop’s offices were answered by voice mail.
Scoop provided trading services for Valhalla, Viking and Viking IRA funds under a contract with Moody. Scoop also handled trading for three Nadel funds: Victory, Victory IRA and Scoop Real Estate, Moody said. Moody holds no position in Scoop Management, and was a partner with Nadel only on the Vahalla and two Viking funds.
Fraud
The disappearance of Nadel comes more than a month after Bernard Madoff, 70, was arrested for securities fraud after allegedly using billions of dollars from new investors to pay off older ones.
Madoff told authorities that investors may have lost $50 billion in a “giant Ponzi scheme,” prosecutors said.
Indiana investment adviser Marcus Schrenker was taken into custody by police in Gadsden County, Florida, earlier this week after he allegedly attempted to fake his death in a plane crash and use a motorcycle to escape. Authorities said Schrenker may have defrauded investors through three companies he owns in a suburb of Indianapolis, CNN reported yesterday.
To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net.
Wednesday, January 14, 2009
Two more Ponzi schemes uncovered
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5485064.ece
January 10, 2009
Two more Ponzi schemes uncovered
Tom Bawden
The US Government moved to clamp down on fraudulent Ponzi schemes in the wake of the $50 billion (£33 billion) Bernard Madoff scandal, by charging two men for allegedly operating two similar schemes.
The US Securities and Exchange Commission (SEC) charged a fund manager based in the Philadelphia area with operating a $50 million Ponzi scheme, in which he paid off early investors with money from later investors.
In a joint filing, the SEC and the Commodity Futures Trading Commission allege that Joseph Forte, 53, reported consistently strong results to as many as 80 investors even though he routinely lost money, withdrew millions of dollars in personal fees and used recent investors’ contributions to repay earlier backers.
In a separate case, the SEC and the Department of Justice charged Richard Piccoli, an 82-year-old, with running a Ponzi scheme through his companies, Gen See Capital Corp and Gen Unlimited. Mr Piccoli, of Williamsville, New York, raised most of his money from clergy, Catholic parishioners, senior citizens and cemetery funds, many of them recruited through advertisements in Catholic newspapers.
US authorities are keen to be seen to be tackling Ponzi schemes to help to restore confidence among investors, which is fragile as a result of the housing crisis and the credit crunch, in the wake of the Madoff scandal.
They are expected to follow these charges with others as the publicity surrounding the Madoff scandal combines with the increasing scrutiny of potentially similar schemes to flush out further fraudsters.
Joel Cohen, the deputy head of Clifford Chance’s litigation and dispute resolution practice in New York, said: “It’s consistent with previous times when markets are down. The rocks get exposed when the tide has washed away.”
Mr Forte, who is based in Broomall, Philadelphia, has reported annual returns of between 18.5 per cent and 38 per cent since 1995, claming that the profits came from successfully betting on the direction of the Standard & Poor’s 500 index, the complaint said.
In fact, Mr Forte consistently lost money as he racked up trading losses of $3.3 million on the portion of the money he invested, He also withdrew for himself $23.1 million he received from investors , the complaint alleges.
Mr Piccoli’s scheme, which promised to deliver annual returns of at least 7.1 per cent from investing in high-quality residential mortgages, allegedly has taken at least $17 million from investors since 2004. Records show no property transactions, the complaint said.
January 10, 2009
Two more Ponzi schemes uncovered
Tom Bawden
The US Government moved to clamp down on fraudulent Ponzi schemes in the wake of the $50 billion (£33 billion) Bernard Madoff scandal, by charging two men for allegedly operating two similar schemes.
The US Securities and Exchange Commission (SEC) charged a fund manager based in the Philadelphia area with operating a $50 million Ponzi scheme, in which he paid off early investors with money from later investors.
In a joint filing, the SEC and the Commodity Futures Trading Commission allege that Joseph Forte, 53, reported consistently strong results to as many as 80 investors even though he routinely lost money, withdrew millions of dollars in personal fees and used recent investors’ contributions to repay earlier backers.
In a separate case, the SEC and the Department of Justice charged Richard Piccoli, an 82-year-old, with running a Ponzi scheme through his companies, Gen See Capital Corp and Gen Unlimited. Mr Piccoli, of Williamsville, New York, raised most of his money from clergy, Catholic parishioners, senior citizens and cemetery funds, many of them recruited through advertisements in Catholic newspapers.
US authorities are keen to be seen to be tackling Ponzi schemes to help to restore confidence among investors, which is fragile as a result of the housing crisis and the credit crunch, in the wake of the Madoff scandal.
They are expected to follow these charges with others as the publicity surrounding the Madoff scandal combines with the increasing scrutiny of potentially similar schemes to flush out further fraudsters.
Joel Cohen, the deputy head of Clifford Chance’s litigation and dispute resolution practice in New York, said: “It’s consistent with previous times when markets are down. The rocks get exposed when the tide has washed away.”
Mr Forte, who is based in Broomall, Philadelphia, has reported annual returns of between 18.5 per cent and 38 per cent since 1995, claming that the profits came from successfully betting on the direction of the Standard & Poor’s 500 index, the complaint said.
In fact, Mr Forte consistently lost money as he racked up trading losses of $3.3 million on the portion of the money he invested, He also withdrew for himself $23.1 million he received from investors , the complaint alleges.
Mr Piccoli’s scheme, which promised to deliver annual returns of at least 7.1 per cent from investing in high-quality residential mortgages, allegedly has taken at least $17 million from investors since 2004. Records show no property transactions, the complaint said.
‘Broken’ Billionaire Merckle Killed Self, Family Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_C73O_KjPlY
‘Broken’ Billionaire Merckle Killed Self, Family Says
By Aaron Kirchfeld and Sheenagh Matthews
Jan. 6 (Bloomberg) -- German billionaire Adolf Merckle committed suicide by throwing himself under a train, “broken” as his business empire crumbled under a growing burden of debt, his family said.
The 74 year-old businessman was hit yesterday evening near his hometown of Blaubeuren, 44 miles southeast of Stuttgart, a police officer said in an interview. His body was found on the tracks at around 7:30 p.m. about 300 yards from his home and a suicide note had also been found.
Merckle, whose holding company owes banks about 5 billion euros ($6.7 billion), owned stakes in HeidelbergCement AG and drug wholesaler Phoenix Pharmahandel AG. He had been seeking emergency financing for more than two months from a group of more than 30 banks led by Commerzbank AG, Deutsche Bank AG, Royal Bank of Scotland Group Plc and Landesbank Baden-Wuerttemberg.
“The dedicated family businessman was broken by his inability to handle the situation and he ended his own life,” his family said in a statement today. “The distress at his companies caused by the financial crisis and the resultant uncertainty of the last few weeks” contributed to his death, the family added.
Merckle, whose estimated $9.2 billion fortune put him 94th on Forbes’ list of the world’s richest people, was hurt by bets on Volkswagen AG, a drop in the value of HeidelbergCement stock and increasing debt. The family’s spiraling debt threatened holdings including its VEM Vermoegensverwaltung GmbH holding company, which owed the bank about 5 billion euros, people with knowledge of the matter said last month.
‘Falling Apart’
“His empire was falling apart,” said Stefan Mueller, managing partner at Proprietary Partners AG in Frankfurt. “This was his last desperate act.”
Merckle’s empire spanned the cement, machinery and drug industries. VEM said today Merckle’s death would have no effect on the restructuring. Merckle was to get more than 400 million euros in bridge loans to rescue VEM, Financial Times Deutschland reported yesterday, citing unidentified bankers.
“News of Adolf Merckle’s death left me deeply shaken,” Baden-Wuerttemberg Prime Minister Guenther Oettinger said. The state “lost a great entrepreneur.”
In November, the state government signaled it would not assist Merckle after he sought a bailout. His companies employ more than 71,000 people, including 46,000 at HeidelbergCement.
Merckle hired insolvency lawyer Eberhard Braun and threatened to initiate bankruptcy proceedings for VEM unless lenders provided him with restructuring capital, two people familiar with the situation said Dec. 10.
HeidelbergCement, Phoenix
The Merckle family may have to sell stakes in HeidelbergCement, Germany’s biggest cement maker, Phoenix Pharmahandel, a drug wholesaler, and Ratiopharm GmbH, a generic drugmaker as part of a deal with banks, people familiar with the matter said on Dec. 15.
HeidelbergCement fell 8.2 percent to 30.60 euros in Frankfurt trading. The Heidelberg-based company declined 70 percent last year, a fall that led the banks to seek additional financial guarantees from the billionaire.
Born in 1934, Merckle fled in 1945 with his family to Blaubeuren, a city with about 12,000 people in southwestern Germany, from the Sudetenland, the historical border region of the Czech Republic long inhabited by ethnic Germans and seized by the Nazis in September 1938.
Merckle’s grandfather founded a company called Drogen und Chemikalien en gros in 1881 and his father expanded the company after taking the helm in 1915. The company was seized during the Nazi era.
Suicide Note
Merckle, a lawyer whose only luxury was climbing in the mountains, took over the family company in 1967 at a time when it had 80 employees and 4 million deutsche marks ($2.5 million) in sales.
There was no suspicion of foul play and police are certain Merckle committed suicide, a police officer in Ulm said. The suicide note didn’t give any reason for his decision, according to the officer. Ulm prosecutors are investigating as a matter of routine, a step done in any suicide case, he said.
Merckle leaves behind his wife Ruth. He had three sons, Ludwig, Philipp, Tobias and a daughter, Jutta.
VEM was caught in a so-called short squeeze after betting Wolfsburg, Germany-based Volkswagen’s stock would fall. Merckle lost at least 500 million euros on the bets on VW stock, people familiar said on Nov. 18. VEM lost “low three-digit million euros” on VW stock, the company said in November.
Financing Talks
Commerzbank expressed its deep sympathy to Merckle’s family, according to spokeswoman Simone Fuchs in Frankfurt today. She declined to comment about potential implications for talks on a financing deal. RBS had no comment, a company spokeswoman in Frankfurt said. Landesbank Baden-Wuerttemberg spokesman Christian Potthoff in Stuttgart also had no comment.
New York based money manager Thierry Magon de La Villehuchet, 65, who may have lost client funds invested with Bernard Madoff, apparently killed himself in his Madison Avenue office, Police Commissioner Raymond Kelly said on Dec 23.
Kirk Stephenson, who helped start Luqman Arnold’s investment company Olivant Ltd., committed suicide, a U.K. coroner’s court judged last month. Stephenson, 47, jumped in front of a train on Sept. 25 at a railway station in Taplow, 28 miles west of London.
To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net.
‘Broken’ Billionaire Merckle Killed Self, Family Says
By Aaron Kirchfeld and Sheenagh Matthews
Jan. 6 (Bloomberg) -- German billionaire Adolf Merckle committed suicide by throwing himself under a train, “broken” as his business empire crumbled under a growing burden of debt, his family said.
The 74 year-old businessman was hit yesterday evening near his hometown of Blaubeuren, 44 miles southeast of Stuttgart, a police officer said in an interview. His body was found on the tracks at around 7:30 p.m. about 300 yards from his home and a suicide note had also been found.
Merckle, whose holding company owes banks about 5 billion euros ($6.7 billion), owned stakes in HeidelbergCement AG and drug wholesaler Phoenix Pharmahandel AG. He had been seeking emergency financing for more than two months from a group of more than 30 banks led by Commerzbank AG, Deutsche Bank AG, Royal Bank of Scotland Group Plc and Landesbank Baden-Wuerttemberg.
“The dedicated family businessman was broken by his inability to handle the situation and he ended his own life,” his family said in a statement today. “The distress at his companies caused by the financial crisis and the resultant uncertainty of the last few weeks” contributed to his death, the family added.
Merckle, whose estimated $9.2 billion fortune put him 94th on Forbes’ list of the world’s richest people, was hurt by bets on Volkswagen AG, a drop in the value of HeidelbergCement stock and increasing debt. The family’s spiraling debt threatened holdings including its VEM Vermoegensverwaltung GmbH holding company, which owed the bank about 5 billion euros, people with knowledge of the matter said last month.
‘Falling Apart’
“His empire was falling apart,” said Stefan Mueller, managing partner at Proprietary Partners AG in Frankfurt. “This was his last desperate act.”
Merckle’s empire spanned the cement, machinery and drug industries. VEM said today Merckle’s death would have no effect on the restructuring. Merckle was to get more than 400 million euros in bridge loans to rescue VEM, Financial Times Deutschland reported yesterday, citing unidentified bankers.
“News of Adolf Merckle’s death left me deeply shaken,” Baden-Wuerttemberg Prime Minister Guenther Oettinger said. The state “lost a great entrepreneur.”
In November, the state government signaled it would not assist Merckle after he sought a bailout. His companies employ more than 71,000 people, including 46,000 at HeidelbergCement.
Merckle hired insolvency lawyer Eberhard Braun and threatened to initiate bankruptcy proceedings for VEM unless lenders provided him with restructuring capital, two people familiar with the situation said Dec. 10.
HeidelbergCement, Phoenix
The Merckle family may have to sell stakes in HeidelbergCement, Germany’s biggest cement maker, Phoenix Pharmahandel, a drug wholesaler, and Ratiopharm GmbH, a generic drugmaker as part of a deal with banks, people familiar with the matter said on Dec. 15.
HeidelbergCement fell 8.2 percent to 30.60 euros in Frankfurt trading. The Heidelberg-based company declined 70 percent last year, a fall that led the banks to seek additional financial guarantees from the billionaire.
Born in 1934, Merckle fled in 1945 with his family to Blaubeuren, a city with about 12,000 people in southwestern Germany, from the Sudetenland, the historical border region of the Czech Republic long inhabited by ethnic Germans and seized by the Nazis in September 1938.
Merckle’s grandfather founded a company called Drogen und Chemikalien en gros in 1881 and his father expanded the company after taking the helm in 1915. The company was seized during the Nazi era.
Suicide Note
Merckle, a lawyer whose only luxury was climbing in the mountains, took over the family company in 1967 at a time when it had 80 employees and 4 million deutsche marks ($2.5 million) in sales.
There was no suspicion of foul play and police are certain Merckle committed suicide, a police officer in Ulm said. The suicide note didn’t give any reason for his decision, according to the officer. Ulm prosecutors are investigating as a matter of routine, a step done in any suicide case, he said.
Merckle leaves behind his wife Ruth. He had three sons, Ludwig, Philipp, Tobias and a daughter, Jutta.
VEM was caught in a so-called short squeeze after betting Wolfsburg, Germany-based Volkswagen’s stock would fall. Merckle lost at least 500 million euros on the bets on VW stock, people familiar said on Nov. 18. VEM lost “low three-digit million euros” on VW stock, the company said in November.
Financing Talks
Commerzbank expressed its deep sympathy to Merckle’s family, according to spokeswoman Simone Fuchs in Frankfurt today. She declined to comment about potential implications for talks on a financing deal. RBS had no comment, a company spokeswoman in Frankfurt said. Landesbank Baden-Wuerttemberg spokesman Christian Potthoff in Stuttgart also had no comment.
New York based money manager Thierry Magon de La Villehuchet, 65, who may have lost client funds invested with Bernard Madoff, apparently killed himself in his Madison Avenue office, Police Commissioner Raymond Kelly said on Dec 23.
Kirk Stephenson, who helped start Luqman Arnold’s investment company Olivant Ltd., committed suicide, a U.K. coroner’s court judged last month. Stephenson, 47, jumped in front of a train on Sept. 25 at a railway station in Taplow, 28 miles west of London.
To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net.
Friday, January 2, 2009
Bernard Madoff One Degree From Kevin Bacon
http://www.tmz.com/2008/12/31/kevin-bacon-loses-shirt-in-madoff-mess/
Kevin Bacon Loses Shirt in Madoff Mess
Posted Dec 31st 2008
Let's hope those residuals from "The Closer" are coming in: Kevin Bacon and Kyra Sedgwick are the latest victims of the Bernie Madoff Ponzi scheme.
Bacon's rep confirmed to New York mag yesterday the Bacons were struck by Madoff's $50 billion eff-up, though he wouldn't go so far to say they'd lost their pants, too -- "Please, let's not speculate or rely on hearsay." Jeffrey Katzenberg and Steven Spielberg were among the others who have lost big bucks in Madoff's bald-faced scheme.
And several sources tell us there are many more celebs who don't even know they've lost money -- so check those brokerage accounts!
Filed under: Celebrity Justice
Kevin Bacon Loses Shirt in Madoff Mess
Posted Dec 31st 2008
Let's hope those residuals from "The Closer" are coming in: Kevin Bacon and Kyra Sedgwick are the latest victims of the Bernie Madoff Ponzi scheme.
Bacon's rep confirmed to New York mag yesterday the Bacons were struck by Madoff's $50 billion eff-up, though he wouldn't go so far to say they'd lost their pants, too -- "Please, let's not speculate or rely on hearsay." Jeffrey Katzenberg and Steven Spielberg were among the others who have lost big bucks in Madoff's bald-faced scheme.
And several sources tell us there are many more celebs who don't even know they've lost money -- so check those brokerage accounts!
Filed under: Celebrity Justice
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