Koch Bros and Madoff

[Tweak155]

All they knew was they were taking profits. They had no idea what was going on behind the curtain.

On your personal investments, do you question the dividends reported to you on your statement? I don't, that is profits as far as I am concerned. I don't KNOW that the investment company is just telling me a story and then giving me other peoples money or not.

So if the company you invested in paid someone else first (because it was a scam) and now all of your money, including your own investment, is gone - you're ok with the guy that they handed it to keeping your money?

 

[Blackjack200]

I really don't understand the Koch's (and other investors') argument here, although it's clearly well grounded since a judge already agreed with them once in 2014. It seems like they're saying that the money can't be clawed back because it was sent overseas after redemption, but that seems strange.

For one, I don't care if you sent the money overseas, money is fungible, just surrender the same amount of money that you didn't send overseas.

For another, it seems pretty surprising the BVIs and other offshore havens don't have reciprocal agreements with the US governments. For the most part BVI accounts have legitimate uses (i.e. foreign investors are not allowed to open securities accounts in the United States.) and I have to imagine that the government in the BVIs wants to cooperate with the US and avoid any kind of financial sanction.

I suspect that MSN is getting some of the facts wrong I this case. I wonder if the feeder fund itself was domiciled offshore and based on the trustee's statement, that seems to be the case:

"Regardless of where these feeder funds maintained operations, their transactions related to BLMIS were predominantly domestic," Picard has said in filings in federal court in New York. Moreover, the customers knew their investments were subject to U.S. law, he argued.

All they knew was they were taking profits. They had no idea what was going on behind the curtain.

On your personal investments, do you question the dividends reported to you on your statement? I don't, that is profits as far as I am concerned. I don't KNOW that the investment company is just telling me a story and then giving me other peoples money or not.

No, because by and large, investor protections in this country are very good. That they completely broke down in this case doesn't change that.

 

[Thump553]

All they knew was they were taking profits. They had no idea what was going on behind the curtain.

On your personal investments, do you question the dividends reported to you on your statement? I don't, that is profits as far as I am concerned. I don't KNOW that the investment company is just telling me a story and then giving me other peoples money or not.

Your position has emotional appeal but you have to understand how the law works. The court (and to an extent, the legislature, which creates statutes) balances the interests of various classes of parties and sets rules. What the receiver is seeking here is in line with decades old and well-established principles of law. What the Kochs are arguing is that since they siphoned their money to Madoff from out of USA spigots their interests are not subject to US law. It will be interesting to see how this plays out in court.

 

[Moonbeam]

Moonie you were wrong with that statement you should apologize. I assume you misunderstood.

Looking for my mistake but don't see it. I saw a prescriptive based on dummies and smart people as to why some lose and others win that does not explain why some sell and others hold.

 

[sm625]

For all we know it was the Koch bros who came up with the scheme in the first place. "Hey Bernie, we got a great idea.... its risky and it could blow up in your face but that's your risk not ours."

 

[Moonbeam]

For all we know it was the Koch bros who came up with the scheme in the first place. "Hey Bernie, we got a great idea.... its risky and it could blow up in your face but that's your risk not ours."

The law deals with evidence, not hysterical conjectures.

 

[Zaap]

For all we know it was the Koch bros who came up with the scheme in the first place. "Hey Bernie, we got a great idea.... its risky and it could blow up in your face but that's your risk not ours."

Oh please. The Madoff scam is well documented.

I do think that *everyone* who knowingly took profits from anything to do with Madoff, thats grossly able to afford to like the Koch brothers- whether the law requires them to or not- should give the money back. Just out of common human decency.

Also, boomerang is right about why they probably got out of it while on top. Good investors often do. They may leave some profits laying on the table when things go higher after they get out- that's fine, but the point is to not lose money when things go south (as a "good thing" almost inevitably will). Just citing that they got out while on top says nothing about them being complicit in the scam. It's more indicative of the way a smart investor would operate. It's the not-so-smart investors that more often take the approach "Hey this is a good thing! Let's just ride it forever!"

 

[Thump553]

For all we know it was the Koch bros who came up with the scheme in the first place. "Hey Bernie, we got a great idea.... its risky and it could blow up in your face but that's your risk not ours."

That's one theory. Another would be that extremely risk adverse investors, making a multi billion dollar investment with access to the best legal counsel money can buy, structured their investment to provide the highest degree of protection.

Hindsight always makes things appear more simple, but remember before his empire collapsed Madoff had a sterling reputation.

Your choice-prudence or fantasy based decision process.

 

[readymix]

Harry Markopolous called it years before the bottom fell out. Some folks paid attention and bailed.

 

[pcgeek11]

That is exactly what he is saying, you get to keep it. However if it were his car that was stolen and you paid for, he would suddenly claim he gets his car back. You have to realize that the weasel nature of the CBD is self protection via rationalization.

Fuck you. You know nothing about me or what I would do.

If my car gets stolen I have very good insurance. I don't want it back, I'll just get a new one.

 

[pcgeek11]

So if the company you invested in paid someone else first (because it was a scam) and now all of your money, including your own investment, is gone - you're ok with the guy that they handed it to keeping your money?

IF he didn't know and was NOT in on the scam. Yes I wouldn't or couldn't see penalizing him. He did nothing wrong. This happens all the time where shareholders get theirs at the expense of others.

Investing is a gamble period. If you don't realize this maybe you shouldn't invest.

 

[Fanatical Meat]

IF he didn't know and was NOT in on the scam. Yes I wouldn't or couldn't see penalizing him. He did nothing wrong. This happens all the time where shareholders get theirs at the expense of others.

Investing is a gamble period. If you don't realize this maybe you shouldn't invest.

However the house shouldn't be using weighted dice, altered slot machines or marked decks to give the house an insurmountable advantage.
I get what you're saying and it may not be fair to require claw backs but then its not fair to the people who got out late. These are true no win decisions.