Who Is Protecting Bernie Madoff's Accomplices?

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[Scandal On Wall Street: Comment]

The mainstream press has failed in its responsibility to inform the public concerning the means by which Bernie Madoff pulled off his $50 billion scam. The press is filled with human interest stories of the charities and individuals, whom Madoff defrauded. But there has been a dearth of information as to the method by which Madoff stole $50 billion.

The press has stated that Madoff could perpetrate his fraud because his firm was a broker-dealer. This is fallacious. Madoff could only have perpetrated this scheme if his firm were self-clearing, in other words if Madoff’s firm processed its own trades. Madoff’s firm was self-clearing and, therefore, printed its own trading sheets. This is an important fact that has not been widely reported.

One newspaper erroneously reported that in one instance Madoff could print a fictitious stock price on a stock trade because Madoff had his own broker-dealer. This is not true. I should know how it works and let me recall an example from the past. As early as 1998 I personally reported to The New York Times and The Wall Street Journal that Pat Schettino, a managing director of Spear Leeds and Kellogg, a major clearing firm, had entered numerous fictitious trades at fictitious prices in several stocks into a customer account- as part of a widespread fraud. Not only did I report this information, but I enclosed a copy of the American Stock Exchange disciplinary decision of Ronald Russo, the individual into whose account Schettino placed these fictitious trades. (See www.wallstreetscandals.com)

Neither The New York Times nor The Wall Street Journal reported this violation of federal securities laws because of the influence of Arthur Levitt, then Chairman of the Securities and Exchange Commission.

I am a former market maker at the American Stock Exchange, who had his own Broker-Dealer, I was not self-clearing; as a matter of fact very few firms are self-clearing. As an example many New York Stock Exchange specialist firms, such as Cohen Specialists LLC, which process hundreds of thousands of trades a day, are not self-clearing but clear through a prime broker, such as Goldman Sachs.

Every newspaper article says: Where did the money go?

And no newspaper ever asks the obvious question: In which bank did Bernie Madoff keep his money?

Madoff had to keep the money in a commercial bank. And the commercial bank would have records of every deposit, every withdrawal and every money transfer. If Madoff transferred money oversees into an offshore account, the investigators would have the answer.

The first question to be posited is: Into which bank did Bernie Madoff launder his money? The second question is: Why is the government protecting this bank by not revealing the name of the bank?

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