Business News: Mark Madoff Commits Suicide on Arrest Anniversary

Business News: Mark Madoff Commits Suicide on Arrest Anniversary

Mark Madoff Commits Suicide on Arrest Anniversary

Posted: 11 Dec 2010 08:45 AM PST

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By Dan Hart and Joe Sabo

(Updates with anniversary of Bernard Madoff arrest in first paragraph)

Dec. 11 (Bloomberg) -- Mark Madoff, a son of convicted con man Bernard Madoff, committed suicide today on the second anniversary of his father’s arrest, his attorney confirmed.

“Mark Madoff took his own life today,” Martin Flumenbaum of law firm Paul, Weiss, Rifkind, Wharton & Garrison, said in a statement released by Business Wire.

“This is a terrible and unnecessary tragedy. Mark was an innocent victim of his father’s monstrous crime who succumbed to two years of unrelenting pressure from false accusations and innuendo. We are all deeply saddened by this shocking turn of events,” Flumenbaum said in the statement.

Mark Madoff, 46, and his brother, Andrew, were under investigation but hadn’t faced any criminal charges in the massive Ponzi scheme that led to their father’s jailing. The case came to light in December 2008 after the elder Madoff confessed to his two sons and his brother, who also worked for him in the business, that he had used money from new investors to pay earlier ones.

Sergeant Kevin Hayes, a New York Police Department spokesman, told Bloomberg News that a body was found at 158 Mercer Street in Manhattan, and police were notified by a family member at about 7:30 a.m. FBI spokesman Richard Kolko later confirmed Madoff was found dead of an apparent suicide in his Mercer Street apartment, declining further comment.

Sued by Trustee

The sons, along with Bernard Madoff’s brother and five directors of the U.K. arm of Bernard Madoff’s investment firm, were sued Dec. 8 by Irving Picard, the court-appointed trustee recovering assets for Madoff’s victims.

Picard didn’t immediately respond to an e-mail and voicemail message seeking comment.

Bernard Madoff, 72, is serving a 150-year sentence at a federal prison in Butner, North Carolina. At the time of his arrest, Madoff’s account statements reflected 4,900 accounts with $65 billion in nonexistent balances. Investors lost about $20 billion in principal.

Mark Madoff’s suicide isn’t the first connected with the scheme’s aftermath. Thierry Magon de La Villehuchet, chief executive officer of Access International Advisors, which managed $3 billion, took his own life in December 2008 after losing funds invested with Madoff’s firm, his brother said in an interview at the time.

--With reporting by Chris Dolmetsch and Bob Van Voris in New York. Editors: Mark Rohner, Ann Hughey

To contact the reporters on this story: Dan Hart in Washington at dahart@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

Madoff Firm Trustee Sues Bank Medici Before Deadline

Posted: 11 Dec 2010 07:12 AM PST

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By Bob Van Voris and Dawn McCarty

(Adds additional banks sued beginning in 18th paragraph.)

Dec. 11 (Bloomberg) -- The trustee liquidating Bernard L. Madoff’s investment firm, facing a deadline today for filing so- called clawback lawsuits to help victims of Madoff’s fraud, sued Bank Medici AG and its founder, Sonja Kohn, for $58.8 billion.

Irving Picard, the trustee, has filed hundreds of suits in the past month, seeking more than $34 billion from banks, feeder funds, investors and others alleged to have profited from Madoff’s decades-long Ponzi scheme, the biggest in history. So far, Picard has recovered about $2.5 billion.

The lawsuit names Kohn, Bank Medici, Bank Austria, UniCredit SpA and dozens of other parties. It seeks $19.6 billion tripled to $58.8 billion under the Racketeer Influenced and Corrupt Organizations Act. It’s the biggest claim filed by Picard, who has sued investors, banks, so-called feeder funds and others for money to pay investors with valid claims.

Kohn, 62, whom Picard called Madoff’s “criminal soul mate,” used a relationship with the con man that began in 1985 to help build the Vienna-based bank, feeding more than $9.1 billion of investor money into his company, Picard said yesterday in a complaint in U.S. Bankruptcy Court in New York.

“The illegal scheme enriched Kohn, her family, and scores of other individuals and entities, including the largest banks in Austria and Italy, at the expense of the BLMIS estate and on the backs of Madoff’s victims,” Picard said in court papers, referring to Bernard L. Madoff Investment Securities LLC.

Higher Returns

In the 153-page complaint against Kohn, Picard claimed she told investors she was very close to Madoff and could deliver higher returns on investments made through his firm. Instead, Madoff was secretly paying Kohn, who knew Madoff was running a fraud, to funnel money into the Ponzi scheme, Picard said.

According to the trustee, Kohn ran her own complex scheme centered on Bank Medici, parts of which overlapped with Madoff’s own fraudulent enterprise, delivering $9.1 billion into the Ponzi scheme. They funneled $4 billion of the total through feeder funds including Primeo Fund, Thema International, Herald Fund Alpha Prime Fund, Senator Fund and Herald (Lux), which placed all of their investors’ money with Madoff, according to Picard.

Shortly before Madoff confessed, in December 2008, Kohn withdrew $536 million from Madoff’s firm, Picard said, and took steps to hide her connection to the money manager.

Bank Austria

Bank Medici operated as a branch of Bank Austria, which administered its accounts, according to Picard. In return, Bank Austria, which is named as a defendant, was paid at least $31 million.

Bank Medici renamed itself 2020 Medici AG after Austria’s Financial Markets Authority withdrew the company’s banking license because of insufficient capital in May 2009.

Andreas Theiss, a lawyer for Kohn, didn’t respond to a call to his cell phone or an e-mail seeking comment.

“Our attorneys are reviewing the matter and we will manage this through the normal course legal process,” UniCredit said in an e-mailed statement on behalf of itself, Bank Austria and its fund management unit Pioneer Global Asset Management SpA, which is also a defendant. “We intend to defend ourselves vigorously.”

Former UniCredit Chief Executive Officer Alessandro Profumo, who was ousted from the Italian lender in September, is also named as a defendant in the suit.

“The allegations are completely unfounded and will be defended vigorously,” said a spokesman for Profumo.

150-Year Prison Sentence

Madoff, 72, who pleaded guilty, is serving a 150-year sentence in federal prison in North Carolina.

At the time of his arrest, his financial statements reflected 4,900 accounts with $65 billion in nonexistent balances. Investors lost about $20 billion in principal.

HSBC Holdings Plc was sued this month for $9 billion by Picard, who alleged Europe’s biggest lender enabled Madoff’s fraud. Picard previously sued JPMorgan Chase & Co. for $6.4 billion over claims the New York-based bank aided and abetted the fraud.

Earlier this week, Citigroup Inc.’s Citibank, Bank of America Corp.’s Merrill Lynch unit and five other banks were sued by the trustee to recover more than $1 billion.

The banks, which include Natixis SA, Fortis Prime Fund Solutions Bank (Ireland) Ltd., ABN Amro Bank NV, Nomura Bank International Plc. and Banco Bilbao Vizcaya Argentaria SA, received money through Madoff feeder funds when they knew, or should have known, that Madoff’s investments were a fraud, Picard said in a statement at the time.

UBS, Tremont

Picard also sued UBS AG and Tremont Group Holdings Inc., the hedge-fund firm owned by Oppenheimer Acquisition Corp., over claims they profited from Madoff’s fraud. Picard, along with the liquidators of Madoff’s U.K. operation, sued the unit’s former directors in a London court seeking at least $80 million.

All of the banks have denied wrongdoing and vowed to fight the lawsuits.

Also this week, one of Bernard Madoff’s first clients, along with 19 family members, settled potential lawsuits by agreeing to forfeit $625 million in profits from the con man’s investment fraud.

Carl Shapiro, a Boston-based philanthropist, held an account with Madoff’s firm beginning in 1961. His son-in-law, Robert Jaffe, is the former vice president of Cohmad Securities Corp., a feeder fund that shared offices with Madoff’s firm.

Picard also sued the owners of the New York Mets baseball team for the return of profits earned from their Madoff investments. The defendants and Picard confirmed they are in settlement talks.

Public Accountants

Yesterday, Picard said in a statement that he sued Frank Avellino and Michael Bienes, two certified public accountants, as well as family members, for more than $900 million, seeking money they withdrew from Madoff’s firm. Picard called Avellino and Bienes “among the earliest enablers” of Madoff.

Picard announced yesterday that he had settled for more than $80 million against a group of charities and non-profit organizations that profited from their Madoff investments.

One settlement announced, with Hadassah, the Women’s Zionist Organization of America Inc., will add $45 million for distribution to Madoff victims, Picard said in the statement.

Hadassah’s former finance chief, Sheryl Weinstein, wrote in a book published last year about an affair she had with Madoff.

The case is Picard v. Kohn, 10-5411, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--With assistance from Zoe Schneeweiss in Vienna, Elisa Martinuzzi in Milan and Alessandra Migliaccio in Rome. Editors: Michael Hytha, Charles Carter.

To contact the reporters on this story: Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net and; Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

OPEC Maintains Current Oil Quotas at Quito Meeting

Posted: 11 Dec 2010 09:58 AM PST

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By Ayesha Daya and Fred Pals

(Updates to add Venezuela in sixth paragraph.)

Dec. 11 (Bloomberg) -- OPEC maintained current oil production quotas at its meeting today in Quito, Ecuador, as member nations consider the global recovery strong enough to withstand price gains.

The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, maintained the quota of 24.845 million barrels a day for 11 of its members, which hasn’t changed since it was agreed in December 2008.

OPEC President Wilson Pastor told reporters the group left quotas unchanged after ministers held a closed-door meeting that lasted more than 90 minutes. The decision was widely expected and four nations didn’t send oil ministers to the conference.

Earlier today, Saudi Arabia Oil Minister Ali al-Naimi told reporters that oil supply and demand are in balance and that “$70 to $80 is a good price.” He declined to comment on current prices.

Crude futures settled yesterday at $87.79 a barrel on the New York Mercantile Exchange.

Venezuelan Energy and Oil Minister Rafael Ramirez said after the meeting that $100 a barrel is a “fair” price and he expects that level to be reached next year.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.

OPEC’s next scheduled meeting is in June next year, at its Vienna headquarters.

--Editors: Stephen Voss, Dan Stets

To contact the reporters on this story: Ayesha Daya in Quito at adaya1@bloomberg.net Fred Pals in Quito at fpals@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

Holbrooke in ‘Critical Condition’ After Surgery to Repair Aorta

Posted: 11 Dec 2010 08:25 AM PST

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By Molly Peterson

Dec. 11 (Bloomberg) -- Richard Holbrooke, the U.S. special envoy for Afghanistan and Pakistan, “is in critical condition and has been joined by his family” after heart surgery, State Department spokesman Philip J. Crowley said.

Doctors this morning “completed surgery to repair a tear in his aorta,” Crowley said in an e-mailed statement. Holbrooke was admitted to George Washington University Hospital yesterday.

Holbrooke, 69, has spent the last two years traveling to Afghanistan and Pakistan, and seeking support from allies to help promote economic development and stabilize the neighboring countries that have been plagued by terrorism.

Holbrooke felt ill while working on the seventh floor of the State Department headquarters, where Secretary of State Hillary Clinton’s office is located, Crowley said yesterday.

Treasury Secretary Timothy Geithner was also admitted yesterday to George Washington University Hospital in northwest Washington for surgery to remove a kidney stone. Geithner returned home at about 10 p.m., ahead of schedule, and will return to the office Dec. 13, the Treasury Department said today in a statement.

Geithner’s surgery was “completed without incident,” Treasury spokesman Steve Adamske said in a separate e-mail. “The secretary is feeling much better and after the procedure spoke with his staff at about 7 p.m. to get a rundown on the day. Geithner’s staff reports that he’s clearly eager to get back to work.”

Holbrooke is a veteran diplomat who, as an assistant secretary of state under President Bill Clinton, was the chief architect of the 1995 Dayton accords that ended the war in Bosnia in the 1990s. He later served as the U.S. envoy to the United Nations.

He was a diplomat in President Jimmy Carter’s administration and was in charge of U.S. relations with China when the U.S. normalized ties in December 1978.

Over the last several months, Holbrooke has been preparing a report for President Barack Obama on the current state of governance and development in Afghanistan. The U.S. and allies have a combined force of about 150,000 troops to turn back Taliban advances and train Afghan soldiers and police.

--With assistance from Indira Lakshmanan, Flavia Krause-Jackson, Nicole Gaouette, Ian Katz and Rebecca Christie in Washington. Editors: Ann Hughey, Mark Rohner.

To contact the reporters on this story: Molly Peterson in Washington at mpeterson9@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

China May Expand Inflation ‘Fight’ After Growth Remains Intact

Posted: 11 Dec 2010 08:01 AM PST

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By Bloomberg News

Dec. 12 (Bloomberg) -- China’s economic data for November showed growth is withstanding government curbs and extra measures may be needed to tame the highest inflation rate in more than two years.

Industrial-output gains accelerated to 13.3 percent last month from a year earlier, exceeding economists’ median estimate, a statistics bureau report showed in Beijing yesterday. Consumer prices rose a more-than-forecast 5.1 percent, the most since July 2008.

The world’s fastest-growing major economy is maintaining momentum after an interest-rate increase in October, curbs on energy consumption and a crackdown on real-estate speculation. So far, officials have held off on the rate increase predicted for this weekend by firms including UBS AG. Instead, the central bank boosted lenders’ reserve requirements on Dec. 10.

“With both inflation and growth figures surprising on the upside, Beijing can and will focus on fighting inflation whole- heartedly,” said Qu Hongbin, an economist at HSBC Holdings Plc in Hong Kong. An “immediate” increase in rates is likely and lenders’ reserve ratios may keep climbing, Qu said.

London-based Capital Economics Ltd. said Dec. 10 that a rate increase after senior officials conclude an economic policy meeting in Beijing this weekend “cannot be ruled out.” The Politburo has already announced that the nation will officially switch next year to a tighter, “prudent” monetary stance.

Besides industrial output, urban fixed-asset investment also grew at a faster pace, climbing 24.9 percent in the first 11 months of 2010 from a year earlier, the report showed. Retail sales gained 18.7 percent in November from a year earlier.

‘Room to Fight’

Bank of America-Merrill Lynch economist Lu Ting said that industrial-production growth may settle at about a 13 percent annual rate, satisfying policy makers and leaving “more room to fight against CPI inflation and asset bubbles.”

Inflation for the first 11 months was 3.2 percent, more than the government’s full-year target of 3 percent. Producer prices climbed 6.1 percent in November, more than any of 28 economists surveyed by Bloomberg News had estimated.

China, which overtook Japan as the world’s second-largest economy in the second and third quarters, lags behind Asian countries including Malaysia and South Korea in boosting borrowing costs.

November’s consumer prices rose by more than the 4.7 percent median forecast of analysts. In October, inflation was 4.4 percent. Yesterday’s data leaked ahead of the announcement, with the Economic Information Daily reporting the inflation number on Dec. 10.

Biggest Challenge

“Inflation is shaping up to be the primary challenge facing policy makers in coming months, and it makes sense for them to bring out the big guns,” Brian Jackson, a Hong Kong- based analyst at Royal Bank of Canada, said before yesterday’s data. Tools may include a faster pace of yuan appreciation, as well as higher rates by year-end, he said.

Food prices rose 11.7 percent in November from a year earlier, the most in more than two years, and residence-related costs such as charges for water, electricity and rent were also a key driver of inflation, the statistics bureau said. Overall consumer prices rose 1.1 percent from the previous month.

The jump in producer prices topped analysts’ median forecast of a 5.1 percent increase. Costs of manufacturers’ raw- materials such as cement, steel, fuel and cotton have surged, a survey of purchasing managers indicated Dec. 1.

Investors’ Concern

The benchmark one-year deposit rate stands at 2.5 percent, less than the annual pace of inflation, and the lending rate is 5.56 percent. The Shanghai Composite Index of stocks has fallen 10 percent from a Nov. 8 high, extending this year’s loss to 13 percent, on concern tighter monetary policy will cut economic growth and profits.

On Dec. 10, the central bank announced a 50 basis point increase in reserve ratios, effective Dec. 20. A basis point is 0.01 percentage point. That move may lock up about 350 billion yuan ($53 billion), according to Barclays Capital Asia Ltd.

Besides monetary policy, Wen is using administrative tools, such as sales of state food reserves, to cool prices.

Signs of inflationary pressure have included McDonald’s Corp., the world’s biggest restaurant chain, pushing up prices, citing rising costs. The southwestern city of Kunming has imposed temporary price ceilings on “daily necessities,” telling retailers such as Wal-Mart Stores Inc. and Carrefour SA to report any planned price rises.

Cash flowing into the economy from trade, foreign direct investment and bets on gains by the yuan has added to a domestic credit boom in exacerbating inflation risks. The trade surplus was $22.9 billion in November and, in addition, banks extended a more-than-estimated 564 billion yuan of local-currency loans.

Money Supply

Broad money supply, or M2, rose last month by 19.5 percent, the fastest gain in six months, the People’s Bank of China reported Dec. 10. M2 has surged 55 percent over the past two years and outstanding yuan-denominated loans have climbed to 47.4 trillion yuan, 60 percent more than in November 2008.

Officials are seeking slower credit growth and economists, including at Societe General SA, expect the government to set a lower loan ceiling for 2011 than this year’s target of 7.5 trillion yuan.

Inflation may have peaked in November and will probably soften this month as “price intervention” takes effect and the impact of earlier price increases washes out of year-on-year comparisons, Wang Qing, a Hong Kong-based economist at Morgan Stanley, said in Dec. 6 note.

--Li Yanping. With assistance from Jay Wang. Editors: Paul Panckhurst, Jim McDonald.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net

To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net

Mark Madoff Committed Suicide, His Lawyer Says in Statement

Posted: 11 Dec 2010 07:21 AM PST

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By Dick Schumacher

Dec. 11 (Bloomberg) -- Mark Madoff, a son of convicted hedge fund swindler Bernard Madoff, committed suicide today, an attorney representing Mark Madoff said.

“Mark Madoff took his own life today,” Martin Flumenbaum of law firm Paul, Weiss, Rifkind said in a Business Wire statement.

“This is a terrible and unnecessary tragedy. Mark was an innocent victim of his father’s monstrous crime who succumbed to two years of unrelenting pressure from false accusations and innuendo,” Flumenbaum said in the statement.

Link to Statement:{NSN LD9QWO3V2800 <GO>}

To contact the reporter on this story: Dick Schumacher in London at dschumacher@bloomberg.net

To contact the editor responsible for this story: Dick Schumacher at dschumacher@bloomberg.net

Al-Naimi Says No Need for an OPEC Output Increase

Posted: 11 Dec 2010 05:54 AM PST

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By Margot Habiby and Fred Pals

(Adds missing ministers, schedule in last two paragraphs.)

Dec. 11 (Bloomberg) -- Saudi Arabian Oil Minister Ali al- Naimi said there is no need for an oil production increase at today’s meeting of the Organization of Petroleum Exporting Countries.

OPEC, which supplies about 40 percent of the world’s oil, hasn’t changed quotas since late 2008, when it announced the biggest-ever reduction in output as global demand collapsed.

Crude oil rose 3.3 percent last month on the New York Mercantile Exchange and exceeded $90 a barrel on Dec. 7 for the first time in more than two years.

“You guys really worry too much about prices,” al-Naimi told reporters yesterday afternoon as he arrived in Quito, Ecuador, for the producer group’s meeting. “They go up, they go down. What’s new?” Asked if there’d be a production increase, he replied, “absolutely not.”

Oil may reach $100 a barrel next year as demand from Europe and the U.S. picks up, Goldman Sachs Group Inc. analyst Jeffrey Currie said last month. Global oil supply reached 88.1 million barrels a day last month, its highest ever level, and world demand is forecast to expand 1.5 percent next year to 88.8 million barrels a day, which will also be a record, the International Energy Agency said yesterday in a monthly report.

“Demand is up, supply is up,” said al-Naimi, whose country is OPEC’s biggest producer. Asked if $100 a barrel for oil would be acceptable to producers and consumers, he said, “What else do you have?”

Weak Dollar

Angolan Oil Minister Jose Maria Botelho de Vasconcelos said earlier in the day yesterday that there’s no reason for OPEC to change production. The 11 members with quotas pumped 26.7 million barrels a day last month, exceeding the official ceiling by 1.86 million barrels a day, or 7.5 percent, according to a Bloomberg survey of producers and analysts.

“The situation is stable right now,” and oil at $90 makes up for a weak dollar, the Angolan minister said.

Crude oil for January delivery declined 58 cents to $87.79 a barrel yesterday on the New York Mercantile Exchange, the lowest settlement since Dec. 1. Futures dropped 1.6 percent this week and are up 24 percent from a year ago.

The Dollar Index, which tracks the currency against those of six major U.S. trading partners, dropped more than 9 percent since early June. The Energy Department in Washington forecasts OPEC’s net oil export revenue will be $750 billion this year.

The 12 members of OPEC are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.

Four members, Kuwait, Qatar, Nigeria and Iraq, did not send their ministers to Quito and will be represented by senior officials instead.

Today’s OPEC meeting is scheduled to start with an opening address by Ecuadorean President Rafael Correa and the country’s oil minister, Wilson Pastor, who is also the president of OPEC, at 9 a.m. local time, 2 p.m. London time, followed by a closed-door session two hours later. A press conference is scheduled for about 4:30 p.m. local time.

--With assistance from Juan Pablo Spinetto, Ayesha Daya and Nathan Gill in Quito. Editors: Stephen Voss, Marthe Fourcade

To contact the reporters on this story: Margot Habiby in Quito at mhabiby@bloomberg.net; Fred Pals in Quito at fpals@bloomberg.net

To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net; Dan Stets at dstets@bloomberg.net