Letter of Apology » Embezzlement

Madoff Probe Moves From Top To Bottom

Solomon Wisenberg — Fri, 23 Jan 2009 16:05:31 +0000

Today’s WSJ has an interesting story here about the “backwards” progress of the Madoff probe, contrary to the typical “from the bottom up” investigatory model. Of course this was necessitated by the SEC’s failure to investigate Madoff’s investment operation, depite years of credible warnings, topped off by Madoff’s surprise confession. The article focuses almost entirely on the SEC’s current probe, hardly mentioning DOJ’s concomitant investigation, which must result in an indictment before long.

Madoff Point Man Seems To Have Exposure

Solomon Wisenberg — Wed, 21 Jan 2009 17:04:24 +0000

Today’s Wall Street Journal reports that Frank DiPascali, who allegedly executed “trades” for Bernard Madoff, has become a focus of the federal investigation. Such focusing make sense, since most of the Madoff trades apparently never occurred. The WSJ story is here.

Madoff To Remain Free On Bond

Solomon Wisenberg — Mon, 12 Jan 2009 21:01:57 +0000

Magistrate Judge Ellis imposed even heavier restrictions. In addition to the previous 24-hour surveillance, Madoff will now have his transportable valuables subject to monitoring and inspection. Plus, the terms of the SEC injunction are to be made part of the bond conditions. The Government also moved, with Madoff’s consent, to extend the 30-day Speedy Trial Act deadline in which it must file an indictment or dismiss the complaint. The Government’s motion states that it is in talks with Madoff with a view toward possible disposition of the case.

Feds Want Madoff Jailed

Solomon Wisenberg — Tue, 06 Jan 2009 14:51:50 +0000

Bernard Madoff’s wife sent some of the couple’s valuables to family members and friends, allegedly in violation of an injunction obtained by the SEC in its civil case against Madoff. Ergo, the SDNY U.S. Attorney’s Office wants Madoff’s bond revoked, on grounds that he is a flight risk and and an economic danger to the community. Magistrate Judge Ronald Ellis seemed skeptical at yesterday’s hearing and wants to see some law. The Government’s brief is due today, and Madoff has through Wednesday to respond. Alex Berenson’s NYTimes story is here. I’ll be discussing this issue on CNBC’s Power lunch today, sometimes between 12:15 and 12:30 PM Eastern Time.

Madoff Charged In Biggest Ponzi Scheme Of All Time

Solomon Wisenberg — Fri, 12 Dec 2008 18:55:56 +0000

High society investment advisor and Wall Street legend Bernard Madoff has been arrested for running what the SEC calls “a stunning fraud that appears to be of epic proportions.” Madoff was turned in by his sons. The Wall Street Journal has the story here. Losses are estimated to be in the $50 billion range. The SEC has filed suit and DOJ has issued a criminal complaint.

Ex-CFO Of Hilfiger Licensee Sentenced To 66 Months In $19 Million Fraud

Dave Westheimer — Tue, 25 Nov 2008 06:49:03 +0000

Martin Bodner, former CFO of Tommy Hilfiger Handbags and Small Leather Goods Inc. (a Tommy Hilfinger licensee), was sentenced on Friday to 66 months in prison by US District Judge P. Kevin Castel in Manhattan. Bodner pleaded guilty on September 15 to a two-count information charging him with mail fraud and wire fraud (earlier); he admitted embezzling more than $19 million from the company between 2000 and 2007, largely by using his authority to secretly increase his salary and bonuses, arranging to be reimbursed for phony expenses and using company funds to pay for personal expenses. Bodner was also ordered to pay over $17.3 million restitution and to forfeit luxury items including real estate and cars (DOJ, North Country Gazette).

Ex-Shriners Hospital CFO Sentenced To 41 Months In Prison For $800K Theft

Dave Westheimer — Fri, 14 Nov 2008 07:00:05 +0000

Robert Brodzin, former CFO of for Shriners Hospital for Children – St. Louis, was sentenced on November 7 to 41 months in prison by US District Judge Catherine Perry for embezzling $828,000 from the hospital between 2004 and 2008. Brodzin pleaded guilty in August to one count of mail fraud (earlier). He admitted stealing the funds by billing the hospital for services that were never rendered by three dummy companies he had set up. He used the money for luxuty items and and for his tanning salon business (DOJ, Bizjournal).

Former Real Estate Manager Pleads Guilty To $3 Million Theft From Homeowners Associations

Dave Westheimer — Wed, 12 Nov 2008 17:36:58 +0000

Jeffrey Koger of Herndon, Virginia, pleaded guilty to wire fraud and tax evasion counts on Monday before US District Judge Leonie Brinkema in Alexandria. Koger was the formerly the CFO of his father’s real estate management firm, Koger Management Group, which managed about 400 homeowners associations. He admitted embezzling about $3 million from a bank account that received dues from homeowners and distributed them to the various associations. On about 140 occasions between 2003 and 2006 he diverted funds to his own accounts; among other things, he invested $733,000 of the embezzled funds in a restaurant and paid a contractor almost $500,000 to remodel his house and a fitness center. He also admitted failing to pay more than $775,000 in income taxes during that period.

The investigation began after Robert Koger, the father, told Fairfax City police that he suspected his son had embezzled $800,000 before leaving the firm in late 2006. The firm filed for bankruptcy in July 2007 but Robert Koger has said he intends to repay the associations.

Jeffrey Koger’s sentencing is scheduled for February 6, 2009; he faces a maximum of 25 years in prison, but he also faces a Virginia state trial later in February on multiple violent felony charges in connection with a shootout with police early this year (DOJ, WaPo).

Former Firefighter Pleads Guilty To $500K Theft

Dave Westheimer — Tue, 11 Nov 2008 07:32:38 +0000

Grant Gaspard of Olympia, Washington, a former assistant fire chief, on Friday pleaded guilty to mail fraud before US District Judge Ricardo S. Martinez in Seattle. In an indictment unsealed in August, Gaspard was charged with embezzling over $500,000 from South King Fire & Rescue, where he was in charge of financial and procurement operations. Gaspard admitted operating an elaborate scheme involving fraudulent purchase orders and a fake company; he used the embezzled funds to buy luxury goods. He also admitted submitting phony documentation to cover up unauthorized purchases on his fire district credit card. Gaspard faces a probable sentence of 33 to 41 months in prison when he is sentenced on January 30, 2009 (Tacoma News Tribune, DOJ).

Former Paralegal Pleads Guilty To Stealing $1.7 Million From Law Firm

Dave Westheimer — Tue, 21 Oct 2008 04:39:36 +0000

A former paralegal at a South Windsor, Connectiut law firm has admitted embezzling more than $1.7 million from her employer to cover her gambling debts. Patricia Baddeley-Meehan pleaded guilty to two counts of mail fraud and one count of filing a false tax return earlier this month before US District Judge Stefan Underhill in Bridgeport. She had signatory authority on three major accounts at the Berman & Russo law firm and wrote checks from the firm’s client fund account over a four year period to pay off nearly $1.5 million in cash advances she had taken on her credit cards at several casinos and to fund other purchases. Her sentencing is scheduled for January 6, 2009; she faces a statutory maximum of 43 years in prison (Hartford Courant, DOJ).