2/4/09 New York Magazine's Daily Intel Column Links To Greenwich Diva's Scoop About The Walter Noel Clan (Updated)

Walter Noel Shopped for Auditors the Way His Daughters Shopped for Shoes

In the text of his prepared remarks to the House Financial Services subcommittee this morning, Fortune points out that Markopolos says Walter Noel's Fairfield Greenwich Group, thought to be Madoff's largest feeder fund, switched auditors three times in three years. Meaning that between 2004 and 2007, no one accounting firm was charged with tracking their numbers from year to year. "To change your auditor like that is highly unusual," Pornsit Jiraporn, a finance professor and the author of a study on "auditor shopping," tells Fortune. Further, two of the auditing firms were located overseas, where accounting standards are not as high. "Sometimes there is a legitimate reason for switching once, but this is very suspicious." Related: The Noels reportedly enjoyed some nice Perrier-Jouet this weekend.

Did Madoff's feeder fund shop for friendly audits?

[Fortune]

Walter Noel daughter Marisa Noel Brown had party at her Greenwich, CT home serving $7,000 bottle champagne

[Original Greenwich Diva]

By: Jessica Pressler

Source: http://nymag.com/daily/intel/2009/02/walter_noel_shopped_for_audito.html

Here Is Today's Raw Greenwich Blog And RSS Feed:

Blog's About Greenwich ....

For What It's Worth By Greenwich Blogger Chris Fountain
Bernie’s list - early report - Over a thousand names in non-alphabetized order, all I can do is a quick scan. I ran down backwards from p. 163 to 100 and came up with Greenwich’s own Met...

Greenwich News
Greenwich Post - Sign up for breaking news. Sports GHS cheerleaders ready to compete Ita TMs all about being aggressive for the Greenwich High School cheerleading team.
2 hours ago

Greenwich Blog :: The Blog of Greenwich, Connecticut :: USA
Reader Submitted Screenshots - Lou Da Silva points out the similarites between the home pages of the New York Times and Greenwich Time at 9:00 am on Wednesday, February 4. Both newspapers...

The Perrot Memorial Library Blog
Thank You - The Staff and Board of Perrot Memorial Library deeply thank each of you who have shared a thought, shed a tear, and expressed your emotions and remembrance...

Bloggers Who Are From, Work In Or Used To Live In Greenwich......

Exit 55 By Rob "WGCH" Adams - The Sports Voice Of Greenwich
Linkage - Things that have jumped out at me: A warm thought - the Yankees' TV schedule on YES (including the woeful Spring Training games). Now let me see if I've go...

Cos Cob Blogger Iggy Makarevich At High Strangeness
SHC over the airwaves - • Larry Arnold, the world’s foremost authority on the subject and the author of Ablaze!: The Mysterious Fires of Spontaneous Human Combustion...

The Daily Spurgeon
Who shall ascend? - “Who shall ascend into the hill of the Lord?” It is uphill work for the creature to reach the Creator. Where is the mighty climber who can scale the tow...

The Fox Trot By Nick "The Sly" Fox
ECW Results! - Dark Match: * Mark Henry b. DJ Gabriel - Alicia Fox came out with DJ Gabriel while Tony Atlas came out with Mark Henry. Henry got the win with the World's S...

Jane Genova: Speechwriter - Ghostwriter
"Without a Trace" - All Crimestopping, no Jack Angst/Romance - As a writer, I wonder why scripts are the way they are. Tonight's "Without a Trace" was all crimestopping. There was no digging into Jack Malone's angst or h...

The Blonde Excuse
Poppy - As you may have read on Jocelyn's blog, our Poppy just passed away. He was a true hero and an amazing grandfather. We were all so very lucky to have had him in our lives.

Poppy had his obituary in the Greenwich Time today, and if you knew Poppy and he touched your life in any way, please leave him a Guestbook entry on this website HERE.

Comment:

Dear Lauren,

The Bloggers Of Greenwich Are So Sorry for Your Loss, You Have Our Deepest Sympathy.

Our Thoughts And Prayers Are With You,

Your Grandfather Was A Very Special And Wonderful Man.

A Star Has Been Added Up In Heaven, Twinkling And Watching Over You And Jocelyn Forever!

Look Up And Take Heart!

PLEASE SEE:

2/3/09 Dear Jocelyn, All of your fellow bloggers and citizen journalists send their heartfelt condolences on the loss of your grandfather

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1/21/09 BLOOMBERG: WALTER NOEL'S VICTIMS MAY BE SAVED BY UNCLE SAM

Walter "Feeder Fund" Noel's Clients May Recoup More Losses Through Taxes Than Law Suits

THAKS A LOT WALLY: Investors In Greenwich Resident Walter Noel's Feeder Fund Are Unlikely To Get SPIC Money,

Customers of Bernard Madoff, accused of bilking his clients in a $50 billion Ponzi scheme, may recover more of their investment losses through tax strategies than by suing Madoff or his bankrupt firm.

“If they invested a lot, then they could possibly recover 40 percent of everything” through U.S. and state tax laws, said Micah Bloomfield, a tax specialist at New York law firm Stroock & Stroock & Lavan LLP.

U.S. tax law allows Madoff’s customers to take income deductions for losses caused by theft if they prove their money was stolen, Bloomfield said. Madoff’s alleged estimate of the size of the fraud didn’t specify if it included principal or how much was lost by charities not subject to taxation.

Madoff, 70, was charged with securities fraud in New York on Dec. 11 after allegedly confessing the crime to federal investigators. So-called Ponzi schemes pay early investors with money from later participants. Madoff faces as much as 20 years in prison, a $5 million fine and forfeiture of his assets. He hasn’t formally responded to the charges or entered a plea.

Madoff lawyer Ira Sorkin declined to comment on the tax consequences of losses linked to his client.

“If an investor loses money to a Ponzi scheme, that can be claimed as a theft loss for tax purposes,” said Martin Shulkin, managing partner of law firm Duane Morris LLP’s Boston office. “The claim should be made for the year you discover the loss, and is subject to a reasonable expectation of recovery.”

Shulkin represents about 30 Madoff investors, most of whom invested directly with Madoff’s brokerage, Bernard L. Madoff Investment Securities LLC. The firm is being liquidated by the Securities Investor Protection Corp., a U.S. agency set up four decades ago to cover losses when brokerages fail.

SIPC Option

Direct customers of Madoff have the option of filing loss claims with SIPC, he said. If they have reasonably determined they are unlikely to recover their loss through a SIPC claim, they may opt to use a theft-loss deduction instead, Shulkin said.

Under the theft-loss provision, eligible victims who don’t file a SIPC claim would have their deductions lowered by the $500,000 cap on SIPC coverage for securities losses, said Bloomfield. Kevin McCue, a spokesman for Irving Picard, the lawyer hired by SIPC to oversee brokerage claims, declined to comment on the tax process.

The Internal Revenue Service has taken the position that the loss from a single occurrence has to exceed $100 and that the total loss has to be more than 10 percent of an individual’s adjusted gross income for the year the deduction is claimed, Bloomfield said.

IRS View

“Under disclosure rules, IRS can’t discuss any specific cases,” the agency said in statement e-mailed by spokeswoman Theresa Branscome.

In the IRS view, someone with an income of $500,000 wouldn’t be able to deduct the first $50,100 in losses. Bloomfield said he disagrees that the $100/10 percent limitation applies to a theft-loss deduction, given amendments to the tax code.

A so-called claim-of-right tax refund is another option for recovering losses in the Madoff scheme, according to Timothy Mulcahy, a tax consultant with accounting firm Holtz Rubenstein Reminick LLP in New York.

The doctrine may allow some Madoff investors to eliminate income tied to Madoff’s investment advisory business from previous tax returns and declare the income-tax paid on those amounts as tax payments for 2008.

The “rarely used” doctrine is more complicated and possibly more rewarding than theft-loss returns, Mulcahy said yesterday in New York at a town-hall style meeting about the alleged fraud.

Good Records

“Every case is going to be different,” Mulcahy said. “To recover as much money as possible, you need very good records” to take advantage of the claim-of-right option. “Hopefully by the end of the year, we’ll have advice from the IRS.”

The IRS may rule this year on whether theft-loss or claim- of-right returns are the proper route for Madoff victims to take, according to Mulcahy.

If the loss from theft is greater than the taxpayer’s income the year the fraud is discovered, it can be carried back three years and forward 20 years to reduce taxable income.

The theft-loss deduction is also an option for people who gave their money to so-called feeder funds, such as hedge fund Fairfield Greenwich Group, that invested with Madoff, Shulkin said.

“We believe it is unlikely that investors in Madoff feeder funds will be successful in recovering SIPC claims,” he said.

Taxpayers may also file amended returns going back as much as three years to adjust for income they didn’t actually earn.

‘Phantom’ Gains

“People have been filing income tax returns reporting gains and income that were phantom,” Stephanie Casteel, a tax partner at Atlanta law firm King & Spalding LLP, said in a phone interview.

Bloomfield said someone who gave, say, $1 million to Madoff to invest and then recorded gains of $3 million over the years, might have paid tax on that amount. A taxpayer might claim a $4 million theft-loss deduction, using the gain and the $1 million principal, he said.

If the IRS denies the deduction for the fake $3 million, the taxpayer could try for a refund claim. Refunds might be claimed on reported income going back further than the typical three year limit, he said.

Mortner Law Office PC in New York is running an ad on Google Inc.’s Web site that offers help to investors with getting money back from the IRS under the headline: “Madoff - Tax Refunds.” According to the Mortner Web site, “These are not simple claims.”

IRS a Beneficiary

The IRS has been a beneficiary of Madoff’s alleged scheme because it received taxes on what may have been billions of dollars in reported phony profits, said Brad Friedman, a securities litigator at Milberg LLP in New York.

“That’s where most of the money went,” he said.

Not everyone agrees the theft-loss tax route will be more fruitful than filing SIPC, bankruptcy claims or lawsuits.

“It’s going to depend on people’s individual situations, and whether legislation gets enacted that lets people restate their taxes for more than three years,” Friedman said.

“I think, through the claims process, if done properly, people will recover a lot more,” said Blair Fensterstock, a trial lawyer at Fensterstock & Partners LLP in New York who has been tracking the Madoff litigation and hasn’t filed any claims for clients. “I also think the government isn’t in any mood to give back money to taxpayers, especially wealthy taxpayers.”

The SIPC case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S.A. v. Madoff, 1:08-mj-02735, and the SEC case is Securities and Exchange Commission v. Madoff, 1:08-cv- 10791, both U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Thom Weidlich in New York at tweidlich@bloomberg.net; Cynthia Cotts in New York at ccotts@bloomberg.net; Erik Larson in New York at elarson4@bloomberg.net.

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01/21/09 Another Victim Of Greenwich Resident Walter "Feeder Fund" Noel Comes Forward

MORE TRUST FUND BABIES ARE CHECKING THE CLASSIFIED ADS THANKS TO GREENWICH GOLDEN COUPLE WALTER AND MONICA NOEL ....



Another One Bites The Dust Thanks To Walter "Feeder Fund" Noel

You Wont Read This On The Business Pages Of The Greenwich Time....

WALTER "FEEDER FUND" NOEL STRIKES AGAIN !!!!!

Yet Another Loser Emerges in Madoff Scandal
New York Times Blogs

Auriga International Advisers, a hedge fund company registered in the British Virgin Islands, lost more than 400 million Swiss francs, or about $350 million, that had been invested with the disgraced financier Bernard L. Madoff, the company’s main shareholder said Wednesday.

Jacques Rauber, who is described as the majority shareholder of Auriga International Advisers in a 2007 filing to Britain’s business register, confirmed reports in the Swiss weekly SonntagsZeitung that the company’s Auriga International fund was wholly invested in the Fairfield Sentry fund, The Associated Press reports.

That fund, run by Walter M. Noel’s Fairfield Greenwich Group in Connecticut, invested all its $7.3 billion in assets with Mr. Madoff, who is accused of running a $50 billion Ponzi scheme....

...Information about Auriga’s investors was scarce. The company says on its Web site that ”clients include both institutional investors and high net worth individuals.”

Auriga is licensed to provide financial management services by authorities on the British Virgin Islands, a Caribbean tax haven known for its corporate and banking secrecy.

Go to Article from The Associated Press via The New York Times »
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1/16/09 Now The British Are Going After Greenwich Resident Walter Noel

UK REGULATORS PUTS THE GOLDEN GREENWICH COUPLE IN IT'S CROSS HAIRS





Madoff ‘Feeder Funds’ Said to Be Probed by UK FSA





Bloomberg





Britain’s financial regulator is investigating the involvement of so-called feeder funds in Bernard Madoff’s alleged $50 billion fraud, according to two people with knowledge of the case.



The Financial Services Authority is looking at how U.K. regulated firms were involved in what Madoff allegedly said was a “giant Ponzi scheme,” the people said on condition of anonymity because the subject of the probe isn’t public. The FSA is also reviewing the role of custodian banks, the people said.



Feeder funds took money from investors and placed it with Madoff’s Bernard L. Madoff Investment Securities LLC. The U.K. Serious Fraud Office said last week it’s investigating Madoff’s U.K. operations, which managed his family’s personal funds.





“The FSA’s task is to look after its own backyard but also to help with the Americans’ backyard,” said Tony Woodcock, a regulatory lawyer at London-based Stephenson Harwood. “While the FSA will probably be looking at civil proceedings, ultimately if a U.S. offense has been committed on British soil, there could be an extradition.”



Other European nations have also begun probes into Madoff’s alleged fraud. Paris prosecutors said last week that they were reviewing whether French investors who lost money were victims of a crime. The FSA will be looking into whether fund strategies were deliberately misrepresented, said Woodcock.



‘Investor Protection’





“The FSA is going to be more interested in investor protection and whether compensation should be paid to investors,” said Andrew Shrimpton, a London-based hedge-fund adviser from Kinetic Partners who used to head the FSA’s alternative investment team. “The SFO will be more directly interested in the employees of the Madoff firm in London.”



Stephen Raven, the head of Madoff Securities International Ltd., the London-based proprietary trading firm that invested Madoff’s family money, said in an interview that he “knew nothing” about the alleged crime, and that he is cooperating with the FSA and the SFO.



The investigations are at an early stage and the people with knowledge of them didn’t mention firms by name. The FSA has said it expects companies that it regulates to comprehend the strategy of funds they invest in.



Dan Waters, the FSA’s director of retail policy and conduct risk, said the regulator had started “examining the issues as they relate to us.”





Custodians



FIM Advisers LLP, a London-based investment firm run by Carlo Grosso and Federico Ceretti, is a consultant to Bermuda- based Kingate Management Ltd., which manages the Kingate funds that invested with Madoff. A call to FIM’s London offices today wasn’t answered.



Fairfield Greenwich Group, Walter Noel’s hedge-fund firm that had $7.5 billion with Madoff, was sued this week for at least the third time by investors in the U.S. over claims it failed to protect their assets. It has 18 employees in London who are licensed by the FSA, according to the regulator’s Web site.





“Fairfield Greenwich intends to cooperate with all regulatory procedures,” said Thomas Mulligan, a New-York based spokesman for the firm.



The FSA is also looking at whether financial custodians’ duties were breached, the people said. Custodians are typically banks charged with oversight of funds’ cash inflows and payments to investors........

HERE IS THE LATEST FAIRFIELD GREENWICH ROUNDUP:

Fraga Targets Brazil Illiquid Assets After Fund Underperforms


Bloomberg


New York-based Fairfield Greenwich Group’s Fairfield Sentry fund, which invested exclusively with Madoff, reported an average annual return of 11 percent ...





Financial Services Companies Targeted as Securities Filings Soar ...


Law.com, CA


.... class action was filed against hedge fund Fairfield Greenwich Group in Manhattan Supreme Court, Anwar v. Fairfield Greenwich, 08-603769, with investors ...





Wall Street Corruption & Despair Continue


The Market Oracle, UK


Fairfield Greenwich, the investment firm run by Madoff chum Walter Noel, lost $7.5bn in the fraud while womenswear magnate and Madoff mentor Carl Shapiro ...





Bill Christine


HorseRaceInsider.com, Canada


It has been reported that the Fairfield Greenwich hedge-fund investment group, which was co-founded by Jeffrey Tucker, a New York breeder, lost $7.5 billion ...





Best Legal Job in America: Representing Walter Noel


Cityfile, NY


This week, Noel's hedge fund, Fairfield Greenwich, was sued for a third time in as many weeks. The plaintiffs in the most recent suit include several ...

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1/14/08 Feeder fund mogul Walter Noel was part of the conspiracy of silence

How Did Walter Noel Miss All Of Those Red Flags ?????





Madoff's Enablers are A Lot Like Bob Woodward


Huffington Post, NY

BY: David Fiderer





....Instead of zigging and zagging, Frank Rich connected the dots. In his column, published the same day as Dowd's, Rich pointed out that there are countless Washington analogs to the Madoff scandal. The common thread running through all these scandals is that the due diligence process, or fact checking, was a sham. Simple due diligence would have discerned that Madoff ran a Ponzi scheme, that the WMD intelligence was bogus, that NINA mortgages were extended to unqualified borrowers, and that the Iraq surge required an expansion of the back-door draft.


Put another way, the scandals always involve two conspiracies: a conspiracy to defraud and a conspiracy of silence. The failure to perform due diligence is part of the conspiracy of silence. As for the Iraq war, Cheney was part of the conspiracy to defraud, Woodward was part of the conspiracy of silence. Bernie Madoff was part of the conspiracy to defraud (trust me, it was physically impossible for him to have acted alone), whereas feeder fund mogul Walter Noel was part of the conspiracy of silence.


In this respect, Bob Woodward and Walter Noel were cut from the same cloth, bigwigs who traded on their insider status to access special information kept from the public rabble, and who ignored the incriminating evidence hiding in plain sight. Noel, no doubt, was "stunned" and "speechless" at the news of Bernie Madoff's Ponzi scheme.

Here's how Woodward and Noel each engaged in a sham due diligence process.

Woodward and the Narrative of Good Faith Reliance on CIA Intelligence

Bush's reelection in 2004 relied on a false narrative, marketed and promoted by Bob Woodward, that the decision to invade Iraq was made in good faith, in reliance on George Tenet's assessment that, "It's a slam dunk".....

....Noel, the Absence of a Separate Custodian, and the Mom and Pop Auditor

Walter Noel is not as famous as Bob Woodward, at least outside of the more exalted social circles of Greenwich, Connecticut, where schadenfreude is more popular than it is in Washington. Walter and Monica Noel, along with their five beautiful daughters and the sons-in-law who worked in Walter's firm, were devoted climbers of the heights of Greenwich society. Their downfall of the was Topic A of almost every holiday party in December, according to well-connected friends. Their appearance at the Christmas dance at the Round Hill Club was met with ridicule in the press, and their foibles are tracked regularly, Perez Hilton style, on The Business Sheet.

The Noels earned hundreds of millions of dollars from their feeder funds at the Fairfield Greenwich Group, which skimmed fees off the top of the Madoff's phantom profits. Jane Bryant Quinn put it best:


"Feeder funds are a racket. They collect the money, extract a large fee, and pass it on to another manager who does the work. By the time both levels of fees are paid, your principal probably will decline, even if the fund itself makes gains. The general partners in feeder funds have only one job: to be rich, mingle with the rich, and make the rich want to surrender their money, at any price. Not bad work, if you can get it."


Putting aside the Noels' understanding of Madoff's purported investment strategy, which others found "statistically impossible to replicate," there were two due diligence red flags that, when considered together, make it impossible to believe that Noel was acting in good faith.



These red flags pointed to the essential and necessary elements of Madoff's scam. Remember, in a scam like this, every check, every wire transfer, issued over the years is an act of bank fraud.

Investors expected that their money was pooled, invested, and proportionately allocated and distributed over the years. Investors' proportionate shares of income and principal would be tracked precisely, for generating 1099 Forms issued each year to individuals and the IRS. In reality, the cash came in and was siphoned off to wherever, and investors received distributions so long as the new cash coming in exceeded the total cash going out.


The cash and investments in Madoff's funds were not kept by a separate custodian. As a red flag, that's huge, because it's so obviously reckless. In a fund where securities or investment contracts are traded, especially over the counter, you want to be absolutely sure that you have good and unencumbered title to the securities before you let cash out the door. And if you are in the business of trading options, a simple recordkeeping error could be disastrous, since options expire abruptly.

By the same token, a mom-and-pop accounting firm like Friehling & Horowitz, Madoff's "auditor," is simply incapable of adequately auditing the risk controls of a company performing custodial services for a $17 billion investment fund that actively trades options. Period. Again, that's a huge red flag. It's like using Joe the Plumber to assess the safety of New York's water supply.


As a rule, actual due diligence is performed by junior people who get pushed around by people further up the food chain. So when the disaster becomes apparent, the higher ups can deflect the blame on to others. The rich, powerful and famous can act "stunned," and "speechless." Or as Bob Woodward might say, "My conscience is clear."



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12/31/08 Adam Horawitz Says Walter "Feeder Fund" Noels Buddy Bernnie Madoff Should Not Be Excommunicated (Updated - Picture)

Jews are Soul-Searching About Madoff -- What About Gaza?

There has been an unusual amount of introspection in the Jewish community this holiday season. Hanukkah was almost overshadowed by the Madoff scandal and the accompanying uproar about his impact on the Jewish community. The frenzy of handwringing and accusation culminated with the call for Madoff's excommunication from Rabbi Joshua Hammerman, of Temple Beth El in Stamford, Connecticut, who stated in a passionate a letter to Malcolm Hoenlein that "never before has one man done such damage to individual Jews, Jewish organizations and Judaism itself." Hammerman was motivated by fears for the future of Judaism: "Our own children are watching us."

The future of Judaism and the moral standing of the US Jewish community are being threatened, but ironically, and tragically, it is happening far from the country clubs of Palm Beach and the mansions of Long Island. It is happening in Gaza. And unfortunately there is far too little handwringing about it in the Jewish leadership.

On the seventh day of Hanukkah, Israel unleashed an aerial assault on the Gaza Strip. This attack was ostensibly in retaliation for Qassam missiles shot from Gaza, but as was also seen in the 2006 war in Lebanon, the barrage was overwhelming and disproportional. At the end of the first three days of fighting over 350 Gazans had been killed and 1,600 injured. These deaths included children coming home from school, women shopping in open-air markets, and people waiting for buses. The indiscriminate nature of the attack combined with the ongoing siege of Gaza, which continues to cut the civilian population off from food, medicine, water, fuel and electricity, constitutes a horrific form of collective punishment....

....I could not celebrate while Gaza was dying - while cities were cut off from electricity, from water, from food. I could not join my community who, if not actively celebrating and promoting this barbaric behavior, were sitting idly by while others are forced to starve and be killed in our name.....

....I do not share Rabbi Hammerman's desire to ex-communicate anyone from the Jewish people, but I do share the Rabbi's concern for the future - for the future of Judaism and the messages we are sending the next generations. The siege and destruction of Gaza is the political, humanitarian, and moral crisis of our time. Where is the moral standing of a community whose leaders promote the slaughter of innocents? And when will we agonize over scandals where lives are lost at Jewish hands, and not just fortunes?

This article has been cross posted at JVoices.com.

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