DiPascali’s on the move and Peter Madoff’s New Troubles
Bernard Madoff cohort Frank DiPascali is on the move – literally. Frank and his wife Joanne have agreed to surrender their Bridgewater, New Jersey home and all its furnishings, according to a court filing.
They are giving up the property so that it and all salable personal property may be sold by the U.S. Marshal’s Service to help satisfy the forfeiture. Other personal property being given up by the DiPascali’s includes a home theater system, multi-station gym and circuit-training equipment, a snowblower, artwork, two all-terrain vehicles and a blue and white Yamaha motorcycle, according to the order.
Frank’s Fishy Ways:
I guess Frank DiPascali’s should have seen the writing on the wall. His 61-foot Viking sportsfishing boat the “Darling-Jo” was previously sold as part of an auction of Madoff’s property. Here’s a picture of the boat:
Apparently, Frank was so into fishing that he even put his boat’s captain, Christopher Warrin, on the Madoff payroll. It might have been a good investment, since Frank won over $55,000 in a 2007 South Jersery Mid-Atlantic Tuna Tournament. Here’s the award ceremony photo:
Frank and Joanne, are the managing directors of Dorothy-Jo Sportsfishing LLC, which registered in New Jersey in October 2002. According to this website and this website Joanne DisPascali is an employee of JP MorganChase National Association (the private banking arm of JPM) in their Iselin, NJ office. In 1998, DiPascali registered Dorothy-Jo Fishing Team LLC but the registration was allowed to lapse in 2005. Oh by the way, Dorothy-Jo Sportsfishing via Frank was a Madoff customer….
Peter Madoff in Hot Water:
In other news Peter Madoff, Bernies brother, is the subject of a federal criminal investigation. This news came to light in documents related to a civil lawsuit over losses by the Lautenberg foundation, which is
the charitable foundation of U.S. Senator Frank Lautenberg. Interestingly, the lawsuit claims that Peter either “recklessly ignored” or “consciously disregarded” the red flags from his brother’s Ponzi scheme. I guess its a bad idea to steal from a Senator. During depositions related to the case led by a lawyer for the foundation Ron Riccio, Peter invoked the fifth-amendments right against self-incrimination over 250 times. in the case. In frustration Mr. Riccio asked the judge to place Peter in contempt by even pleading the fifth in response to such questions as “Did you ever talk to him [Bernard] in your entire life?” Perhaps Peter’s next line of defense will likely go something to the effect of, “Am I my brothers keeper?”
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Corgentum to moderate: The Changing Landscape of Alternative Investments and what opportunities lie ahead?
Corgentum Consutling Managing Partner Jason Scharfman, will moderate a panel at the upcoming Opal 
Investments Consultants Forum entitled, “The Changing Landscape of Alternative Investments and what opportunities lie ahead?”
Mr. Scharfman will address topics including the increasing resources being dedicated towards due diligence, the evolving nature of operational due diligence and the effect of the global recession on due diligence.
The conference will take place on March 11, 2010 at the Princeton Club of New York .
For more information regarding the conference or to register please visit Opal’s website.
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Blast from the Past – Brian Hunter and Amaranth’s Manipulation
Does anyone remember Brian Hunter? Just a few short years ago he was the famed (or 
is it infamous?) Amaranth lead energy trader who allegedly tanked the firm via massive trading losses. In a famous case of where was the risk manager – in September 2006 Amaranth collapsed after approximately $6 billion in losses in a single week largely due to bad bets in the natural gas market.
For some perspective here is a video about Amaranth from CNBC:
The Huffington Post has a nice description of Mr. Hunter’s “trading strategy” which it refers to a banging the close:
“By flooding the NYMEX with Sell orders in Nat Gas in the last 10-15 minutes of trading (the Close), Hunter found that he could manipulate the price downward as there were no likely buyers for the type of size he was representing for sale.
Hunter concurrently held similar Nat Gas positions at the ICE that were much larger. Those positions are called look alikes, because they a not physically settled like their counterparts at the NYMEX are. After First Notice, those long contracts can be delivered against. This is true for any commodity.
Conversely, ICE contracts are settled financially, like the S&P 500 for example, so a trader does not have to worry about getting delivered against. Hunter was short his contracts, so he did not have to worry about delivery in this case. His goal, however, was to artificially depress NYMEX Nat Gas contracts so as to lower his larger ICE look alike Nat Gas contract position and burgeon his account balance. Herein is the manipulation.“
The notoriously secretive Mr. Hunter, he reportedly won’t allow his picture to be taken by journalists, is back. It should be known that accordingly to New York magazine (which refers to Mr. Hunter as an “international jerk of mystery”) denies that he is the root of all evil. This is (supposedly) one of the only pictures available of him (yet it remains unconfirmed) – nice catch!:
In July 2007 the Federal Energy Regulatory Commission (“FERC”) had Amarath and two of its former traders Brian Hunter and Matthew Donohoe of violating federal anti-manipulation regulations in natural-gas futures trades in March, April and May of 2006 on the New York Mercantile Exchange.
In August 2009 FERC approved a settlement with Amaranth and Donohoe which required the parties to pay $7.5 million. Mr. Hunter did not participate in the settlement. Maybe he should have in light of these instant messages….
A federal administrative judge, Carmen Cintron, ruled last week that Mr. Hunter 
violated market-manipulation rules. Judge Cintron’s decision will now go onto the Federal Energy Regulatory Commission (“FERC”) for a final decision.
Mr. Hunter, who is certainly lawyered up, has been fighting FERC every step of the way since 2007 during which time there was his interesting attempt to reinvent himself at Solengo.
A recent example of Mr. Hunter trying to fight FERC was on August 14, 2009 he filed a motion seeking to disqualify Judge Cintron because she may have been engaged in improper ex parte consultations, citing certain sections of the Administrative Procedure Act. Mr. Hunter’s motion was denied.
It is anticipated that FERC could take about two months two make a decision but the Wall St. Journal, quoting a FERC spokeswoman, said the final timetable is set by the commission.
Matthew Menchel, a lawyer who represents Mr. Hunter said in repsonse to Judge Cintron’s ruling, “The FERC should never have presided over this matter which is outside its competence and jurisdiction. Its decision means nothing in our view, and the FERC will have to accept the consequences when we get to the DC Circuit, which the FERC has been trying to avoid for the last few years.” Sounds like fighting words to me and that this case is turning into the things’ Administrative and Constitutional Law Professor’s dream about at night.
Here is an interesting perspective arguing for trader’s personal responsibility, and subsequently Mr. Hunter’s personal responsibility for his own actions.
If that is the case, and the decision really does mean nothing to Mr. Hunter and Mr. Menchel, why indeed show up to defend yourself in from of FERC? or is this just another case of delaying the inevitable of what many feel are just desserts.
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