British Madoff Terry Freeman Admits to Running a Ponzi Scheme
A man who has been dubbed the to be the “British Madoff” and Britain’s “mini-madoff” admitted to running a Ponzi scheme. The man, Terry Freeman is 62 years old and from Buckhurst Hill in Essex, United Kingdom. He admitted to fraudulent trading, engaging in business while bankrupt, acting as a director when bankrupt and acting in contravention of a disqualification order.
Freeman was convicted at Southwark Crown Court. Judge Geoffrey Rivlin QC (who incidentally found two people who cheated on the UK version of Who Wants to be a Millionaire? not guilty) told the court: “People were putting good money into this business and they were being conned.”
He
defrauded approximately 700 investors including golfer Colin Montgomerie’s ex-wife Eimear. The daily mail reports Eimear invested a small amount with Freeman’s company, GFX Capital. One couple invested £1.4m, were told that it had risen to £2.7m, only to later find just £14,000 in their trading account. The City of London police, who uncovered the fraud, said that the couple were now living in rented accommodation “in a state of despair”.
Freeman so-called investment strategy was centered around foreign exchange investments – but it was all a Ponzi scheme. He was paying off earlier investors with new
cash coming through the door. Like Madoff, Freeman lived an extravagant lifestyle owning vacation homes in Cyprus and France, an executive box at Tottenham Hotspur FC which he bought for £44,000 and used to impress prospective investors, a £120,000 diamond ring for his new bride and expensive City offices.
Freeman’s downfall came about due to the collapse of the global economy and Lehman Brothers. When investors began to demand their money Freeman became scared for his life and went to the Metropolitan police in February 2009, complaining that investors were threatening him and admitting he had lost £20m. He was arrested days later. Police said he was trying to draw in new investors even as the operation crumbled around him.
If investors had performed their operational due diligence, they may have learned that Freeman had a checkered past. He was disqualified from being a director as a result of an earlier conviction. In 1997 he was jailed for four and a half years after being found guilty of eight offences relating to bankruptcy and being a disqualified director. In an attempt to start fresh, he changed his name from Terrence Sparks on leaving jail in 2000. Using a Saxo Bank trading platform, he attracted investors to GFX with the offer of high returns on short-term trades.
The United Kingdom’s Financial Services Authority is effectively claiming that detecting the Ponzi scheme was not their responsibility since Freeman’s Ponzi scheme was unregulated. The unregulated nature of this entity prevents investors from seeking compensation from the FSA.
Here is a video in which one of Freeman’s victims Peter Besson who put £600,000 into Freeman’s fund speaks out:
It seems in this case a simple background investigation and a bit of operational due diligence may have detected many of the red flags which could have raised investor concerns before they unfortunately lost millions.
The Madoff Jeffry Picower Settlement and Annette Bongiorno’s Temporary Freedom
It seems as if wronged Madoff investors had a brief moment to recover thanks to the efforts of Madoff trustee Irving Picard in his continued pursuit of reclaiming (i.e. – clawing back) capital from those who reaped profits from the Madoff scandal. One of the biggest benefactors from Madoff appears to have been the late Jeffry Picower (see previous posts about Picower here).
Mr. Picard recently announced a deal struck with the Picower estate to repay $7.2 billion. Only approximately $5 billion will go to Madoff victims with the remainder being paid to the government. Not every investor was happy with this deal and several of them have banded together and filed a lawsuit objecting to the settlement. This settlement will not leave Picower’s widow destitute. Most of this money had been intended for a philanthropic foundation, not for Picower’s heirs. According to the Washington Post, Picower’s widow will retain $200 million and his daughter will retain $25 million, the funds for all of which reportedly derived from sources other than Madoff-related profits.
Here is a video from MSNBC regarding the settlement:
And from the Wall St. Journal:
Here is a nice summary of the Picower withdrawals from Madoff:
In other Madoff news, Madoff’s former secretary Annette Bongiorno was recently freed on bail.
Here is a video regarding the original charges brought against Bongiorno’s and another Madoff secretary Joanne Crupi (who was responsible for supervising the primary bank account used in BMIS’s investment advisory operations):
Bongiorno is accussed of assisting Madoff implement his Ponzi scheme. Clients recruited by Bongiorno and her electrician husband Rudy had their money put in accounts that were code-named RuAnn in company files, according to a former Madoff employee . It is reported that Bongiorno mined her old Queens neighborhood for investors. Not helping her case are Bongiorno’s considerable assets including a $2.6 million mansion in a gated community in Manhasset, New York, and three fancy cars, including a Mercedes that sells for nearly $100,000.
Bongiorno, 62, is facing charges of helping Madoff defraud investors of billions of dollars. Bongiorno, pleaded not guilty to conspiracy and fraud charges. U.S. District Judge Laura Taylor Swain in Manhattan cut Bongiorno’s bail from $5 million to $3 million after prosecutors seized most of her bank accounts and defense lawyers agreed to disclose others. The judge required eight people to guarantee the bail. This bail reduction allowed Bongiorno with enough flexibility to make bail, but she will remain under house arrest in her Manhasset mansion…
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The Life and Death of Mark Madoff: Madoff’s Eldest Son
The Madoff saga has yielded another unfortunate death -Madoff’s eldest son Mark Madoff. According to media reports Mark Madoff, 46, committed suicide by hanging himself with a black dog leash while his 2-year-old son slept nearby. His death occurred two years to the day after his father (Bernard Madoff) was arrested by the FBI.
Mark Madoff had sent at least two e-mails to his wife and one to his lawyer in the early morning, a police official said, before killing himself. In the e-mails to his wife, he asked her to take care of their son and said that he loved her, the official said. If you will remember Stephanie Madoff, Mark’s wife, petitioned a Manhattan court in February to change her and her children’s last names to Morgan to avoid harassment and threats (see previous post). Here is a video about Mark’s death:
Madoff and his first wife, Suzanne, divorced in 2000.He has two other children from a previous marriage, ages 18 and 16. Mark Madoff graduated from the University of Michigan. He was a licensed broker with his father’s firm since 1987.
Mark’s death is the fourth major death surrounding the Madoff scandal and the second purported suicide. The first was investor’s Rene-Thierry Magon de la Villehuchet’s suicide and the second being the death of Jeffry Picower (see previous post regarding Picower) and the third was Stanley Chais a Beverly Hills, California investment advisor who operated feeder funds which allocated capital to Madoff funds (see previous post regarding Chais).
In recent weeks, federal investigators had charged a number of Bernard Madoff associates in indictments. The latest under indictment was key operative Annette Bongiorno, who was charged last month with fabricating documents and securities fraud in connection with the Ponzi scheme.
Madoff’s other son Andy, despite attempts to continue to keep a low profile, was featured in several media articles relating to a company he started with his girlfriend Catherine Hooper (who reportedly has a tattoo of the Madoff name) called Black Umbrella which provides disaster recovery planning for families. Andy and the now deceased Mark reportedly also were avid fisherman which was coincidentally a hobby equally shared by Madoff’s former Chief Financial Officer Frank DiPascali (see previous post). Here’s is a video with Mark Madoff showing off Abel Reels (a company he was the leader of an investment group which bought them):
Agents investigating the scheme recently had focused more attention on Mark Madoff, one investigator said. “He was next up to the tee,” said the investigator, who didn’t want to be named because of the pending probe, referring to the shift of attention to Mark Madoff. Mark Madoff wasn’t viewed as a major insider with vast knowledge of his father’s fraud but he is believed to have had some awareness of the fraudulent nature of the operation, the investigator said.
“This is a tragic development, and my sympathy goes out to Mark Madoff’s family,” Irving Picard the Madoff trustee said in a statement yesterday.
Jeff Wilpon, chief operating officer of the New York Mets, who went to Roslyn High School with Madoff in the 1980s, said, “It is shocking, it is sad, it is tragic.” Mr. Wilpon, who said in December 2008 that Mark Madoff had been a friend of his for 30 years, has been sued along with other members of his family by Picard in one of hundreds of lawsuits the trustee has filed to get back profits from Madoff investors.
Ira Sorkin, Bernard Madoff’s lawyer, said he was unable to get in touch with his client, who is serving a 150-year sentence at federal prison in North Carolina. Sorkin did say, “I’m very sure he has been informed. This is a great tragedy on many, many levels.”
A lawyer for Madoff’s mother said, “Ruth is heartbroken.” Mark Madoff had not spoken to his parents since his father’s arrest, on the 
advice of his lawyer.
There have been no reported statements made by Peter Madoff (Bernard’s brother and Mark’s uncle) or Peter’s daughter (Bernard Madoff’s niece and Mark and Andy’s cousin Shana Madoff). Both Peter and Shana were also named in a suit recently filed by Irving Picard.
Perhaps this fictional account of Mark and Andy teaming up with their own lawyers and distancing themselves from Bernard Madoff around the holidays puts Mark’s death this in perspective:
