This reporter got to the “smart person” here for her interview who did not want to be identified for obvious reasons. Madoff was one of the first innovators of off floor stock trading and I’m sure he hired the best. Interesting though for the Ponzi end of it how they hired the most “non tech” individuals to work that end of the business, like the old saying of being barefoot and pregnant, and from reading this interview it sounds like that is exactly what happened, but they were well paid barefoot employees. When you have folks that don’t understand much about computers and software your worries are a whole lot less, like maybe somewhat like at the SEC in the recent past?
Wall Street and Healthcare – Was it the Mob or have the rest of us been operating like a PC with no anti-virus protection?
“Now we are stuck with a whole bunch of “Root Kits” and some of us are “Zombies”…so if we can’t find an solution, well in tech world we call it “reformatting” (starting with a clean drive) so with the spread of all the malware and bad algorithms running around, maybe that’s what it’s going to take, reformat all of us. Madoff alone is one big “root kit” and how many more will be found? “
We have Trojans and Root Kits in healthcare too that have infiltrated their way into the system. Again, one more time why we need “smart people” with technology backgrounds or at least some experience in top positions. Geeks give you the straight story for the most part, that is unless they too have been coerced.
Andrew Cuomo has been great so far in exploring and getting down to the brass tactics used with technology of late, such as the case with Ingenix and I’m sure we will be hearing more from him soon. BD
An employee of Bernard Madoff’s legitimate brokerage operations, which were described by the fraudster in his plea agreement as being “successful and profitable,” has told The Daily Beast that they were in fact money-losers that acted as a front for his Ponzi scheme.
He said that these businesses, the proprietary and market-making arms on the 18th and 19th floors of Madoff Securities, were designed to lure investors in, especially highly placed figures in society, and to fool the SEC into thinking that he had a large and impressive galaxy of businesses.
But behind the façade, these businesses were a shambles. They were excessively staffed with grossly overpaid people, and run with marked inefficiency, he said.
The employee, who did not want to be identified because of possible lawsuits or threats by victims, was a member of an elite group that designed sophisticated computer-trading programs. His identity was verified by consulting the Madoff employment roster, where he was listed. He also has an employment confirmation letter and a letter of reference from the Madoff firm.
“The three managers who ran parts of the businesses were getting $500,000 to $750,000 a year and they didn’t even know anything about modern computerized trading,” the employee said. The employee was part of a trading group, which was able to break a security code that he says led them to a site that was supposed to be seen only by the Madoff family. It showed the profits and losses of the legitimate businesses. Even in years when they grossed $25 to $50 million, they calculated in the outlandish costs and thus concluded that the firm barely broke even and some years lost money.
THE SECRETIVE 17TH FLOOR
The employee says he only saw the 17th floor, where the fraudulent Investment Advisory operation was located, about two times. He noticed the out-of-date computers and the old-fashioned dot-matrix printers that printed out paper with green and white stripes. The computers he saw were about 15 years old, including one system that “is not even around anymore—miles away from modern Windows technology. And the statements I've seen from victims don’t look like my statements from Fidelity. They had primitive typefaces, as though they had been typed on a typewriter. Nobody sends statement like that, so maybe it was done to create the illusion of old-fashioned transparency.”
He learned that those who staffed the 17th floor were less than knowledgeable, often uneducated, often appeared incompetent. “There was this one guy, who had worked there his whole life who generated the statements but he would often not get them out on time.”
What should have been a red flag, the employee said, was that the 17th floor’s statements detailing the financial output of his four-man computer unit often did not match what they calculated for themselves. “They screwed up a lot and were not technically sophisticated. And in that business, you have to be accurate, you have to know what you are doing.”