Why would certain well-off clients and investors in the feeder funds (for example Switzerland's Union Bancaire Privee) not sue Madoff for his illegal pyramid scheme? Because the funds were placed with them for a reason, and that was to help their clients avoid paying taxes on the income. If you read the following letter submitted to the SEC in 2005 by an anonymous fund manager and linked to the website of karmabanque.com, you see that the SEC had been given all of the information it needed to bring down Madoff's firm. http://karmabanqueradio.com/wp-content/uploads/2008/12/madoff_secdocs.pdf
(Thank you to Stacy for this and I would urge everyone to listen to karmabanque.com's podcats! They are always right on about exposing the financial system and are brilliant and hilarious to listen to as well.)
That the person who wrote this letter to the SEC should be afraid for his or her life means s/he knows what is going on and how far the tentacles reach. This goes straight to the top of the financial hierarchy. These are very powerful people who can do and have done a great deal of damage. This person should have been taken seriously and protected! The problem is that corruption has so deeply penetrated so many levels of US and international business and government that people are scared to blow the whistle. You end up scared to death and hiding just for doing the right thing as a citizen!
For every nervous investor who has used an insider tip and watched as Martha Stewart was carted of to jail, thinking, "There but for the grace of G-d go I"... there are the bigger fish who are going to sit tight, lay low, keep quiet about this Madoff thing. And they won't be filing any law suits and they won't want those they invested with to do so either in case their accounts are checked.
Unless some of the wealthier investors want to go to jail too for tax evasion, they will have to keep quiet. And Bernie knows it. The fund managers know it. The Swiss banks that were had know it. But what is most scary of all, is that the SEC knows it too. And they did nothing.
Which leads me to ask, as I have about the Judicial system in the U.S., the Bush White House, and even the FDA...is this now just another good ole boys club (i.e. mafia) where everyone protects one another? Those who got in first and profited for years may have been given a sign to get out. Many got out years ago.
The system has been rigged for so long and the authorities which had oversight have done such a poor job for so long (granted they do not have enough staff to look into every accusation) that a lot of people are going to get away with what amounts to robbing the US and other country's governments of taxes which could hep us survive at the moment...oops! I forgot, we gave them our tax money too!
Those who are taking the fall in the media headlights: the Fulds and Zells and Madoffs of the world, are really just the tip of the iceberg. And those icebergs sure are melting fast. And if we don't change the entire system pretty damn quickly, we are all going to drown.
No wonder billionaires all have huge yachts. They are going to need them, sort of like Noah's arks for the End of the World as We Know It.
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