Monday, March 2, 2009

It's All Connected

Man, I didn't know what I was getting into when I started untangling that ball of wax containing Madoff and Merkin. I don't claim to be cutting edge, but this stuff has even reached me, way out here on the periphery. What brought it all together for me was the New York Magazine March 2nd issue with Bernie Madoff on the cover made up like a cross between the Joker and Grandpa Munster.

I became quite interested in Madoff because a family I had known for decades lost a sizeable fortune that had all been invested with him. Since I had been receiving a small retainer from the family for doing some work at home, I indirectly was affected by Bernie's ponzi scheme. My retainer stopped when everything went up in smoke. See how wide the ripples spread? Who would think that what Madoff did would affect me since I never saved or invested anything in my life?

Then there was Daphne Merkin, whom I wrote about last week. Daphne thought she understood lesbian "glamour" because she spotted Rachel Maddow wearing makeup. Well, Daphne's brother, J. Ezra Merkin, and Bernie were "like this" because J. Ezra had been turning over huge amounts to Bernie to "invest" on behalf of several charities. Of course, J. Ezra cut a nice slice off the top of the money going over to Bernie as his share for directing the flow Bernie's way.

Now that Bernie has come clean about the giant FU he's been giving his "investors" since maybe even the '60s, J. Ezra has not only lost $billions on his clients' behalf, but on his own. What makes it even more interesting to me is that there's an art connection: J. Ezra is believed to be THE biggest private collector of Mark Rothko's work according to Lindsay Pollock of Bloomberg News. Reportedly, the dozen or so giant Rothko's (such as 9x15 feet) that he owns are worth $150-200 million and Merkin is getting calls from collectors worldwide who want to buy the pieces that are undoubtedly going on the block sooner or later. *

*Another piece of the Madoff trivia puzzle that I couldn't figure was also answered when I read that Merkin's art advisor, Ben Heller, is the stepfather of Kyra Sedgwick, wife of Kevin Bacon. I couldn't understand how Kevin, a nice Boston Irish Catholic boy, got mixed up with Uncle Bernie and lost plenty of money, but now it all makes sense - Kevin took investment advice from Heller.

This Rothko is owned by the National Gallery, "White Center", 1950

Another Rothko owned by the National Gallery, Untitled, 1949.

Isn't it odd that in all the time Bernie Madoff's been doing "business", the SEC didn't catch on that he never made any trades and that his "investments" were a complete sham? Sunday night 60 Minutes had an interview with Harry Markopolos, a financial analyst and fraud investigator from Boston, who provided the SEC with information about Madoff's fraudulent activities several times dating back to 2000. That interview was powerful stuff and if I had lost money with Madoff, I'd be suing the SEC not only for negligence but for potential cronyism. What a stink! (It's probably just as well that I had no money with Madoff because now I'd be throwing away legal expenses too.)

The latest that I heard this a.m. is that Madoff claims he should retain his penthouse plus $62 million. NY Magazine was right. He is the Joker.

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