Madoff Auditor Pleads Not Guilty

Count us as surprised. After agreeing to not have the evidence against him reviewed by a grand jury, which led some (i.e. us, Bloomberg, others) to speculate that he would plead guilty, Bernie Madoff's auditor/alleged accomplice/number-maker-upper, David Friehling, plead not guilty today.

WSJ:

"[Friehling] entered a not guilty plea to securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports with the Securities and Exchange Commission. Mr. Friehling was originally charged in March. Assistant U.S. Attorney Lisa Baroni asked the court for the next hearing in the matter to be scheduled in 60 days to allow the parties to continue discussion of a possible disposition of the matter. The next hearing scheduled in the case is Oct. 1."

This really doesn't make a helluva lotta sense to us but whatevs. If dude is looking to roll the dice, who are we to say "you're an idiot"?

UPDATE 2:25 pm: Because it's Friday and we are intent on getting the party started early, we just so happened to ignore that the possibility of a "disposition of the matter". Our bad.

Madoff's Auditor Pleads Not Guilty [WSJ]

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Sky Capital Chief is a Typical Wall St. Guy

We were going to leave the Sky Capital story alone but self-appointed nicknames have always begged to be a point of ridicule and this is no exception. Apparently the Sky Capital honcho, Ross Mandell, referred to himself as "The Chuck Bass Bad Boy of Wall St.".

Two points:

1. Real original, Ross

2. Remember Costanza giving himself the nickname "T-Bone"? Went over well didn't it?

According to the FT, here is Ross "T-Bone" Mandell's bad boy resume:

During the 1980s and 1990s, he had a series of run-ins with US securities regulators, including the National Association of Securities Dealers, the forerunner to Finra.

In 1995, he was given a six-week suspension from securities dealing after numerous customer complaints prompted an investigation by the New York Stock Exchange, records show.

Two years later, he settled a separate matter with a disgruntled client by paying $75,000.

In an interview with the New York Sun in 2005, Mr Mandell said he had been an alcoholic and addicted to cocaine. “I lived hard and played hard,” he told the Sun. “I treated my friends, business associates and clients quite badly.”

Recap: Regulators beating on your door, friends, clients and co-workers hated you, you got suspended briefly and were a boozehound with a coke problem (or is it a cokehead with an alcohol problem?).

Count us unimpressed. Bored even. Has anyone ever heard of broker that was investigated, despised by clients and had dependency issues? You just described Bud Fox. Get back to us when you rip off Kevin Bacon or Muammar Gaddafi.

Sky Capital chief called himself ‘bad boy of Wall St’ [FT.com]

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The Next Alleged Accomplice in the Stanford Case is the State of Florida

Because we're big fans of reckless disregard for rules that cramp our style, the latest twist in the 2nd most famous Ponzi scheme happens to be especially diabolical.

According to a story in today's Miami Herald, the Florida banking director gave the green light to the Stan's request to create an entity that would be allowed to move money offshore to Antigua without reporting any of the funds to regulators.

This occurred, "Over objections by the state's chief banking lawyer -- including concerns that Stanford was laundering money -- regulators granted sweeping powers never given to a private company."

The Florida banking director that ok'd the creation of Stanford Fiduciary Investor Services admits he screwed the pooch, but... DUDE, concerns about money laundering? Caribbean banks? A Texan who likes cricket? Does any of this smell strange?

Perhaps this is a stretch but maybe, just maybe this guy Art Vandelay Simon was getting greased by Stan to give this sketchy entity structure the big thumbs up. Just putting it out there. It's not like this case can get any weirder.

Florida aided Allen Stanford, suspect in huge swindle [Miami Herald]

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Additional Confirmation Why Getting Duped in India is Bad

Last month we told you about the two audit P. Dubya partners that are sitting in an Indian prison because they are accused of being complicit while Satyam just sorta made the numbers up.

You would figure that a couple of auditors spending a few months in prison would be able to make bail and end up on house arrest for their trial. Not so in India, friends.

The judge in the case, has denied bail for the two bean counters:

The court also felt that there is material evidence against the two auditors, who represent Price Waterhouse, for their involvement in the scam. The court also agreed that despite the availability of authenticated documents on various accounting issues in the company, the auditors chose to go by the documents provided by the Satyam management.

So, just in case you're keeping score at home, Allen Stanford may post bail in U.S. and two auditors in India (either crooked as the Satyam management or simply dimwitted, neither so flattering) are going to stay in the joint.

No bail for Satyam auditors: HC [dnaindia.com] Sphere: Related Content

Stanford Pleads Not Guilty

"Texas financier Allen Stanford pleaded not guilty on Thursday to federal criminal charges that he masterminded a $7 billion fraud." Silver lining: He looks pretty good in orange.

Turning to the sauce (but now on Ativan) to cope with the possibility of going to hell if he's wrong? Guilty as charged.

Allen Stanford pleads not guilty to fraud charges [Reuters] Sphere: Related Content

Madoff's lawyer asks for 12-year prison term

From the AP:

A lawyer for Bernard Madoff has told the judge who will sentence the disgraced financier that a prison term of 12 years would be fair.

Attorney Ira Sorkin says such a sentence will not disproportionately punish his client compared to other white collar criminals.

Federal Judge Denny Chin is scheduled to sentence Mr. Madoff next Monday.

The 71-year-old Madoff pleaded guilty March 12. He admitted operating a massive Ponzi scheme. He faces up to 150 years in prison.

Dozens of Mr. Madoff's victims have already urged the judge to make sure Mr. Madoff spends the rest of his life in prison.

Mr. Madoff has been jailed since pleading guilty to 11 felony counts including securities fraud and perjury.

Complete and utter outrage to ensue in 3...2...1... Sphere: Related Content

Please Let There Be a Media Circus of a Trial. PLEASE

Obviously, our favorite news of the day is the surrender of everybody's second-favorite Ponzi mastermind, Allen Stanford.

Stan-the-Man trumps Bernster in our minds for one key reason however: constantly maintaining his innocence. It's one thing to tattoo "fuck it" on your forehead and quite another thing to say, "you all can get fucked".

Stan has already promised to jump into the lake of fire if his business is a Ponzi scheme and has been itching like Courtney Love to turn himself in, so we can get this show on the road.

But his attorney has made the strongest argument:

"'Allen Stanford was not running a fraudulent operation,' Mr. DeGuerin said. He added that, 'the S.E.C. has done more damage to Stanford investors' than Mr. Stanford could have possibly done himself."

Gotta say, the man may have a point.

Regardless, here we are, we've got our big Texas showdown. Between the drug informants, money laundering, and some strange methods of attracting investors, we're watching this one until the bittersweet end.

Texas Financier and Antiguan Official Indicted in Fraud [New York Times]

UPDATE: Dude is appearing in court, circa now.

UPDATE 2, 2:33 MDT: DealBreaker. Possible 375 years. Meh. Sphere: Related Content

HealthSouth Lawyers Want $20M For Going After E&Y

The New Mexico attorney general says that the attorneys that sued E&Y on behalf of HealthSouth Investors should receive $20 million on a proposed $109 million settlement.

The settlement was over E&Y's failure to detect the $2.7 billion fraud at HealthSouth that was pretty much all Richard Scrushy's fault.

According to the article the AG said that the fee was "reasonable" because of counsel's "superior skill and ability"

In a strange bit of irony, it's likely that because of E&Y's superior skill and ability, they must have concluded that the $2.7 billion discrepancy was reasonable.

HealthSouth Investors’ Lawyers Deserve $20 Million [Bloomberg] Sphere: Related Content

Harry Markopolos's "I Told You So, SEC" Tour Still in Full Swing, May Have a Crush on Schapiro

In a serious case of "we heard you the first time", Harry Markopolos is still shouting from the rooftops about the SEC ignoring his warnings about Bernie Madoff's Ponzi scheme.

"'I knew it was a fraud in about five minutes', [Markopolos] said."

We get it man. You told 'em. Now go write a book and make millions so we can get on with our lives and you'll be an answer-question on Jeopardy! soon enough.

Markopolos is giving the new and improved SEC a big thumbs up though, "'[Mary Schapiro is] on fire—she has changed that agency,' Markopolos said. 'I'm really impressed.'"

Sounds like someone has a big hot crush on MSchape. Don't make it so obvious though Mark, she doesn't strike us as the type to just swoon over some whistleblower. You've got your work cut out for you.

Madoff Whistleblower Markopolos Blasts SEC [Business Week] Sphere: Related Content

Supreme Court Stonewalls Tyco Executives' Appeal

The Supreme Court has refused to hear the appeal of Tyco executives Dennis Kozlowski and Mark Swartz in order to overturn their convictions.

Shockingly, a case involving $6,000 shower curtains and a toga party on the island of Sardinia was determined to be not worthy of the high court.

Ex-Tyco execs lose appeal at Supreme Court [Miami Herald] Sphere: Related Content

You Know, Pleading Guilty and Getting the Whole Thing Over With Just Isn't That Fun

Allen Stanford's attorneys are having a conniption over the $20M fee that the case's receiver is charging for attorneys, a PR firm, and forensic accountants.

At first glance, one would think that $20M is no big whoop, but the SEC and the court-appointed examiner have even complained about the tag.

The slime that is all over this thing is ridiculous. Greed. Drugs. Texas. Awesome.

Stanford lawyers blast receiver's $20 million request [Reuters]
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Yawn.

In, is there anyone out there that hasn't gotten ripped off yet, news, a Philadelphia fund manager has pleaded guilty to operating an $80M Ponzi scheme.

Joseph Forte spent $20M from 1996 to 2008 and judging by the amounts involved, just wasn't trying very hard.

Fund manager admits to $80M Ponzi scheme [Miami Herald]
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Word to the Wise: Don't Get Duped in India

The PwC/Satyam Computer Services fraud is becoming bigger news as more is learned about the case is reported on.

The partners on the engagement are currently in "judicial custody" for their alleged complicity in for not discovering a phantom $1 Billion on Satyam's books. Original NYT article here.

Sounds like paradise, "They sleep on the floor in a cell with other inmates, in temperatures that often exceed 100 degrees."

But one of the auditors is keeping it real, thank the Creator:

The other PricewaterhouseCoopers partner, Srinivas Talluri, a youthful 48-year-old with wire-rim glasses, is trying to maintain his professional mien behind bars. In the interview, his hair was neatly brushed, he carried a notepad and a plastic water bottle and his T-shirt was so smooth it seemed ironed...He recently offered to check the accounts at the prison’s canteen, just to keep his mind sharp.

No word from the Times if Mr. Talluir was also carrying his 10-key calculator.

The Tramp will be following this story closely as the repercussions of this fraud may fall hard on PwC...stay tuned.

2 Auditors Held in India Fault System [New York Times]
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Ex-Ernst Partner Off to his Retirement Home

Sort of...

In the latest edition of auditors behaving badly, a former partner at E&Y was found guilty on Friday of securities fraud for an insider trading venture scheme. The poor bastard is looking at doing up to 20 years and paying millions in fines after tipping off a friend about deals going down that E&Y clients were involved in.

On the bright side, if the judge goes easy on him at sentencing, his credentials are strong for any openings at the SEC.

E&Y continued the FB4 policy of staying mum after someone walks the plank.

Ex-Ernst Partner Guilty of Insider Trading [DealBook]

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Contrary to Anyone's Knowledge, HealthSouth's Fraud is Still in the News

The Ghosts of Bush Administration Corporate fraud are still lingering. There is currently a civil case against Richard Scrushy, the former CEO of HealthSouth and some shocking news came out of a deposition of an executive that was/is helping (isn't clear from the article) turn the company around.

According to the AP, Scrushy, who beat criminal charges back in 2005 (only by virtue of a carefully negotiated deal with the Morning Star), left the company with "no internal controls".

SHEESH, I guess it makes you wonder how fraud was able to occur in the first place...

Scrushy Left HealthSouth in Disarray, Executive Says [AP via DealBook] Sphere: Related Content