Madoff Had Friends In High Places

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[Column: Genesis Of The Financial Meltdown]

Ever notice how the media always protects certain individuals who were responsible for the Bernard Madoff debacle?

Frank Zarb, former Chairman of NASDAQ, has not even been mentioned in any article; yet Zarb surely protected Madoff. Both attended Hofstra University. Madoff was a donor to Hofstra. Zarb even has the Frank G. Zarb School of Business at Hofstra University named after him.

Zarb was a partner in the Wall Street firm, Carter Berlind Weill & Levitt; the Levitt being Arthur Levitt, former Chairman of the Securities and Exchange Commission (SEC) and former Chairman of the American Stock Exchange.

In a previous article, "Why Madoff Smiles," I had stated that in 1998 Gene Weissman, a former member of the American Stock Exchange and at that time a principal in Lieber and Weissman, asserted that Levitt was protecting Madoff when Madoff's firm front ran public orders.

Zarb was Levitt's retriever- Zarb always did what Levitt suggested. This included the disastrous purchase by NASDAQ of the American Stock Exchange. Thus, when the article, "Scandal On Wall Street," appeared in April 1999 Zarb and Mary Schapiro, then President of NASD Regulation, limited the scope of the investigation into violations of federal securities laws at the American Stock Exchange- especially into violations of securities laws by Joseph Giamanco and his firm, GHM. (This will be explored in a future article.)

It is now readily apparent that Levitt and Zarb had conspired to limit the scope of NASD's investigation into Madoff- just as the investigation into Giamanco's violations of federal securities laws was limited.

There is no way that an investigation into alleged front running by Madoff and the statement by Harry Markopolos that Madoff's fund was a Ponzi scheme could not have revealed that Madoff was violating federal securities laws--unless a cover up had been arranged. That’s a possible reason for Madoff being permitted to be out on bail- Madoff is covering up for his friends in NASDAQ and the SEC.

It is here that I must add a note. It has been my direct experience that the Office of the United States Attorney for the Southern District is endemically corrupt. Let me provide one example.

When Mary Jo White, then United States Attorney for the Southern District indicted the principals of Oakford Corp. and several members of the New York Stock Exchange for illegal trading- not only did White cover up the extent of the illegal trading, but White refused to investigate illegal trading by Goldman Sachs.

White also refused to investigate Spear Leeds and Kellogg's involvement in the illegal trading of Oakford- including lending tens of millions of dollars overnight to meet net capital requirements.

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