Marcus Schrenker’s past finally caught up with him. The Indiana financial manager was arrested by authorities on Jan. 13 after staging his own plane crash to escape financial ruin.

U.S. marshals located Schrenker late Tuesday night at a campsite in Quincy, Florida. Schrenker was then taken to a nearby hospital. Once released, he faces securities fraud charges for allegedly bilking clients out of hundreds of thousands of dollars.

This isn’t first time Schrenker, who heads Heritage Wealth Management, Heritage Insurance Services and Icon Wealth Management, has been on the wrong side of the law. Mark Maddox, a former Indiana securities commissioner and later a lawyer, approached county and state regulatory officials in 2002 over concerns about Schrenker’s business practices. No investigation, however, ever evolved from Maddox’s inquiries.

Seven years later, 38-year-old Schrenker is charged in what many are calling a mini Bernard Madoff scheme. In between providing financial advice and managing investors’ portfolios, Schrenker created a personal empire. In addition to a 10,000-square-foot luxury home in the exclusive Geist Reservoir area, Schrenker was an avid collector of rare cars and owner of two airplanes.

Now it’s likely Schrenker will be trading in his Armani suits for less-attractive attire. In addition to the avalanche of lawsuits expected from investors, Schrenker already was facing $10 million or more in potential and actual court judgments and legal claims when he departed Indiana in his Piper aircraft on Jan. 11. State regulators also have filed charges against Schrenker for operating as a financial manager even though his license had expired in Indiana.

“My heart goes out to victims who lost money,” said Maddox, in an interview for Fox Channel 59. “I think we’re going to see not just hundreds of thousands but millions lost before the final accounting is done.”

The plot concerning hedge fund manager Bernie Madoff continues to thicken. And this time the news may benefit the growing number of investors trying to recover some of the $50 billion that the disgraced 70-year-old and former Nasdaq stock market chairman scammed from them as part of a massive Ponzi scheme.

On Jan. 5, the Securities Investor Protection Corp. (SIPC) reported that Irving Picard, the trustee charged with overseeing the liquidation of assets from Madoff’s investment firm, had identified $830 million in liquid assets. Both Picard and the SIPC subsequently mailed more than 8,000 claim forms to investors who lost money in the investment fraud. The deadline for claims to be filed is March 4.

Claim forms and instructions also are available on the SIPC’s Web site at http://www.sipc.org/cases/sipccasesopen.cfm.

Meanwhile, prosecutors in the Madoff case are asking a federal judge to immediately revoke Madoff’s $10 million bail and place him behind bars. Their reasoning is based on the fact that Madoff apparently transferred various items totaling $1 million in value to a third party following his arrest on Dec. 11. The allegation, if true, violates a previous freeze on Madoff’s assets by the Securities and Exchange Commission (SEC).

As the case continues to build against Madoff, more investors are coming forth with accounts of their financial losses. As reported Jan. 5 by Bloomberg, Harley International Ltd., a hedge fund run by Cayman Island-based Euro-Dutch Management Ltd., invested all of its assets – $2.76 billion – with Madoff. Other Investment firms that have lost billions in the Madoff swindle include Tremont Group Holdings and Fairfield Greenwich Group. 

One of the first tasks greeting lawmakers in the new year will be to examine Bernard (Bernie) Madoff’s alleged $50 billion Ponzi scheme and why the Securities and Exchange Commission (SEC) appeared to be asleep at the wheel before detecting the fraud. On Jan. 5, members of the House Financial Services Committee plan to hold a lengthy discussion on the Madoff scandal as part of an effort to radically reform the impaired U.S. regulatory structure that oversees banks and financial service firms. 

On Dec. 11, federal agents arrested Madoff at his luxury Manhattan apartment on charges of securities fraud. The 70-year-old hedge fund manager is accused of running a massive Ponzi scheme – a rob-Peter-to-pay-Paul scam in which early investors are paid off with money from newer investors. The nickname of “Ponzi” is coined after Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s.  

Investors scammed in Madoff’s modern-day Ponzi scheme include numerous foundations and charities, universities, some of the world’s biggest banks, actors Kevin Bacon and Kyra, director Steven Spielberg, Dreamworks chief Jeffrey Katzenberg Sedgwick, former Salomon Brothers Chief Economist Henry Kaufman and countless others. 

Flushed with investors’ cash, Madoff built a massive financial empire for himself over the years, with mansions in Manhattan, the Hamptons and Palm Beach, Florida. Many of the clients Madoff later duped were recruited from the country clubs that the money manager belonged to.   

The allure of exclusivity may have, in part, allowed Madoff to keep his scam undetected for so long. A client had to “know” someone to get a meeting with Madoff.  Even in the face of too-good-to-be-true financial results and lack of account transparency, people still clamored to get on board with Madoff.  

Now, after having lost their life savings, many of those investors are wishing they had jumped ship long ago.   

On Dec. 30, the trustee placed in charge of Madoff’s money management firm, Bernard L. Madoff Investment Securities LLC, obtained court approval to use $28.1 million out of its accounts as it begins the liquidation process.  

Shortly before his arrest, Madoff told employees that his own financial worth had deteriorated from billions to approximately $200 million to $300 million. Madoff has until midnight Dec. 31 to provide the SEC with a detailed list of his assets. 

Only a few months ago, Madoff’s firm ranked as the 23rd-largest market maker on Nasdaq, handling an average of about 50 million shares a day. Now, instead of taking orders for some of the largest companies in the United States, Madoff faces the likely prospect of spending the rest of his life behind bars. 

For Madoff’s investors who have lost everything because of the decades-long fraud swindle, it’s a fitting end for the so-called legend of Wall Street. 

Our securities lawyers are actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

The disgraced New York hedge fund manager responsible for bilking investors out of some $50 billion in the world’s biggest Ponzi scheme has until New Year’s Eve to provide a detailed list of his investments, assets and financial holdings to the Securities and Exchange Commission (SEC). For investors duped by Bernard (Bernie) Madoff, the financial catalog may at least give them some idea as to what they stand to potentially recover from their losses.

As reported Dec. 26 by Bloomberg, Madoff’s firm, Bernard L. Madoff Investment Securities LLC, began liquidation proceedings immediately following the money manager’s arrest on Dec. 11. If convicted on securities fraud charges, Madoff faces up to 10 years in prison and a $5 million fine.

Already lawsuits have begun to pile up against 70-year-old Madoff, who confessed to federal agents that his investment advisory business was nothing more than a giant Ponzi scheme in which he paid off old investors with money garnered from newer ones.

Investigators have since uncovered a who’s who list of individuals and entities scammed by Madoff. Oscar-winning film director Steven Spielberg, the owner of the New York Mets professional baseball team, charities, global hedge fund managers, universities, Nobel laureate Elie Wiesel and L’Oreal cosmetic empire heiress Lilliane Bettencourt among others all lost fortunes in the Madoff fraud.

Last week, the Madoff scandal took an even deadlier turn. Rene-Thierry Magon de la Villehuchet, who lost more than $1 billion of his clients’ money to Madoff, as well as his own family’s fortune and that of friends, was found dead in an apparent suicide. 

Meanwhile, investment brokerages that conducted business with Madoff and Bernard L. Madoff Investment Securities LLC may have legal issues of their own to contend with from clients who incurred losses because of Madoff’s fraud. On Dec. 20, Celfin SA, a Chilean brokerage firm, became one of the first firms to accept accountability in the Madoff case by agreeing to repay a total of $10 million to clients who lost money with Madoff.

As more details unfold in the Madoff story, it’s likely the lawsuits will continue to grow, as well. In addition to investment firms, accounting firms also may be targeted – including PricewaterhouseCoopers and KPMG, which oversaw many of the feeder funds that channeled billions of dollars of investors’ money to Madoff yet failed to take note of the many red flags surrounding his business over the years.

Our securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

The enormity of the Bernie Madoff scandal and the massive losses hitting investors was underscored this past weekend when the Federal Bureau of Investigation (FBI) announced that the $50 billion Ponzi scheme and other frauds would take priority over counter-terrorism cases. 

A Dec. 22 Bloomberg article confirmed that the FBI is reassigning agents in New York to focus on efforts that pose the “greatest threat” to Americans. According to FBI official David Cardona, the threat is to the financial system and Wall Street.

On Dec. 11, following Madoff’s arrest by the FBI on charges of securities fraud, the disgraced 70-year-old reportedly confessed that he was the sole person responsible for bilking investors out of $50 billion in a worldwide Ponzi fraud scheme. Victims of the scam not only include Madoff’s direct clients, but also investors in so-called third-party feeder funds and funds of hedge funds that provided billions of dollars in capital to Madoff’s investment business.

The inability of these feeder brokerage firms, which includes OppenheimerFunds’ Tremont Capital Management, to detect Madoff’s fraud in the face of numerous red flags is a sure-fire sign of poor risk management and a failure to perform proper due diligence on behalf of clients and their money. After all, these funds charge investors significant fees for the privilege of their services, typically 1% of the assets under management and up to 10% of the profits. In the end, their negligence of failing to protect investors renders them guilty right along with Madoff. 

The plot continues to thicken in the saga of Bernard (Bernie) L. Madoff. Earlier today, authorities placed the mastermind behind a $50 billion hedge fund Ponzi scheme under house arrest. Now, instead of late-night Manhattan parties, the once-revered Wall Street legend will be subjected to electronic monitoring and 7 p.m. curfews.

At the center of the Madoff controversy is the Securities and Exchange Commission (SEC) and questions as to why it took so long for the agency to detect Madoff’s misdeeds. As far back as 1999, the SEC apparently had knowledge that all was not right in the house of Madoff. Returns in his fund were consistently and unusually high: 15% to 22%. A decade ago, memos from competitor manager Harry Markopolos and others even went so far as to allege Madoff’s business was nothing more than a “Ponzi scheme.”

In true ‘a-day-late and a-dollar-short fashion,’ Christopher Cox, chairman of the SEC, is now admonishing his agency’s inactions for failing to rein Madoff in when it had the chance. Yesterday, Cox publicly stated that the SEC failed to act on “credible allegations” when it was presented with the information nine years ago.

Madoff’s world came crashing in only when redemption requests, totaling some $7 billion, started to pile up and he was unable to meet investors’ demands for their money.

As it turns out, Madoff’s scam lured every kind of investor imaginable, from the super rich to the ordinary. Pension funds, global financial firms, hedge funds, higher education institutions, charities, the co-owner of the New York Mets, even a Senator bought into Madoff’s hype. Now, they’re collectively $50 billion poorer.

Shortly before his arrest on Dec. 11, Madoff was living life large. As reported Dec. 17 by Bloomberg, the disgraced money manager had recently made his usual stop for a $65 a haircut, a $40 shave, a $50 pedicure and a $22 manicure. If convicted of securities fraud, Madoff could spend the rest of his life in jail, where personal etiquette might not be so glamorous.

Our securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

From humble beginnings as a lifeguard to a storied investment leader on Wall Street, Bernard (Bernie) L. Madoff has seen and done it all. Or, so he thought. Following Madoff’s arrest by federal agents last week for running a giant Ponzi scheme and losing at least $50 billion of his clients’ money, the next stop for the now-infamous hedge fund manager may be jail.

According to the criminal complaint, Madoff revealed his bogus investing business to his sons on Dec. 10. The two men, Andrew and Mark Madoff, then contacted their lawyer, as well as federal authorities. It was later revealed that Madoff apparently had been running the scheme since at least 2005, and only recently did problems surface when he became unable to meet redemption requests from clients for some $7 billion.

A Ponzi scheme is coined after Charles Ponzi, an Italian immigrant who swindled investors out of millions of dollars in the 1920s through a modern-day pyramid scheme in which early investors are paid with money from newer investors.

Madoff’s rise to Wall Street fame began innocently enough. He opened his investment firm in 1960, with $5,000 he had saved from working as a lifeguard during the summer. His star continued to rise over the next half century; his positions of authority included chief of the Securities Industry Association’s trading committee, vice chairman of the National Association of Securities Dealers and a member of the Nasdaq Stock Market’s Board of Governors and its Executive Committee.

To no one’s surprise, Madoff also did exceedingly well in his personal life, amassing a multimillion-dollar fortune that included mansions in New York and Palm Beach, as well as a 55-foot yacht ironically named “Bull.”

Prior to Madoff’s Dec. 11 arrest, there apparently had been several warning signs over the “fiscal soundness” of Madoff’s managed funds. Competing hedge fund managers had long questioned how Madoff was able to consistently generate exceedingly high returns year and year, while investors themselves regularly claimed that the account statements Madoff provided were too complex for them to understand.

Meanwhile, the SEC itself appears to have been asleep at the wheel regarding Madoff and the inner-workings of his so-called investment business. Nine years ago, the agency received a letter from Boston financier Harry Markopolos, who at the time warned that Madoff’s firm was the world’s largest Ponzi scheme. Markopolos went on to conduct his own investigation, turning his findings, which apparently were largely ignored by the SEC, over to agency’s New York and Boston bureaus.

Now the SEC’s inaction during the past nine years may well have shattered the last remaining remnants of investor confidence. As for Madoff, when FBI agents went to his Manhattan home at 8:30 a.m. Thursday morning to make their arrest, they asked if he had an innocent explanation for what had happened, according to statements provided in the criminal complaint. Madoff, dressed in a blue bathrobe and slippers, simply said: “There is no innocent explanation.”

Our securities lawyers are actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Matthew Tannin and Ralph Cioffi, former Bear Stearns’ hedge fund managers, were taken into custody at their homes Thursday morning. They are facing criminal charges due to the collapse of the subprime mortgage market and the resulting implosion of the two hedge funds they managed.  

Both former executives are accused of deceiving investors about the risk of their investments in subprime mortgages. The principal question is what did they really know when they presented the funds as promising investments.  

The prosecutors look to rely heavily on private emails.  According to the Wall Street Journal, the two allegedly sent emails implying the funds they invested in were about to crash four days before they told their investors they were confident in these funds. Tannin supposedly told Cioffi he thought the market they invested in was “toast” and wanted to shut down the funds.  

“The arrests are appropriate given the magnitude and the egregiousness of their alleged misconduct,” said attorney Steven Caruso, who is representing investors in arbitration cases against these funds.  

Their arrests are the first of possible fraud cases by banks and mortgage firms whose investments in the subprime market decreased in value. The market’s losses are now totaling around $396.6 billion. The current indictments may lead to several other criminal cases and civil suits in the future. 

Bear Stearns’ termination should have been predicted when the Federal Reserve intervened early this year to bail out the bank after the hedge funds collapsed. This collapse added fuel to the fire for the recent credit crisis. It was proof that the market could critically impair the companies that bought and resold these loans.  

Tannin and Cioffi were brought up in lawsuits last year by hedge fund investor, Barclays Bank, claiming they were purposely misled. Barclays stated Bear Stearns’ knew for months the assets in its Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund had decreased in cost since their original value.  Barclays reported that the email from Tannin said the fund is “having our best month ever.” But, at the time the fund was actually having “severe liquidity problems, and lost hundreds of millions of dollars.”  The funds failed despite Cioffi and Tannin’s positive evaluations , resulting in over $20 billion in assets to crash.

Former Bear Stearns Cos. managers Ralph Cioffi and Matthew Tannin are on the verge of criminal charges for securities fraud for mismanaging two Bear Stearns Cos. hedge funds, costing investors $1.6 billion in losses.  

Federal prosecutors have suggested that Cioffi and Tannin could face indictment. “At issue is whether the managers intentionally misled investors by presenting a rosy picture of the funds at a time when they were privately communicating with colleagues about their worries over how the investment vehicles would ride out weakness in the mortgage market,” says Wall Street Journal reporter Kate Kelly.  

Bear Stearns’ recent history of financial problems has raised concerns over its management abilities and risk controls. Bear Stearns invested large amounts of borrowed securities into bonds backed by subprime mortgages.

Despite the subsequent meltdown of mortgage-backed securities, Cioffi and Tannin remained optimistic about the subprime market. However, in May 2007, Bear Stearns was unable to repay its investors with cash and meet demands from lenders for additional cash, or margin calls. As a result, Bear Stearns lent $3.2 billion in order to recover its High-Grade fund only to see the funds file for bankruptcy protection a month later. Additional losses to the firm came from the bond market losses and investor panic. 

The potential indictment of managers from Bear Stearns, now part of J.P. Morgan Chase & Co., could mark the beginning of more investigations dealing with the mortgage-market crisis, which began a year ago. More financial firms are taking precautions to provide more precise valuations on their holdings of mortgage securities.

After 18-years, Citigroup veteran Reaz Islam, is leaving the firm.  Mr. Islam most recently was the manager of two Citigroup, Inc. hedge funds that have imploded over the last several months.

The hedge funds, Falcon Strategies and ASTA/MAT, are fixed income funds marketed to individual investors.  The funds were sold as low risk, conservative investments.  Over the last couple of months, both of these funds have been wiped out. 

Falcon Stategies has lost over 75% of its value and ASTA/MAT was at one time down 77%. 

Last month Citigroup set aside $250 million to help some investors recoup a portion of their losses.  Unfortunately, this set aside does not even begin to fully compensate for investors’ losses.  As a result, a number of lawsuits have been filed by aggrevied investors.  

Our firm is interested in meeting with investors of these funds in order to evaluate their investments to see if a case of action exists.