The New Money Manager Mantra - "Run Away! Run Away!"

CATEGORY: Market Crash, Philanthropist, Suicide

DIVISION: Modern Evil Investments

EDITORIAL: When it rains, it pours. Another money manager kills himself in the market crash and you have to wonder where it will all end? Or, should it all end? Or, should we start taking bets on who's next? Or, should we start offering a "Fake Your Own Death" service? Either way, we've got to get in on this action.












Missing Money Manager Believed Alive

By Jim Loney

MIAMI (Reuters) - A missing Florida money manager is believed to be alive, his business associate said on Saturday as police investigated the possible disappearance of hundreds of millions of dollars from investment funds.

The family of Sarasota, Florida, philanthropist and fund manager Arthur Nadel, 75, reported him missing on Wednesday and on Friday Sarasota police launched an investigation into complaints that "hundreds of millions of dollars" may have vanished from the funds Nadel managed.

Nadel, president of Scoop Management Inc, left a note for his family that was characterized by a local newspaper as a suicide note. Police would not disclose its contents but said his family believed he was "distraught" at the time of his disappearance.

Neil Moody, a business associate, said Nadel has since been in contact with his wife. He said he believed Nadel was still alive.

"At this point we have every indication that he is," Moody told Reuters, adding that he did not know where Nadel was.

"If we knew where he was, we'd be on him," Moody said.

The Florida investigation, which the Sarasota Herald-Tribune said could involve as much as $350 million, began just over a month after the arrest of New York money manager Bernard Madoff on charges he ran a giant $50 billion Ponzi scheme that shook the investment world.

The Madoff case rattled charities and wealthy families in Palm Beach on Florida's east coast. The Nadel allegations have struck hard in Sarasota, on the state's west coast, where the missing money manager was well-known in society circles and a prominent donor to local causes.

Nadel's Sarasota-based Scoop Management managed funds branded as Valhalla, Viking, and Scoop. The Herald-Tribune said Moody told investors in a statement this week that the funds may have "virtually no remaining value."

The paper said Moody had contacted the U.S. Securities and Exchange Commission and other authorities to report the situation.


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CATEGORY: Billionaire, Empire, Suicide

DIVISION: Modern Evil Investments

COMMENT: Well, it looks like someone to our last post seriously. But what we don't understand about the suicide of German billionaire Adolf Merckle is that dead or alive, his empire is going to be broken up anyway. So why not stick around and take pictures? For a billionaire, the 94th richest person in the world, and a German to boot, surprisingly he didn't have that 'never say die' spirit.
















Facing Losses, German Billionaire Takes Own Life

By CARTER DOUGHERTY

FRANKFURT — Adolf Merckle, the German billionaire whose speculation in volatile Volkswagen shares pushed his sprawling business empire to the edge of ruin, has committed suicide, his family said Tuesday.

Mr. Merckle, 74, was found dead Monday night on railroad tracks near his villa in the southern German hamlet of Blaubeuren. German authorities in the nearby city of Ulm confirmed the death, saying there was no sign of foul play.

“The distress to his firms caused by the financial crisis and the related uncertainties of recent weeks, along with the helplessness of no longer being able to handle the situation, broke the passionate family businessman, and he ended his life,” the family said in a statement.

Forbes put Mr. Merckle’s fortune at $9.2 billion in 2008. A native of Dresden who made his way to the West after World War II, Mr. Merckle parlayed a family business in chemicals into one of the biggest pharmaceutical companies in the world. Ratiopharm, a maker of generic drugs that nonetheless became a recognized brand itself, became the pride of the family.

Other businesses included Phoenix, a pharmaceutical wholesaler, and HeidelbergCement, a building materials supplier that in 2007 acquired a British rival, Hanson, to become a leading global player.

The financial crisis began taking its toll on HeidelbergCement last year as the debt incurred to buy Hanson became more burdensome. Standard & Poor’s lowered the company’s credit rating as liquidity became scarce thanks to global market convulsions.

But Mr. Merckle’s dalliance with Volkswagen shares, more than any other single investment, caused the distress that apparently led to his death. Caught in the “short squeeze” that also cost many hedge funds dearly, Mr. Merckle lost hundreds of millions of dollars, and was facing the breakup and sale of his business empire.

Suicide is an Exit Strategy for Investing

CATEGORY: Madoff Ponzi, Investments, Suicide

DIVISION: Modern Evil Investments

COMMENT: Just a reminder to all white-collar criminals that its OK to snuff it when you're about to get busted. French franc filcher René-Thierry Magon de la Villehuchet and late funder of the Madoff Ponzi scheme did just that a week ago when his pyramid-built investments vanished. But please, do it with some style - on a yacht in the Mediterranean or in a mansion library with a candlestick.


















Follow the Feeders

The Economist

A WEEK after Bernard Madoff’s vast alleged Ponzi scheme came to light in mid-December, a thief made off with a $10,000 copper statue from his Florida estate. Since then, dozens of Madoff-related items have appeared for sale on eBay, a website, including a disaster-recovery kit for employees of his securities firm and opera glasses emblazoned with its logo.

That a few plucky souls are profiting from Wall Street’s biggest fraud will be scant consolation to the hapless hordes of charities, foundations, banks and rich individuals who fell for Mr. Madoff’s charms, and whose declared losses now top $30 billion. An embarrassingly large number of the victims were supposed to have been highly sophisticated. Fresh reports put losses for customers of Credit Suisse, for instance, at up to SFr1 billion ($956m). For some of those who led clients to the slaughter, the pain has proven too much. René-Thierry Magon de la Villehuchet, an aristocratic Frenchman who had parked $1.5 billion with Mr Madoff, most of it from wealthy Europeans, was found dead in his office on December 23rd in an apparent suicide, his wrists slit using a boxcutter.

Mr Villehuchet’s firm, Access International, was part of a motley network of “feeder funds” that funnelled many or all of their assets to Mr Madoff. The biggest had no problem attracting clients, who were comforted by the gold-plated names behind them. Banco Santander, for instance, helped to suck in billions from wealthy Spaniards and Latin Americans.

Investigators are looking into what, if anything, these middlemen knew about the deception, and what they told clients about their links to Mr Madoff. Fairfield Greenwich, an investment firm that sent more than $7 billion his way, had disclosed that it considered his services “essential”. Others were coyer. In a lawsuit, New York Law School contends that it would never have invested $3m with Ascot Partners had it known that the fund was charging hefty fees merely to stick all its eggs in one basket. Some were clearly duped along with their clients: Mr Villehuchet lost a good chunk of his personal wealth. The funds’ auditors are also under fire. KPMG has been named as a defendant in a suit against Tremont, another manager.

Regulators, too, face awkward questions. The Securities and Exchange Commission (SEC) gave short shrift to those who suspected him of wrongdoing—including Harry Markopolos, an erstwhile rival who in 2005 sent the commission a 19-page analysis entitled “The world’s largest hedge fund is a fraud”. The report listed 29 “red flags” that, taken together, strongly suggested the Madoff operation’s returns were either fictitious or down to front-running (trading for one’s own account ahead of filling client orders).

Explaining its failures is a task that will fall to the SEC’s incoming chairwoman, Mary Schapiro. But the commission can partially redeem itself by quickly getting to the bottom of some unanswered questions. Who, apart from Mr Madoff, was party to the scam? When did it start? And how much money is left? Much of the $50 billion that he has confessed to losing was phantom profit that only existed on customers’ account statements. But that fact, like the art theft and the eBay sales, provides little comfort. Real or not, it was money they thought was theirs.