cohmad securities
picard v. cohmad securities corp. 09 - ap - 1305, june 22, 2009
sec v. cohmad securities corp. , 09 civ. 5680, june 22, 2009
picard v. cohmad securities corp. 09 - ap - 1305, june 22, 2009
sec v. cohmad securities corp. , 09 civ. 5680, june 22, 2009
cohmad, sonny and marcia cohn, and former cohmad vice president robert jaffe in 2010 settled a related u. s. securities and exchange commission probe into their dealings with madoff .
the u. s. securities and exchange commission and the trustee last week sued cohmad securities, a brokerage founded by bernard madoff and long - time associate maurice cohn. also sued were cohn’s daughter, marcia, and robert jaffe, both cohmad executives .
though cohmad is insolvent, picard said he plans to keep pursuing claims against six other individuals who received “substantial fees” for helping cohmad raise money for madoff .
cohmad received $ 67 million in generated fees from madoff investments, from 2000–2008 .
madoff trustee reaches recovery agreement of approximately $ 32 million with cohmad securities corporation, the estate of maurice “sonny” cohn, marcia b. cohn & marilyn cohn
on march 15, 2009, federal prosecutors filed a notice in federal court declaring its intent to seek the forfeiture of the madoffs' interests in cohmad securities .
sipc - madoff trustee reaches recovery agreement of approximately $ 32 million with cohmad securities corporation, the estate of maurice “sonny” cohn, marcia b. cohn & marilyn cohn
irving picard, the trustee liquidating bernard l. madoff investment securities llc, on friday announced the settlement with the estate of former cohmad chairman maurice “sonny” cohn, his widow marilyn cohn, and their daughter marcia cohn, who was cohmad’s chief operating officer .
in re bernard l. madoff investment securities llc, debtor. irving h. picard, as trustee for the liquidation of bernard l. madoff investment securities llc, plaintiff, v. cohmad securities corporation, etc. , and the joint tenancies of phyllis guenzburger and fabian guenzburger and robert pinchou and fabian guenzburger, defendants .
cohmad received $ 67 million in generated fees from madoff investments, from 2000 - 2008 .
jaffe has filed requests with the courts to dismiss the sec and the picard cases. the cases are picard v. cohmad securities corp. , 09 - ap - 1305 ,
law360 (may 8, 2009, 12: 00 am edt) - - massachusetts' top securities enforcement office has revoked the license of madoff feeder firm cohmad securities corp. and ordered it to pay a $ 100, 000 fine for allegedly refusing to cooperate with an investigation of the fund' s relation to the ponzi scheme, in violation of state securities law .
“cohmad is one of the earliest and best - known names affiliated with madoff, and this highly successful settlement brings one important chapter of the cohmad securities corporation story to a close, ” said bakerhostetler co - lead attorney kathryn m. zunno. “we negotiated and reached this agreement despite the fact that cohmad has been insolvent and non - operational, and a key principal (sonny cohn) is now deceased. we look forward to further resolution as we pursue the ongoing cohmad - related litigation. ”
the cases are picard v cohmad securities corp et al, u. s. bankruptcy court, southern district of new york, no. 09 - ap - 01305; and in re: bernard l. madoff investment securities llc in the same court, no. 08 - 01789 .
new york, new york and washington, dc - november 4, 2016 - irving h. picard, securities investor protection act (sipa) trustee for the liquidation of bernard l. madoff investment securities llc (blmis), filed a motion today in the united states bankruptcy court for the southern district of new york, seeking approval of a settlement agreement with cohmad securities corporation (“cohmad”), the estate of maurice “sonny” cohn, marcia b. cohn and marilyn cohn (the “cohmad parties”). an approval hearing has been set for november 30, 2016 at 10 a. m .
in re bernard l. madoff investment securities llc, 418 b. r. 75 – urltoken
the sipa trustee will continue to pursue his claims against the remaining defendants in picard v. cohmad et al, including certain cohmad registered representatives who received substantial fees for referring investors in the ponzi scheme. under the agreement, the cohmad parties agree to cooperate with future discovery requests from the sipa trustee and make themselves available for depositions and any trials that may assist in recovering additional funds related to cohmad for the sipa trustee’s ongoing recovery efforts .
the brokerage firm lists its address as madoff' s firm' s address in new york city. cohmad employs
the sec previously charged madoff and bernard l. madoff investment securities llc (bmis) as well as their auditors with committing securities fraud through a ponzi scheme perpetrated on advisory and brokerage customers of bmis .
the notice follows mr. madoff’s guilty plea last week in the biggest securities fraud scheme in corporate history .
new york (reuters) - victims of bernard madoff’s ponzi scheme will receive another $ 32. 1 million under a new settlement over the swindler’s ties to cohmad securities corp, whose clients invested more than $ 1 billion with him .
secretary of the commonwealth of massachusetts william f. galvin announced the decision from the massachusetts securities division on thursday .
jaffe is a massachusetts registered representative of, and an owner of, defendant cohmad securities corporation (cohmad), a massachusetts registered broker - dealer. because of jaffe' s reported close personal and professional ties to madoff, the secretary believes that jaffe may have
significant information material to his investigation into mr. madoff .
id. , para. 5 .
seeking to revoke the massachusetts license of cohmad securities corp. , an accounting of all massachusetts investors cohmad referred to madoff’s company, all the fees it earned doing so (more than $ 67 million), and a fine. it named ruth madoff as having withdrawn $ 10 million on december 10, 2008 and $ 5. 5 million on november 25, 2008 from her brokerage account. it also cited $ 526, 000 in referral fees paid from madoff investments, to cohmad, to vienna
[ 1 ] jaffe has not contested that he is registered as an agent with the securities division, and that the subpoena, and this action, arise out of his transaction of business in massachusetts relating to the sale of securities .
listed in the two - page notice are the madoffs’ homes in manhattan, montauk, n. y. , palm beach, fla. and the antibes in france. prosecutors are also seeking their interests in cohmad securities, a securities firm under investigation by the state of massachusetts, and a wachovia bank account in ruth madoff’s name holding more than $ 17 million .
cohmad had fewer than 650 client accounts, and made 99. 7% of its sales from brokerage services to madoff' s larger broker - dealer. in its audited financial statements for the 12 months ending june 30, 2008, cohmad said revenue from madoff securities totaled $ 3, 736, 829. its total sales for the same period were $ 3, 748, 397 .
the subpoena is signed in the name of the secretary by the associate director & general counsel of the massachusetts securities division .
jaffe has filed requests with the courts to dismiss the sec and the picard cases. the cases are picard v. cohmad securities corp. , 09 - ap - 1305, u. s. bankruptcy court, southern district of new york (manhattan), and sec v. cohmad, 09 - cv - 5680, u. s. district court, southern district of new york .) .
the lawsuit claims that up to 90 percent of cohmad’s income came from referring clients and that the firm had a “symbiotic” relationship with madoff, having earned hundreds of millions of dollars from the fraud. the lawsuit seeks more than $ 100 million paid to cohmad six years prior to madoff’s firm declaring bankruptcy, and more than $ 105 million in profits cohmad employees and their families withdrew from the investment accounts they held with madoff .
richard spring, of boca raton, florida, received payments from cohmad for many years in exchange for bringing investors and investment ideas to madoff .
securities investor protection corporation 1667 k st. n. w. , suite 1000 washington, d. c. 20006 - 1620
on may 8, 2009, the commonwealth of massachusetts found the firm to be in “default” for not assisting regulators. cohmad’s securities registration has been revoked, and they must provide an accounting of all fees the company or its agents earned for referring massachusetts investors to mr. madoff' s firm as well as, pay a $ 100, 000 fine for failing to cooperate with the state securities investigation .
seeking to revoke the massachusetts license of cohmad securities corp. , an accounting of all massachusetts investors cohmad referred to madoff’s company, all the fees it earned doing so (more than $ 67 million), and a fine. it named ruth madoff as having withdrawn $ 10 million on december 10, 2008 and $ 5. 5 million on november 25, 2008 from her brokerage account. it also cited $ 526, 000 in referral fees paid from madoff investments, to cohmad, to vienna bank medici majority owner, sonja kohn, which she subsequently denied .
the sec' s complaint also alleges that the compensation arrangement between bmis and cohmad indicated fraudulent conduct at bmis. cohmad was paid an annual percentage of the funds its representatives (except jaffe) brought into bmis offset by any withdrawals from those investor accounts. this compensation arrangement indicated to cohmad and the cohns that bmis was not providing any real returns to investors. for example, where the client' s principal investment had been $ 10, 000, cohmad stopped receiving fees if a client withdrew $ 15, 000 from an account, even if under bmis' management the account had purportedly grown to $ 100, 000. in cohmad' s internal records, such an account was designated with a negative $ 5, 000 number .
posted by phillip crawford jr. at 01: 30 pm in bernard madoff, cohmad securities corp. , colombian drug cartels, gennaro angiulo, m / a / s capital corp. , patriarca, robert m. jaffe, russian mafia, the mafia & other organized crime news
h. picard, trustee for the substantively consolidated sipa liquidation of bernard l. madoff investment securities llc and bernard l. madoff .
the sec' s complaint against the cohmad defendants alleges that while bringing investors to madoff, they ignored and even participated in many suspicious practices that clearly indicated madoff was engaged in fraud. for example, the sec' s complaint alleges that the cohns and cohmad filed false forms bd and focus reports that concealed cohmad' s primary business of bringing in investors for bmis. this referral business comprised as much as 90 percent of cohmad' s revenue in some years, brought in more than 800 accounts, and billions of dollars into bmis' advisory business, for which bmis paid them more than $ 100 million .
the brokerage firm lists its address as madoff' s firm' s address in new york city. cohmad employs robert jaffe, as vice - president .
posted by phillip crawford jr. at 12: 19 am in bernard madoff, cohmad securities corp. , donato angiulo, francesco angiulo, gennaro angiulo, m / a / s capital corp. , michele angiulo, patriarca, robert m. jaffe, the mafia & other organized crime news
both sec' s complaints seek injunctions, financial penalties and court orders requiring cohmad, the cohns, jaffe and chais to disgorge their ill - gotten gains .
the order directed cohmad to pay a $ 100, 000 administrative fine to the state, revoked the fund' s registration and ordered it to ...
washington, d. c. , june 22, 2009 — the securities and exchange commission today charged a new york - based broker - dealer and four individuals with securities fraud, alleging that they collectively raised billions of dollars from investors for bernard l. madoff' s ponzi scheme .
( manhattan), and sec v. cohmad, 09 - cv - 5680, u. s. district court, southern district of new york .) .
posted by phillip crawford jr. at 04: 31 pm in ariana tadler, bernard madoff, cohmad securities corp. , gennaro angiulo, m / a / s capital corp. , melvyn weiss, milberg llp, milberg weiss bershad & schulman llp, patriarca, robert m. jaffe, seeger weiss, stephen weiss
bakerhostetler co - lead attorney esterina giuliani added, “this settlement is a key step in the overall cohmad - related litigation that is part of the overall liquidation of blmis. we will now focus on pending litigation against remaining cohmad defendants, as our team continues its global efforts to recover money stolen by madoff to return to its rightful owners. ”
maurice
sonny
cohn owned 48% of cohmad, and his daughter marcia, who served as president and chief compliance officer owned 25% . madoff owned 15% . mr. madoff' s brother, peter owned 9% , and mr. cohn' s brother owned 1% , and another unnamed cohmad employee owned 1% .
in re bernard l. madoff investment securities llc, 418 b. r. 75 (bankr. s. d. n. y. 2009 )
the sec acknowledges the assistance of the trustee for the securities investor protection corporation, and california attorney general jerry brown. the sec' s investigation is continuing .
posted by phillip crawford jr. at 10: 41 pm in bernard madoff, cohmad securities corp. , donato angiulo, francesco angiulo, gennaro angiulo, m / a / s capital corp. , michele angiulo, mob history, patriarca, raymond l. s. patriarca, robert m. jaffe, the mafia & other organized crime news
on december 17, 2008, the secretary issued a subpoena commanding jaffe to appear before the massachusetts securities division on january 6, 2009 and give sworn testimony
in the matter of: bernard l. madoff investment securities
( subpoena). the secretary issued the subpoena in connection with his investigation of madoff, and pursuant to the massachusetts uniform securities act, g. l. c. 110a (act). he caused it to be served on jaffe, apparently by certified or registered mail, return receipt requested, addressed to jaffe at cohmad' s new york office. the proof of service attached to the complaint bears the signature of
j. larsen
on december 19, 2008 .
law360, new york (november 4, 2016, 7: 12 pm edt) - - the court - appointed trustee for bernie madoff’s fraudulent investment firm asked a manhattan bankruptcy judge on friday to approve a $ 32. 1 million clawback settlement with cohmad securities corp. and won approval to dismiss an $ 8 million clawback suit against a former basketball team franchise owner .
, 153 - 54 (2d cir. 1999) (finding long arm jurisdiction for claims arising out of defendant' s transactions to and from its new york securities account) .
— бывший председатель совета директоров фондовой биржи nasdaq американский финансист, основатель компании madoff investment securities. бывший председатель совета директоров фондовой биржи nasdaq. в декабре 2008 года был арестован по подозрению в… …
robert m. jaffe, the broker who steered many wealthy boston and palm beach investors to bernard madoff' s investment fund through both new york - based cohmad securities corp. , partly owned by madoff and of which jaffe is a vice president, and jaffe' s own palm beach - based m / a / s capital corp. , previously did business with gennaro angiulo and his brothers :
robert m. jaffe, the broker who steered many wealthy investors to bernard madoff' s investment fund through both new york - based cohmad securities corp. , partly owned by madoff and of which jaffe is a vice president, and jaffe' s own palm beach - based m / a / s capital corp. , previously
did business with another notorious rogue: former boston mob leader gennaro angiulo
:
maurice
sonny
cohn owned 48% of cohmad, and his daughter marcia, who served as president and chief compliance officer owned 25% . madoff owned 15% . mr. madoff' s brother, peter owned 9% , and mr. cohn' s brother owned 1% , and another unnamed cohmad employee owned 1% . cohmad received $ 67 million in generated fees from madoff investments, from 2000–2008. the brokerage firm lists its address as madoff' s firm' s address in new york city. cohmad employs robert jaffe, as vice - president. jaffe is married to ellen shapiro, daughter of boston philanthropist carl j. shapiro, the founder and former chairman of apparel company kay windsor inc. and an early investor and close friend of madoff. jaffe reportedly convinced the elder shapiro to invest $ 250 million with madoff just 10 days before madoff' s arrest .
here, jaffe' s contacts with massachusetts consist of his registration in massachusetts as a representative of cohmad securities corporation, a massachusetts broker - dealer, and his dealings with massachusetts investors on behalf of madoff. the secretary' s action indisputably arises out of jaffe' s contacts in massachusetts, where the secretary seeks to obtain information from jaffe related to his involvement with cohmad, an entity in which madoff has an ownership interest, and to his direct involvement in sales by madoff of securities to massachusetts investors. there is nothing before the court that would indicate that the assertion of jurisdiction over jaffe is unduly burdensome or otherwise unfair in light of the significant interests at stake. [ 5 ] the only remaining issue, therefore, centers on whether jaffe' s contact with massachusetts is sufficient to satisfy the requirement of minimum contacts. the court concludes that it is .
robert m. jaffe, the broker who steered many wealthy boston and palm beach investors to bernard madoff' s investment fund through both new york - based cohmad securities corp. , partly owned by madoff and of which jaffe is a vice president, and jaffe' s own palm beach - based m / a / s capital corp. , previously
did business with another notorious rogue: former boston mob leader gennaro angiulo
:
the complaint, filed on june 22, 2009, proceeds against cohmad securities corporation (
cohmad
) and various affiliated individuals and entities, seeking turnover and accounting, avoidance of preferential and fraudulent transfers, and damages pursuant to sections 542, 544, 547 (b), 548 (a) (1) (a) and (b), 550 and 551 of the bankruptcy code and sections 276, 276 - a, 278 and / or 279 of the new york debtor and creditor law. the complaint alleges, inter alia, that cohmad, a new york corporation founded in 1985 by madoff and friend sonny cohn, participated in the fraudulent scheme by recruiting clients for, and diverting billions of dollars to, blmis. collectively, the named defendants are alleged to have profited in the amount of several hundred million dollars at the expense of the defrauded victims of the blmis ponzi scheme .
jaffe' s brokerage relationship with the angiulos first came to light
in an inquiry by federal securities regulators into whether cowen failed to report large deposits the angiulos made into their brokerage accounts there
that
was part of a broader federal investigation of alleged money laundering by the angiulos
; however ,
neither jaffe nor cowen was ever implicated, and the securities and exchange commission inquiry appears to have ended quietly .
bernard l. madoff investment securities llc had about 200 employees in a brokerage unit and an investment advisory business. the court - appointed trustee winding down the firm said the criminal activity took place in the investment arm .
for the reasons stated above, the secretary' s application for an order enforcing the administrative subpoena issued to defendant robert m. jaffe is granted. it is therefore ordered that defendant robert m. jaffe shall comply with the subpoena by appearing at the offices of the securities division of the secretary to give testimony under oath in the matter of bernard l. madoff investment securities on a date to be agreed to by the parties, but not later than february 6, 2009 .
“cohmad is one of the earliest and best - known names affiliated with madoff, and this highly successful settlement brings one important chapter of (its) story to a close, ” kathryn zunno, a partner at picard’s law firm baker & hostetler, said in a statement .
thus, under paragraph 6 ,
for the purpose of complying with the laws [ of massachusetts ] relating to sale of securities
– e. g. , c. 110a, § 407 – jaffe has appointed the secretary his attorney for service of process in
any action or proceeding against me... in connection with
the sale of securities or an alleged violation of the act. even if the secretary' s investigation of madoff' s sales of securities and alleged violations of the act is not an
action or proceeding
against jaffe, this lawsuit is, because it is brought directly against jaffe under c. 110a, § 407 (c) to enforce a subpoena issued
in connection with
that investigation .
filed a claim against cohmad, founder maurice “sonny” cohn, daughter marcia cohn, robert jaffe, richard spring, alvin j. delaire, jr. , stanley mervin berman, jonathan greenberg, cyril jalon, morton kurzrok, and rosalie buccellato, among more than two dozen individuals and trusts in
trustee irving picard urged u. s. bankruptcy judge stuart m. bernstein to approve the $ 32. 1 million deal with investment firm cohmad, the estate of its deceased founder and his surviving family. picard accused the firm of funneling huge sums into madoff' s defunct brokerage, ...
the sec' s complaint against the cohmad defendants specifically alleges that cohmad violated section 17 (a) of the securities act of 1933, sections 10 (b), 15 (b) (1), 15 (b) (7), and 17 (a) of the securities exchange act of 1934 and rules 10b - 5, 15b3 - 1, 15b7 - 1 and 17a - 3 thereunder and aided and abetted violations of sections 206 (1), 206 (2) and 206 (4) of the investment advisers act of 1940 and rule 206 (4) - 3 thereunder; that the cohns violated section 17 (a) of the securities act, and section 10 (b) of the exchange act and rule 10b - 5 thereunder and aided and abetted violations of sections 10 (b), 15 (b) (1), 15 (b) (7), and 17 (a) of the exchange act and rules 10b - 5, 15b3 - 1, 15b7 - 1 and 17a - 3 thereunder and sections 206 (1), 206 (2) and 206 (4) of the advisers act and rule 206 (4) - 3 thereunder; and that robert jaffe violated section 17 (a) of the securities act and section 10 (b) of the exchange act and rule 10b - 5 thereunder and aided and abetted violations of sections 10 (b), 15 (b) (7), and 17 (a) of the exchange act and rules 10b - 5, 15b7 - 1 and 17a - 3 thereunder and sections 206 (1), 206 (2) and 206 (4) of the advisers act and rule 206 (4) - 3 thereunder .
most of the information on the madoffs’ property was made public on friday by lawyers for mr. madoff. the madoffs’ net worth was valued at more than $ 823 million at the end of 2008, according to a filing in a civil lawsuit brought by the securities and exchange commission .
the return of service of the summons and order of notice, complaint, and related papers in this case, attached to the secretary' s memorandum, comprises two affidavits from
certified process servers
for, respectively, palm beach county, florida, (certifying service at jaffe' s
usual place of abode
in palm beach, florida ,
to steven jaffe, son
) [ 4 ]; and new york, new york (certifying service at cohmad securities corporation, 886 third avenue, 18 th floor, upon marcia cohen, president, as authorized to accept on behalf of the above - named entity .
in a complaint filed in u. s. district court for the southern district of new york, the sec charged cohmad securities corporation as well as its chairman maurice j. cohn, chief operating officer marcia b. cohn, and registered representative robert m. jaffe for actively marketing investment opportunities with madoff while knowingly or recklessly disregarding facts indicating that madoff was operating a fraud. in a separate complaint filed in the same court, the sec charged california - based investment adviser stanley chais, who oversaw three funds that invested all of their assets with madoff. when the ponzi scheme collapsed, chais investors' accounts were valued at nearly $ 1 billion .
the sec' s complaint against chais specifically alleges that he violated section 17 (a) of the securities act, section 10 (b) of the exchange act and rule 10b - 5 thereunder, and section 206 (4) of the advisers act and rule 206 (4) - 8 thereunder .
madoff cultivated an air of exclusivity by pretending that he was too successful to trouble himself with marketing to new investors ,
said robert khuzami, director of the sec' s division of enforcement .
in fact, he needed a constant in - flow of funds to sustain his fraud, and used his secret control of cohmad to obtain them .
harry markopolos, the securities industry executive and fraud investigator who attempted to warn the s. e. c. for years that bernard madoff was involved in a ponzi scheme ,
did not initially disclose his own identity to regulators because he feared for his life, according to testimony he has apparently prepared for a congressional hearing wednesday morning
:
in ruth’s world, the landscape was filled with younger, taller women. “i brought my fiancé to a stany [ securities traders association of new york ] party, and the two of us were talking to ruth, who kept looking over my fiancé’s shoulder at bernie talking to two women, one of whom was a blonde, ” says a guest .
some of the property, such as the boats, is registered in ruth madoff’s name. she has not been charged with a crime and had no formal association with her husband’s business. but some of her actions — notably the withdrawal of $ 15. 5 million from cohmad days before her husband’s arrest and the mailing of more than $ 1 million of jewelry and watches — have brought harsh scrutiny .
on june 22, 2009, madoff trustee, irving picard filed a claim against cohmad, founder maurice “sonny” cohn, daughter marcia cohn, robert jaffe, richard spring, alvin j. delaire, jr. , stanley mervin berman, jonathan greenberg, cyril jalon, morton kurzrok, and rosalie buccellato, among more than two dozen individuals and trusts in u. s. bankruptcy court in new york .
you mention madoff. but, madoff never had a criminal record until now. yes, there were countless indicators (as ken would say) that madoff was running a scheme: his inaccessibility; the lack of transparency; the conflict of interest with cohmad securities; the unimpressive 3 - man accounting team in charge of overseeing billions of dollars of investor money; the 2001 controversial articles that questioned madoff’s rates of return; and so on. still, these are nuances. we have looked into the backgrounds of several executives and hedge fund managers who have been subject to rumors and, upon further examination, we have found these rumors came from people who felt wronged in some way and attempted to smear the names of perfectly fine business men and women. those rumors were baseless .
it was brilliant. with the most revered jewish philanthropist in palm beach as his surrogate father, and the philanthropist’s glamorous son - in - law as his local feeder, madoff could remain aloof and say no while jaffe—who many insist was duped along with his father - in - law—attracted investors. (a spokesperson for robert jaffe and carl shapiro says, “both men are victims and had no knowledge of madoff’s fraudulent scheme. ”) as late as thanksgiving of last year, two weeks before madoff’s arrest, jaffe was reportedly considering new clients in palm beach. while jaffe and other middlemen were pulling in money, however, ruth madoff was withdrawing: $ 5. 5 million on november 25 from cohmad securities, the investment entity co - owned by madoff, of which jaffe is vice president .
the complaint alleges that each of the joint tenancy defendants maintained an account with blmis in new york and directed transfers to and from these accounts to the detriment of blmis victims. additionally, the guenzburger tenancy allegedly maintained an account with cohmad, and the pinchou tenancy directed defendant sonny cohn, co - founder of cohmad, to maintain its blmis files. neither of the moving defendants has filed a claim in the underlying liquidation. the complaint lists the guenzburger joint tenancy as having an address at amsel strasse 18, basel 4059, switzerland, and the pinchou joint tenancy as having an address at dornacherstrasse 16, 4147 aesch, switzerland. the trustee attempted service by mailing process to the two swiss addresses through regular mail, care of the united states postal service, on june 25, 2009. actual receipt of service by this mail method has not been denied .
on valentine’s day 1994, after four months of dating, levy made what carmen called his “grandstand play” for her affection. he instructed her to meet him at the office of bernard l. madoff investment securities, in the lipstick building, the oval red - granite monolith at 53rd street and third avenue designed by philip johnson and john burgee. “bring your checkbook, ” he said .
on january 14, the secretary filed this action. the court issued an order of notice for hearing on january 21 at 2 p. m. on january 15, jaffe was served with the summons, complaint, order of notice, and other papers (including a copy of the subpoena, attached to the complaint) at his residence in florida, and at cohmad' s offices, by process servers for each of those respective states .
there can be no doubt that jaffe' s registration in massachusetts as an agent of cohmad, a registered massachusetts broker - dealer (permitting jaffe to
transact business
in the commonwealth, see g. l. c. 110a. §§ 201 and 202), together with his transaction of business in connection with the very matter under investigation by the secretary, satisfies the purposeful availment prong. accordingly, jaffe' s constitutional argument fails .
pursuant to massachusetts general laws chapter 110a, §407 (b), you are hereby commanded, in the name of the commonwealth of massachusetts to appear personally and give testimony before the massachusetts securities division, office of the secretary of the commonwealth, john w. mccormack building, one ashburton place, room 1701, boston, massachusetts, 02108, on january 6, 2009 at 10: 00 a. m. this oral examination will continue until completed .
secretary of the commonwealth william galvin (secretary) seeks an order, pursuant to g. l. c. 110a, § 407 (c), compelling defendant robert jaffe (jaffe) to comply with a subpoena to testify in connection with the secretary' s investigation of bernard madoff (madoff) and madoff investment securities llc (madoff llc). for the reasons stated below, the court will order jaffe to comply with the secretary' s subpoena .
both sides refer the court to silverman v. berkson, supra, 661 a. 2d 1266, a case nearly identical to the present case, and considered by one authority
the leading case in the area
of enforcement of out - of - state administrative subpoenas. long, j. , blue sky law, § 11: 43 (november 2008). in silverman, the issue was
the authority and power of a new jersey agency investigating securities transactions involving new jersey residents to issue a subpoena to a witness outside of the state' s boundaries, and the corresponding authority and power of a new jersey court to enforce such a subpoena .
like the act adopted in massachusetts, new jersey' s version of the uniform securities act contained no provision
‘affording a procedure for the bureau to take out - of - state testimony of a non - resident witness.'
id. at 1268 .
under the terms of the agreement with the cohmad parties, the settlement will immediately benefit the blmis customer fund by approximately $ 32 million. it represents more than 100 percent of the amount transferred by blmis to sonny cohn, marilyn cohn and marcia cohn as withdrawals from their investment advisory accounts during the six - year period prior to the blmis liquidation filing, as well as more than 100 percent of the fees for referrals made to blmis that sonny cohn and marcia cohn received during the six - year period prior to the blmis liquidation filing .
against co - founder maurice
sonny
cohn, president marcia cohn, and robert jaffe. the lawsuit alleges the company was madoff' s
in - house marketing arm
and critical to madoff' s scam. cohmad representatives were paid for funds they brought into the firm but not for any putative increase in the investments' value. withdrawals were treated as a loss, which
suggested that profits generated by madoff were fictitious
, although madoff changed the arrangement in 2002 for maurice cohn, and began paying him $ 2 million a year .
the trustee initiated this adversary proceeding in connection with the infamous ponzi scheme perpetrated by bernard l. madoff through his investment company, blmis. on december 11, 2008, madoff was arrested by federal agents and charged with securities fraud in violation of 15 u. s. c. §§ 78j (b), 78ff and 17 c. f. r. § 240. 10b - 5 in the united states district court for the southern district of new york (
district court
) .
i, the undersigned, for the purpose of complying with the laws of [ massachusetts ]... relating to sale of securities... , hereby irrevocably appoint the administrator of [ that state ]... my attorney in said state [ ] upon whom may be served any notice, process or pleading in any action or proceeding against me arising out of or in connection with the offer or sale of securities... or out of the violation or alleged violation of the aforesaid laws of said state [ ] and i do hereby consent that any such action or proceeding against me may be commenced in any court of competent jurisdiction and proper venue within said state [ ] by service of process upon said appointee with the same effect as if i were [ a ] resident in said state [ ] and had lawfully been served with process in said state [ ]. it is requested that a copy of any notice, process or pleading served hereunder be mailed to me at my residence .
on december 15, 2008, the securities investor protection corporation (
sipc
) filed an application in the civil action seeking a decree that the customers of blmis are in need of the protections afforded under sipa. the district court granted sipc' s application and entered an order on december 15, 2008, placing blmis' s customers under the protections of sipa (
protective order
). the protective order appointed plaintiff as trustee for the liquidation of the business of blmis and removed the sipa liquidation
on january 13, 2009, the secretary responded to jaffe' s counsel by faxed letter :
in response to the information you provided last night indicating that mr. jaffe will be available to testify as of january 19, 2009, the massachusetts securities division is rescheduling mr. jaffe' testimony for wednesday, january 21, 2009 at 10: 00 am at the offices of the division. the testimony is pursuant to the initial subpoena served on december 17, 2008 .
arkin aff. , ex. r .
in addition to ms. zunno and ms. giuliani, messrs. harbeck and picard, and david j. sheehan, chief counsel to the sipa trustee, would like to thank the securities investor protection corporation’s josephine wang and kevin bell, as well as bakerhostetler attorneys oren j. warshavsky, thomas l. long, elizabeth m. schutte, shawn hough, frank m. oliva, kevin m. wallace, samuel m. light, lauren r. weinberg, and brian f. allen, who assisted with the work on this settlement .
this is the second recovery agreement reached in the blmis liquidation in two weeks. on october 28, a $ 277 million, global settlement was announced in chais, et al, that will bring an immediate benefit of $ 232 million to the customer fund. with these new recovery agreements, the sipa trustee has recovered or has reached agreements to recover more than $ 11. 491 billion. distributions to blmis customers now total more than $ 9. 467 billion, which includes $ 836. 6 million in committed advances from the securities investor protection corporation .
her salespeople at jeffrey messenger a shipment of [ narciso ] rodriguez’s clothes and shoes to her at the beginning of each season and simply charge her for what she doesn’t return. “if i see something i like, i call around, ” explains madoff, a securities lawyer. “i just don’t have time to shop. i get a little bit aggravated when i go into a store because i could be doing so many other things that are so much more productive. and the salespeople are around the clothes all day. they know them much better than i do. ”
as the above discussion demonstrates, jaffe has consented to the jurisdiction of massachusetts, as represented both by the secretary as administrator of the act, and the court, in two ways. he has done so directly, in paragraph 2 of form u - 4 (at least as to any matters relating to the act, as here), and in paragraph 6, by appointment of the secretary as his agent for service of process in actions or proceedings against him in connection with sales of securities or violations of the act. both have been held sufficient to confer personal jurisdiction .
although milberg llp claims that none of its remaining partners participated in the illegal conduct the question still begged is whether some of them were aware of the scheme and what, if any, steps they took to address the problem. after all, what did they think was happening when the same individuals repeatedly were serving as plaintiffs in dozens of lawsuits? indeed, in 1995, congress enacted the private securities litigation reform act specifically for the purpose of curbing the abuses for which milberg weiss and its partners were indicted, and surely this legislation raised a red flag even among the innocents at the firm .
on a cross - country tour to speak with those who weren’t lucky, i felt like the angel of death, knocking on the doors of the once privileged, chosen people who had gained admission into bernie madoff’s amazing investment vehicle, only to be fleeced by him. they all shared the same stacks of now worthless paper (monthly statements from bernard l. madoff investment securities) and an overnight obsession with terms such as “feeder funds” (the myriad individuals and businesses that funneled money to madoff) and “claw back” (the government’s threat to make investors return money they’d taken out of madoff’s fund from as far back as six years) .
when former madoff employees speak of ruth, they invariably bring up the company christmas party at the rosa mexicano restaurant on december 10, the day before bernie’s arrest. that same day, according to his sons, bernie had confessed his crime to them with ruth standing nearby in their penthouse, but at the party ruth and bernie acted as if nothing were wrong, as if bernard l. madoff investment securities were rock - solid. “ruth was at the party, staring at these people, knowing they were penniless, ” says someone who knows her, adding that ruth reportedly said at the party that she and bernie were going to florida for the holidays .
with regard to the former, the secretary asserts that jaffe is foreclosed from contesting personal jurisdiction in massachusetts because he has consented thereto. it is not disputed that on november 6, 1989, jaffe signed a form u - 4 ,
uniform application for securities industry registration or transfer
( form u - 4). see c. 110a, § 202; 950 cmr 12. 202. jaffe, the applicant, having indicated in item 10 that he was
to be registered with the following: jurisdictions – ma ,
signed the application on page 4 in a box headed
the applicant must read the following very carefully ,
and containing the following pertinent language (emphasis added) :
in any event, the lack of a procedure under massachusetts law for service of a subpoena issued under § 407 – whether to a resident in or out of state – should not render such a subpoena invalid, at least if the subject of the subpoena receives actual notice of it and has fair opportunity to object. nor does the fact that neither massachusetts nor florida have adopted the 1985 revision of the uniform securities act ,
containing a procedure for taking of testimony in the state of a nonresident witness for the purpose of an investigation being conducted in another state ,
silverman v. berkson, 141 n. j. 412, 661 a. 2d 1266, 1268 (1996), lead to a different conclusion. as the court in silverman stated ,
general principles of administrative law suggest that the legislature intended the agency to have the authority necessary to fulfill its function to investigate, within and without the state, securities transactions involving [ that state' s ] residents .
id. at 1269. authority to issue a subpoena
within and without
the state implies authority to serve it, even though the procedure for doing so is unspecified. the court need not construct such a procedure in the circumstances of this case, where jaffe clearly received actual notice of the subpoena, had fair opportunity to object to the manner in which it was served, and instead agreed not once but twice to comply .
before this court is the motion (
motion to dismiss
) of the joint tenancy of phyllis guenzburger and fabian guenzburger and the joint tenancy of robert pinchou and fabian guenzburger (collectively ,
defendants
or
joint tenancy defendants ,
and individually ,
guenzburger tenancy
and
pinchou tenancy ,
respectively) seeking to dismiss the complaint (
complaint
) of irving h. picard, esq. , (
trustee
or
plaintiff
) trustee for the substantively consolidated securities investor protection act (
sipa
), 15 u. s. c. § 78aaa et seq. , liquidation of bernard l. madoff investment securities llc (
blmis
) and bernard l. madoff. defendants move to dismiss the complaint for insufficient service of process and lack of personal jurisdiction pursuant to rules 12 (b) (2), (5), (6) and 12 (e) of the federal rules of civil procedure, made applicable herein by rule 7012 of the federal rules of bankruptcy procedure. defendants assert that the complaint should be dismissed because 1) the complaint fails to establish personal jurisdiction over the defendants; and 2) service by mail from new york to switzerland was insufficient under rules 4 (f) (1) and 4 (f) (2) (c) of the federal rules of civil procedure, made applicable herein by rule 7004 of the federal rules of bankruptcy procedure .
as in this case, the subpoenaed witness in silverman raised constitutional due process objections based on minder. the court stated that
[ t ] he issue in minder was whether a criminal defendant in georgia had received a fair trial when he could not subpoena material defense witnesses who were outside georgia. at that time, georgia law made no provision to subpoena out - of - state witnesses .
by contrast ,
[ t ] he question in this case is not whether a state may compel attendance in the forum of any out - of - state witness, but rather whether it may require the attendance of one who has purposely availed himself of the privilege of entering regulated securities markets in the forum state .
silverman, at 1273 .
jaffe asserts that he has not consented to service of process of investigative subpoenas, relying on that portion of paragraph 6 at page 4 of the u - 4 application which states that he appoints the
administrator
( i. e. , the secretary) his attorney for service of process in any
action or proceeding against me
arising out of sales of securities. because the secretary' s investigation is of madoff, not jaffe, jaffe argues that he has not consented to service of the secretary' s subpoena in furtherance of that investigation. see memorandum in opposition to application to enforce subpoena (jaffe memorandum), at 12. jaffe further argues that
an investigation does not appear to be either an ‘action' or ‘proceeding' even if it were ‘against' mr. jaffe, which it is not .
id. , n. 7 .
the court is satisfied that the secretary' s investigation of the alleged madoff scheme under, e. g. , c. 110a, § 101 (prohibiting fraud in the sale of securities) and § 102 (prohibiting fraud in the giving of investment advice) is conducted pursuant to a legitimate purpose; that the information which the secretary seeks from jaffe, a close associate of madoff who reportedly
made representations concerning mr. madoff [ to massachusetts investors ] and participated in investing their funds or... directed that they invest their funds with mr. madoff ,
complaint, para. 3, is or may be relevant to that purpose; [ 1 ] that the information is not already within the secretary' s possession; and that the subpoena has not been issued for an improper purpose .
[ 2 ] whether all legally required administrative steps have been followed is addressed below .
‘i want justice! ” screamed joan sinkin, who, along with her husband, arnold, a retired contractor, had sunk every cent from 55 years of work and the proceeds from the sale of several houses into madoff. after learning that they had lost everything, she was hospitalized with what seemed like a stroke, and her husband collapsed. “i want to be treated like g. m. and a. i. g. and bank of america! i can’t wait years! i want s. i. p. c. [ securities investor protection corporation, which insures investors up to $ 500, 000 ] to put people like us back on our feet! ” out of her husband’s hearing, she whispered, “we had a good life, and it’s gone. ” the night the news hit, her husband “turned old overnight, ” she said. “it was such a blow to him, to realize that everything he worked for all of his life, someone else just”—she snapped her fingers—“plucked. ”
eventually, bernie hired a full - time financial executive to take over the billing and banking. “and ruth eased her way out, ” says squillari. but ruth still wrote checks on her husband’s behalf. most mornings she left a to - do list for bernie. and her name pops up frequently in the hundreds of pages of madoff documents recently released by the bankruptcy trustee. the papers, which track the ebb and flow of billions of dollars, also show that many of madoff’s assets were in ruth’s name. “the books and records of blmis [ bernard l. madoff investment securities ] show that madoff also used blmis funds to purchase assets for his personal enjoyment and that of his family, ” reads one affidavit. “madoff and his family created a web of shell companies to hold these assets after purchasing same with blmis funds. for example, blmis funds were used to purchase and maintain two yachts, the first in 2003 and the second in 2007... . these yachts were used by madoff and his family and served no apparent business purpose. the second yacht, named bull, is held by yacht bull corporation, a corporation in which ruth madoff has an interest. ”
in light of the foregoing, it is clear that jaffe has agreed to
submit myself
– literally, his person – to the jurisdiction of massachusetts, and
to comply with, be subject to and abide by... all... orders [ and ] directives
of massachusetts. it is also clear that the secretary' s
command [ ], in the name of the commonwealth of massachusetts to appear personally and give testimony before the massachusetts securities division, office of the secretary ,
is both an
order
and
directive
by the commonwealth to appear. see in re simon, 297 f. 942, 945 (2d cir. 1924), quoting burns v. superior court, 140 cal. 1, 73 p. 597, 598 (1903) (
the very etymology of the word ‘subpoena' signifies ‘an order with a penalty for disobedience.'
) having already determined that the subpoena is otherwise within the investigatory authority of the secretary under § 407 (a), the court further concludes that jaffe has consented to the exercise of jurisdiction by the commonwealth (represented by the secretary) over his person by means of the subpoena.
cohmad securities was a us company whose main business was to introduce investors to the bernard madoff investment company for which it received commission based on the amount invested . the company , whose name combines “ cohn ” and “ madoff , ” was founded in 1985 by bernard madoff and maurice cohn , madoff ’s friend and former neighbor . its office was located at the same address as madoff 's firm , and it employed between 10 and 20 employees with annual sales between $ 1m and $ 5m . 
cohmad securities was a us company whose main business was to introduce investors to the bernard madoff investment company for which it received commission based on the amount invested. the company, whose name combines “ cohn ” and “ madoff, ” was founded in 1985 by bernard madoff and maurice cohn, madoff ’s friend and former neighbor. its office was located at the same address as madoff's firm, and it employed between 10 and 20 employees with annual sales between $ 1m and $ 5m.
cohmad securities was a us company whose main business was to introduce investors to the bernard madoff investment company for which it received commission based on the amount invested. the company, whose name combines “ cohn ” and “ madoff, ” was founded in 1985 by bernard madoff and maurice cohn, madoff ’s friend and former neighbor. its office was located at the same address as madoff's firm, and it employed between 10 and 20 employees with annual sales between $ 1m and $ 5m.