$7.2 Billion — This does not compute!

Mrs. Picower voluntarily agreed to return $7.2 Billion to the Madoff Trustee Recovery Fund.  As one of the largest beneficiaries of the fraud, she made the correct moral choice — but what was her real motivation?

Rocky figured this out!

He discovered that Mrs. Picower’s copy of Quicken Personal Finance Software crashed.

Quicken cannot handle dollar amounts larger than $99,999,999.99. Hence the $7,200,000,000.00 sitting in Mrs. Picower’s account was causing her computer to crash!

 Rather than rebooting the computer, she decided to boot the cash to the other victims.  For technical details, see: http://quicken.intuit.com/support/articles/using-quicken/reports-and-graphs/483.html  (The technical term is “maximum supported value.”)

[Disclosure: It's difficult to imagine a checking account balance of $7.2 Billion. It's even more shocking to realize that at  1% interest rates, she's accruing interest at $200,000 per day! It's worth noting that TurboTax does not list a "maximum supported value" so Internal Revenue Service Agents can relax...]

Madoff jewelry auction & Valentines Day 2010

The US Marshals Service will auction Bernie Madoff’s possessions on Saturday.  Proceeds will benefit the victims of his fraud. 

For the auction catalog, click on :  http://www.proxibid.com/asp/Catalog.asp?aid=23422

Rocky looked through the odd collection of watches, necklaces and Lynn Swann-autographed footballs (“certificate of authenticity not included.”)

He decided that Lot #7, a heart-shaped pendant would be a perfect Valentines Day gift for Trophy Wife.

Fast forward to Valentines Day 2010….

Rocky (to Trophy Wife) :  “Honey,  I got you a special present for Valentines Day.”

Trophy Wife: “That’s nice. What did you get?”

Rocky:  “It’s an 18KWG heart-shaped pendant set with 7 princess, 4 half-princess & 40 baguette cut diamonds, total weight 2.75 cts.”

Trophy Wife: “Why is it in a brown paper envelope? And not a nice blue Tiffany box?”

Rocky: “Because I got it special. It was a deal.”

Trophy Wife: “A deal? That’s typical.  Let me see, what’s this little paper tag with a star on it?  Hmmm. Marshalls??? You bought me a piece of jewelry at Marshalls????”

Rocky: “No, silly. That’s US Marshals. I always think of you as the Wyatt Earp of our family.”

(Unimpressed, Trophy Wife examines the heart under her jeweler’s loupe.)

Trophy Wife: “Rocky, these diamonds are fake.”

Rocky: “I guess I should have known better. The price was too good to be true.”

[Disclosure: Jewelry gifts purchased at the Madoff auction may contain dangerous levels of bad karma.]

A shocking new SEC / Madoff revelation

“Shocking,” is the adjective that comes to Rocky’s mind after perusing the SEC Inspector General’s report on the  botched handling of Bernie Madoff.

Rocky is shocked and appalled by the multiple grammar and syntax errors in the Inspector General’s report.  Rocky’s tennth-grade Inglish teacher, Mrs. Calabash wud have flunkked that authhor (along with Rocky too, of course.)

Rocky’s readers, with sharp red pencils at the ready, can find the SEC Inspector General’s report here:

http://sec.gov/spotlight/secpostmadoffreforms/oig-509-exec-summary.pdf

[Note: Any reader who correctly identifies five or more grammar errors should notify Rocky, and claim a unique prize of dubious monetary value.  And to Mrs. Calabash, "Good night, whereever you are!"]

Counting one’s blessings

A Nice Gentleman sat next to Rocky on a recent airplane flight.  Rocky shares Nice Gentleman’s saga as an example of both Murphy’s Law and a remarkable perserverance of the spirit.

The Bad News: Nice Gentleman’s family was heavily invested in the Madoff Funds.  His daughter’s college fund was wiped out, along with his retirement savings.
The Good News: He was sanguine, recognizing that he had taken out many dividends over the years, and would have lost just as much money in more traditional investments (after tax benefits).

The Bad News:Nice Gentleman was enroute to Florida — to visit his aging mother, who had early stage Alzheimers Disease. 
The Good News: During his last visit, he hid his mother’s car keys. Demonstrating that “she’s still with it”, she called the car dealer and had a new set of keys made.

The Bad News:Nice Gentleman was laid off from his job of more than 10 years last week.
The Good News:He already has a job prospect, and may decline his former employer’s severance package, because it contains a non-compete agreement.

The Bad News:The same day that Nice Gentleman was fired, he was walking his small dog (a cockapoo) in a park.  The tiny dog was attacked by a german shepard who picked up the little fellow in his mouth, and started shaking it like a rag doll.
The Good News: Nice Gentleman rescued his dog — rushed to the Vet — and, after surgery, saved the little guy’s life.

Rocky was ambivalent about Nice Gentleman’s tale: Rocky was unsure whether to feel sympathy for Nice Gentleman’s misfortune, or to envy Nice Gentleman’s improbably upbeat mood and optimism.

Crime “pays” for Madoff investors

Rocky sadly notes that it’s now more profitable to invest with a BIG crook, than to invest in a BIG company.

Bloomberg News reports that Representative Gary Ackerman (D, NY) introduced a bill giving preferential tax treatment to de-frauded investors in Bernie Madoff’s Ponzi Scheme.

“The bill would extend to 13 years the time for which investors may obtain refunds on taxes tied to the phony profits,” the New York Democrat said in a statement. Current rules limit investor refunds to the past three years.

Rocky highlights the economics of this new Government bailout:

Investors who bought $1,000,000 of stock or preferred shares in:
(1) Washington Mutual
(2) IndyMac Bank
(3) Fannie Mae
(4) Freddie Mac
(5) Lehman Brothers
(6) Enron
(7) Worldcom
have been COMPLETELY wiped out.

These investors receive no tax credit for any retained earnings reported by these companies. It’s a 100% capital loss. Gone. Zilch. Nada. Diddly-squat. Zip. Goose egg. Hill of beans. ZERO!

In contrast, investors who gave $1,000,000 to Bernie Madoff, will receive a $500,000 insurance payment from the SIPC. They also keep any income received before the Bankruptcy Preference Claim period. And, they get an unlimited tax deduction for qualified “theft” losses. (This is under the current law. Rep. Ackerman wants to give a special new tax hand-out to Bernie’s investors.)

Rocky’s suggestion to Rep. Ackerman: Go ahead and change the tax code — but eliminate the current $3,000 per year capital loss limit for EVERYONE.

If the Government wants to be Rocky’s partner on 100% of the profits, it should be his partner on 100% of the losses too.

Guaranteed to never lose value: Another scam?

Rocky rubbed his eyes upon receiving an advertisement from a Fortune 500 company that promised an investor would “never lose value.” Rocky knows that such statements are either fraudulent or “qualified in their entirety by the Private Placement Memorandum” (i.e. legal but money-losing.)

Rocky’s initial reaction was to call the Securities Exchange Commission, but based on recent whistleblower experiences, he decided that his time would be better spent buying a new pair of non-prescription reading glasses … so he could independently read the “fine print.”

Click here for details on the one place where “your money never loses value.”