Dec 19, 2008 Russ Tarby Uncategorized
Recent securities fraud 50 times more costly than Bennett’s pyramid scheme:
Wall Street’s newest alleged con man, Bernard L. Madoff, has apparently eclipsed Syracuse scammer Patrick R. Bennett, by billions.
Madoff’s securities fraud, exposed Dec. 11, was estimated at $50 billion worldwide.
Bennett’s crime, exposed in 1996, totaled $1 billion swindled from 12,000 investors in and 10,000 creditors of his family’s companies. At the time, prosecutors called it the biggest Ponzi scheme in American history.
Now, if proven, Bernie Madoff’s scam would claim that dubious distinction. In fact, his alleged scam is being called the largest in the history of the world. Small investors, institutions, hedge funds, global banks and pension funds all fell victim.
In Madoff’s case, his own family turned in the 70-year-old former Nasdaq Stock Market chairman, to the Securities and Exchange Commission after he confessed his pyramid scheme to them. Through his investment firm, Bernard L. Madoff Investment Securities LLC, he allegedly paid redemptions to previous investors in certain funds with the money he collected from new investors. Last week he finally admitted “it was all a big lie,” according to the SEC.
In Bennett’s case, his own family nearly went down with him after the Syracuse-based Bennett Funding Group was accused of selling investors leases for equipment that didn’t exist and sometimes selling the same lease over and over again to different investors.
His father, E.T. “Bud” Bennett, faced federal charges. His wife, Gwen, was pressured to sell the family home. His brother, Michael, pleaded guilty to aiding the scam. A $600,000 yacht named after his mother, Kathleen Bennett, “The Lady Kathleen,” was targeted for sale by the bankruptcy court.
The Bennetts’ holdings included the Hotel Syracuse, the Quality Inn, a Maine shopping mall, office equipment, campgrounds, gambling barges, a casino and Vernon Downs Racetrack.
In all, 11 men were charged in the Bennett scheme. Nine pleaded guilty to fraud or its cover-up. A jury cleared one, and Patrick Bennett was tried and found guilty.
Neither Bud nor Michael served prison time, but after his second trial in 1999 Patrick was convicted of 42 charges of securities and bank fraud, money laundering, obstruction of justice and perjury. His first trial ended in a mistrial. He was originally sentenced to 30 years, but in 2002 that sentence was reduced to 22 years.
Patrick Bennett, 55, continues serving his sentence in a federal prison in Western Pennsylvania.
Bennett appeals, creditors wait
But incarceration doesn’t stop him from trying to have his conviction overturned. He has filed several appeals since going to jail nine years ago, and his most recent appeal had been scheduled to be heard Oct. 20 in the 2nd Circuit U.S. Court of Appeals, but was apparently postponed.
Bennett claims his lawyers failed to adequately represent him in his second trial.
A recorded message from SEC staffer Melanie Stephens informed callers Dec. 15 that final distribution checks to Bennett creditors are being processed but have not yet been mailed.
Twelve years ago the Bankruptcy Court of the Northern District of New York appointed Richard Breeden as trustee. He has distributed approximately $353 million to general unsecured creditors of the Bennett companies, according to the SEC. Breeden was scheduled to make one final distribution this year.
For information, contact the Bennett Bankruptcy Estate at 1-800-247-2846, or visit sec.gov/divisions/enforce/claims/bennett.htm.
And as for Madoff case, The Financial Times reported that global banking major HSBC sustained the heaviest losses among the thousands of Madoff investors. HSBC reportedly lost $1 billion to Madoff’s Ponzi scheme.
Stay tuned for an update on a Bennett appeal.