MIT Picower mini-campaign
created 12/09

  "(Jeffry) Picower was the only one that might have known (of the fraud),"
“I mean how could he not?” Bernie Madoff as quoted by NY Times reporter Diana B. Henriques

Go to homepage

Original research analyzing Picower Foundation stock portfolios
         Review of 501(c)(3) Picower Foundation 990 filings 2001 thru 2007
                Picower Foundation's Mind Boggling Short Term Investment Gains    9/11/09
         (pdf format with hi-lited portfolio attachments)
        Analysis of early Picower Foundation investments (1989-1990) --- more evidence of fraud      3/12/10

Emails to MIT
       Jeffry Picower's association with MIT    7/20/09
        Question to MIT   8/19/09
         MIT reply    8/19/08
        Re: Jeffry Picower's association with MIT?    8/20/09
        CBS's 60 Min story features Picower    9/27/09
        Recent revelations about Jeffry Picower and the Picower Foundation    9/28/09
        Jeffry Picower and the Forbes 400    10/8/09
        Picower Foundation Trustee's son leads Madoff investigation    10/11/09
        Open letter to MIT Treasurer, Theresa M. Stone, about Jeffry Picower Donations    10/14/09
        Please Mr. Picower can we have some more, or Jeffry Picower makes a quick 39 million    10/14/09
        Curious case of Picower Foundation Trustee Gerald C. McNamara    10/21/09
        Reporter Mary Jacoby on Jeffry Picower    10/30/09
        William Zabel's amazing effort to save Picower's ass    11/4/09
        Reading Picower's Will --- a new Picower Foundation
         or Time to kiss April Freilich's ass?)         12/10/09
       Ask his brother-in-law?       1/4/10
       Barbara Picower speaks       1/20/10
       Picower money is too dirty to accept       2/1/10
       Where did the money to fund the Picower Institute at MIT really come from?       2/8/10
       Did Barbara Picower trigger the Madoff ponzi collapse?       2/15/10
       Latest Madoff news      2/25/10
       Analysis of early Picower Foundation investments (1989-1990) --- more evidence of fraud      3/12/10
       Another view of Jeffry Picower's role in the 65 billion dollar fraud      12/17/10
       Meet Picowers' (newly arrested) account manager      12/xx/10
 Posting and emails when 7.2 billion Picower settlement announced     12/18/10
       Picower settles for 7.2 billion --- Some perspective on Barbara Picower's statement      12/18/10
       Picowers as philanthropists      12/18/10
       Earnings on Madoff money not returned      12/18/10
         Ridiculous claim that settlement is 'what Jeffry would have wanted'      12/18/10
         Why future Picower grant should be considered tainted      12/18/10

Letters published in MIT newspaper 'The Tech'
        letter #1   "Picower Money Tainted"  8/28/09
        letter #2    "Open letter to MIT Treasurer, Theresa M. Stone, about Jeffry Picower Donations"
                              changed by The Tech editor to "MIT can benefit from Picower"       10/20/09
        letter #3    "Should MIT accept Picower Money?"  11/30/09
        letter #4    "Picower money is too dirty to accept"   2/2/10

        Summer 2009 article on Picower by Tech Editor

        Various postings

        Of particular note is that each annual Picower Foundation 990 filing (links below) contains in just a couple of pages detail information on the foundation's huge portfolio (trade dates, shares, price/share, gain/loss, etc). This nearly 20 years of portfolio information is all fake, riddled with errors and implausible gains. The foundation's investments were always managed by Madoff, so there were no trades, none, these records were fabricated by a handful of people in Madoff's backroom. These portfolios long in the public domain provides a unique window into the Madoff ponzi, and it beggars belief that over nearly two decades that neither Barbara Picower, Jeffry Picower, all the trustees of the foundation and MIT itself never picked up on this fraud.

        First two years of the Picower Foundation IRS 990 filings (partial) (from IRS 990's archive)
         Picower Foundation 990 filing 1989
         Picower Foundation 990 filing 1990

        Downloaded Picower Foundation IRS 990 for years 1996 to 2004 (also available online)
         Picower Foundation 990 filing 1996
         Picower Foundation 990 filing 1997
         Picower Foundation 990 filing 1998
         Picower Foundation 990 filing 1999
         Picower Foundation 990 filing 2000
         Picower Foundation 990 filing 2001
         Picower Foundation 990 filing 2002
         Picower Foundation 990 filing 2003
         Picower Foundation 990 filing 2004

        Picower Foundation IRS 990's original filings. (At Foundation Center 990 repository only amended filings are available for these years.)
         2005 Picower Foundation original 990 filing
         2006 Picower Foundation original 990 filing
         2007 Picower Foundation original 990 filing

        MIT accepted 50 million from the private family foundation of Barbara and Jeffry Picower (2001 to 2005) to fund the Picower Institute for Learning and Memory at MIT. MIT will soon be offered another 25 million according to the terms of Jeffry Picower's Will. Should MIT accept more money from the Picowers? Absolutely not! It's stolen money, money stolen from other Madoff investors, and in the simplest of terms you don't take money from crooks!

        I don't mean crooks in the left-wing sort of way that all capitalists are crooks, I mean an insider in the largest financial fraud of all time, the 60 billion dollar Madoff ponzi scheme. A forensic analysis of Madoff's files produce a mountain of detailed and credible evidence that Jeffry and Barbara Picower were active participants in fraud with Madoff, and that "Picower accounts with the Madoff firm were “riddled with blatant and obvious fraud” that a finance professional like Mr. Picower should have detected immediately." (NYT 11/9/09) My own analysis of its 990 portfolios confirms this.

        Prior to MIT accepting 50 million to build the Picower Institute of Learning and Memory Picower's public reputation was not good. Clues that something was not right with the Picower Foundation's source of income have been available in the public domain for years. The Foundation's investment portfolios included in their IRS 990 filings show strange inconsistencies and improbable gains. Immediately following Madoff's arrest for running a ponzi scheme in Dec 2008 the Picowers suddenly cut off all funding to researchers and charities they traditionally supported, claiming they were Madoff's biggest victim, even though it would have taken less than 1% of their wealth per year to maintain 100% funding.

           Come summer 2009 the court appointed Madoff Trustee disclosed detailed and credible allegations of participation in fraud with Madoff by all those running the Picower Foundation [Jeffry & Barbara Picower and their business associate April Freilich] and sued the Picowers for return of 7.2 billion in ill gotten gains. Earlier the Wall Street Journal reported on the front page that Jeffry Picower was one of eight Madoff insiders that criminal investigators were looking at. Two months later the Picowers made a rebuttal court filing to the Trustee's allegations of fraud.

        I found the Trustee's allegations convincing, but wrote nothing until I had a chance to read the Picower's rebuttal (I found it very unconvincing). I then began writing a series of emails to the MIT treasurers office and researchers at the Picower Institute at MIT. I did my own original analysis of the Picower Foundation stock portfolios included in their IRS 990 filings, which I distributed widely after making a significant finding: a pattern of short term gains that are for all practical purposes statistically impossible. I also sent letters to the independent MIT newspaper 'The Tech', several of which have been published.

        In Oct 2009 Jeffry Picower died suddenly, His Last Will and Testament laid out plans for a new Picower Foundation that he "requests" grant MIT an additional 25 million dollars in its first year of operation. To the best of my knowledge MIT has said nothing publicly about any of this. No comment as to whether they would, or would not, accept an additional 25 million dollars from the Picowers. (It is, I suppose, possible that they may have already accepted it, or agreed to accept it, and have kept quiet about it.)

Picowers at MIT
        Left in front of the new building they funded, and right with MIT president at the building's dedication in 2005.


7/20/09 (first email to MIT, sent only to press contact on Picower Institute web site)

Jeffry Picower's association with MIT

Picower Institute

         As an MIT alumni I am embarrassed to have Jeffry Picower's name associated with MIT. The Madoff scandal has produced credible allegations that Picower is a world class tax cheat and major participant in one of the largest frauds in history. The 50 million he gave MIT, the Maddoff trustee alleges, was other peoples money that Picower obtained by (effectively) blackmailing Madoff (read the trustee filing below carefully).

        MIT should take steps to separate itself completely from this crook. Ideally return the 50 million to the Madoff trustee, but baring that remove Picower's name from the Institute and remove his portrait.

  I sent the letter below this day to the 'Tech'

       Jeffry Picower is emerging as the #2 man in the Madoff scandal. The suit filed by the Madoff trustee against Picower says the huge phony gains and huge fraudulent tax loss statements delivered to Picower at his request were nothing more than payoffs for “perpetuating the Ponzi scheme". Picower ended up with more cash from Madoff's ponzi in his pocket than anyone (blackmail?): 5.1 billion cash, not phoney paper gains, but cash.

        The roughly 1% of that 5.1 billion that MIT accepted from Picower for the Picower Institute for Learning and Memory is clearly tainted.

        The trustee's filing makes interesting reading, I suggest everyone at the Picower Institute read it, and then reconsider whether Picower's portrait should hang in the lobby.

Don Fulton, MIT 64
8/19/09  Question to MIT email

Judith Korch
       If you didn't see it, here are links to the Picower's July 31 court filing replying to charges by the Madoff

     Here (again) are links to the Madoff Trustee's suit aginst Jeffry and Barbara Picower, individually and as
trustees of the Picower Foundation, and including the Picower Foundation:

     Has MIT (at any level) issued a statement, or is it planning to issue a statement, about accepting what
appears to have been (in part or in toto) 'stolen' money to fund the Picower Institute for Learning and Memory
and various other MIT programs funded by the Picower Foundation?

                                                         Don Fulton, MIT 64
8/19/09 MIT reply email

Subject: Re: Jeffry Picower's association with MIT
Date: Wed, 19 Aug 2009 08:37:40 -0400

Dear Mr. Fulton:

Thank you for your recent email; I know from Martha Ruest that you have expressed your concerns to us earlier, as well.  MIT has not made a statement; we are following the matter as it continues to unfold.


Judith Korch
Judith Korch
Assistant Director of Administration
Picower Institute for Learning and Memory
Massachusetts Institute of Technology
77 Massachusetts Avenue, 46-1303
Cambridge, MA  02139
8/20/09 email

Re: Jeffry Picower's association with MIT?

Judith (Korch)
      Given the two court filing now on the public record, the fact that the sums involved (5.1 billion net cash) must represent the bulk of Picower's wealth, the fact that Picower 'withdrew' hundreds of millions of dollars (up to 1 billion) per year out of the ponzi during the years that MIT had its hand out, I'd say it would prudent to at least now throw a sheet over the Picowers' portrait.

     If your son steals a car and hands you the keys, saying pop here's a gift, how long to you think the police will let you keep the car? The fact that you did not know the car was stolen counts for nothing. What's the difference between this case and MIT accepting money from Picower that appears at this point to have been in essence stolen? The Trustee calls Picower's 5.1 billion cash withdrawal "other peoples money"

     I suggest MIT prepare a statement, and perhaps plan to cough up the 50+ million, because I am going to press this matter, hard.

        Did you notice who headed legal team Picower picked to write his response? He is one of the 'independent', outside trustees of the Picower Foundation. My understanding is trustees of any tax exempt foundation have obligations to see that the money is prudently (& likely honestly) invested, so not only do we have a massive failure by Jeffry Picower and Barbara Picower in the loss of the one billion of the Picower Foundation, but by Picower's lawyer as well in his capacity as trustee.

        Even on paper the Foundations assets were not well diversified. I looked at the Dec 2007 990 filing by the Picower Foundation, and it shows that nealy half of the almost one billion in assets were in (supposedly) only seven stocks.
9/27/09 email

CBS's 60 Min story features Picower

        Picower Institute portrait boy, Jeffry Picower, was featured in a long story on CBS's 60 min last Sun about the Madoff recovery effort. Below is a link to the full story. You'll notice the two lawyers leading the Madoff recovery effort, who now know how Jeffry Picower earned (to use the term loosely) much of his money, are a tad less admiring of him than MIT officials and Picower Institute directors in the past have been. They are suing him for return of 5.1 billion, about 1% of which funded the Picower Institute at MIT.

        Picower appears about 10 min into the 13 min video (one 1 min commercial near start).;photovideo

Don Fulton
9/28/09 first email to wider distribution (Picower profs and post docs)


To: Picower Professors and Researchers
From: Don Fulton, embarrassed MIT alumnus
Date: Sept 28, 2009

Recent revelations about Jeffry Picower and the Picower Foundation

       As a hard working researcher all you may know of Jeffry Picower is that he was a generous benefactor that made the Picower Institute for Learning and Memory at MIT possible and that he and his wife's private granting foundation, Picower Foundation, had to close because it had invested all its assets with Madoff.

        But in the last few months new information about Jeffry Picower and the source of his wealth has come to light from the Madoff investigation. Maybe you don't care since Building 46 and the Picower professorships are fully funded, but I think you should, at least as long as the Picower name is connected to MIT. And, of course, there is also the ethical dilemma that almost all the money accepted by MIT from the Picowers to built the Picower Institute and fund the professorships was according to the Madoff Trustee "other peoples money", in essence the money was stolen (by Madoff).

        I am a retired MIT engineer (EE 64) with time to pursue what interests me, so in Dec 2008 when Madoff was arrested claiming 'I did it alone' and victims were popping up everyday claiming never to have noticed anything amiss, I smelled a good story and have followed the Madoff developments closely ever since assembling a large Madoff archive on my home page (link below). And was I surprised when in spring 2009 the Madoff money trail led straight to Jeffry Picower and back to my alma mater.

        To a follower of the twists and turns of the Madoff saga and a reader of primary documents (like me), which in this case includes court filings and 990 filings, Jeffry Picower is not the innocent victim of Madoff he pretends to be. He's a Madoff insider, more like an associate of Madoff. My low opinion of Jeffry Picower is shared by others. In the excellent new Madoff book, Too Good to be True, by former Barrons writer Erin Arvedlund you find this entry in the Index {Picower, Jeffry, illegal activities of}. Picower, she says, "had a history of tax avoidance" and it's downhill from there with several pages required just to summarize all the charges against him by the Madoff Trustee.

Picower Foundation unique 990's
        I think it's little known that Madoff (probably with Picower's input) crafted and maintained a unique investment portfolio just for use by Jeffry Picower. The Picower Foundation investments as reported in its IRS 990 filings are thus quite interesting because they provide a unique public window into how Madoff operated. The 990 portfolios of other charities who invested with Madoff are far less interesting, because they were supposedly invested using the famous Madoff split-strike strategy, which always took the entire portfolio to cash on the reporting dates. The Picower Foundation portfolio was structured (fabricated) to look real while at the same time producing super returns, not an easy thing to get right for a portfolio that purports to buy and hold stocks for years.

My 990's review
        Recognizing the importance of the 990's as a window into Madoff and that the fact 990 information had been available to MIT and online for a long time, I began a detailed review of the Picower Foundation 990's. I sent a report recently to MIT of my findings covering years 2001 thru 2007.

        The Picower Foundation 990's (2001 to 2007) did not indicate, at least not clearly, that the foundation's assets were managed by Madoff. Perhaps this is because Madoff didn't like his name used and perhaps also it was to give the illusion to grantees that the investment manager and master stock picker of the Picower Foundation was Jeffry Picower. But a search for 'Madoff' in these years 990's does produce some hits. For example, in 2001 the bulk of the foundation's assets are shown residing at 'B. Madoff', and the grantee list several times shows 'Ruth Madoff' as the contact for contributions (really little kickbacks) to her pet charities.

Picower's ponzi withdrawals
        Picower's withdrawals from the ponzi (7 billion) far exceeded his input (2 billion) leaving him with 5 billion net cash. Most of the well known Madoff feeders like Merkin (Ascot Partners), Noel (Fairfield Greenwich) were enriched to the tune of 100 to 200 million dollars. Madoff and his extended family are thought to have extracted 100 to 300 million. Compare this to Picower's net 5,000 million dollars from the ponzi, more cash by far than anyone else! The only other person even close in net cash is Madoff insider Stanley Chais of LA, who received about 1/5th of what Picower got. If you 'Follow the Money' in the Madoff investigation, it leads directly to Jeffry Picower.

         Note, that Picower received billions (net) from Madoff is not really contested. The court appointed Madoff Trustee, after a forensic analysis of Madoff's books, determined that Picower had received a net of 5.1 billion in the last thirteen years and sued Picower for its return. Picower in his reply to the court confirmed that he had received "billions" from Madoff.

Is Jeffry Picower the world's cheapest philanthropic bastard?
        Why did Jeffry Picower and his wife Barbara last Dec just suddenly cut off funding and leave hanging all the medical researchers, including those at MIT, they were currently supporting and to whom they had promised future support? Because the assets of the Picower Foundation suddenly vaporized with the Madoff ponzi collapse?  Please.... if you believe that I have bridge you might be interested in.

        Jeffry Picower has wealth beyond anyone's imagination. He could have paid for every item bought online from WalMart last year and still had billions left over! His contributions to the Picower Foundation over the last decade (50 million) were less than 1% of his reported wealth. So is the explanation simply that he is the world's cheapest philanthropic bastard?

Or is he running for cover?
        My theory is that Picower has decided to play the role of Madoff victim as his best hope of staying out of jail. When Madoff was arrested and his files were suddenly open to inspection by the authorities, Picower had more than a little problem (for details see the Madoff Trustee's May 13 filing) and immediately ran for cover. Even though Jeffry Picower could have financed the few million in continuing medical/scientific programs of the Picower Foundation with pocket change, his role as Madoff victim required that the Picower Foundation be closed ("caused" by Madoff related losses says his court filing) and medical researchers and research supported for years by he and wife Barbara be abruptly cut off.

990's portfolio transactions
        My review of the Picower Foundation 990's shows its equity portfolio purchases in the last seven years had to have been rigged (backdated) with 27 of 27 stocks rising after purchase with an average gain of 50% in just a few months, and the 990's for 2000 and 2001 show strong hints of similar rigging of equity sales. Anyone looking closely at the Picower Foundation investment portfolio over the years as reported in its 990's can see that its success in buying and selling of stocks is just not statistically possible, it does not represent a real portfolio.

Picower Foundation grant money was nearly all ponzi money
       You've probably heard of Madoff's steady 10-15% returns, well that doesn't apply here. Madoff paid his friend Jeffry Picower much higher rates of return (says the Madoff Trustee). In 1993 the Picower Foundation assets were in the range of 27 million and by the end of 2007 had increased to 958 million. This is an increase of x35 in fifteen years, an average annual increase in assets of about 27%! I don't know how much Picower contributed 1993 to 1997 because the 990's for those years are not available online, but from 1998 to 2007 his contributions were small. In these years Picower's contributions came nowhere near covering the grants of the foundation, all the foundation's 600 million dollar increase in assets plus the bulk of its 230 million or so in grants in these years came from the (so-called) returns of its portfolio. Madoff just shoveled money into the Picower Foundation. The Picower Foundation grant money was nearly all Madoff ponzi money.

        Did MIT ever look at the Picower Foundation 990's, even notice its 'almost too good to be true' investment record? Or perhaps they did notice and concluded professional investor Jeffry Picower must be one hellva of a money manager? His investment returns were likely better than the MIT endowment returns, so I wonder if maybe they considered recruiting him to help out with the endowment? (Of course, I'm being sarcastic, but it's to make the point that the Picower Foundation 990's returns history should have raised a red flag, a red flag that was either missed or dismissed by MIT.)

Picower's knowledge
       At the minimum Jeffry Picower had to know the Foundation's portfolio was rife with fraudulent transactions and gains (though he does not admit this), but the court appointed Madoff Trustee (Irving Picard) in his May 13th court filing does not mince words and goes much further. He accuses Jeffry Picower of being directly responsible for the (illegal) portfolio manipulations. The Trustee's allegations against Picower are too numerous to even summarize here. (See Arvedlund's book for a summary and the Trustee's link below for details. I also have include the link to Picower's content-free rebuttal).

        In simple terms the Madoff Trustee is alleging that the Picower Foundation was not honestly run by the Picowers, Jeffry and Barbara (both are defendants, as is the Picower Foundation, in the Madoff Trustee's suit to recover 5.1 billion), that the investment gains of the Foundation's portfolio, which is where most of the Foundation's money came from, were phony ("payoffs" from Madoff to Jeffry Picower says the Trustee), and that Jeffry Picower knew they were phony and had a hand in directing them.

Why should you care?
        The Picower Foundation was more than a gift machine, a supporter of good research. It may very well be that in its research support the Foundation was excellently run (by Barbara Picower), but an assessment of the Picower Foundation cannot ignore the source of its money. If the Picower Foundation acquired the bulk of its assets in a manner that its investment manger, Jeffry Picower in his capacity as Picower Foundation trustee, knew, or as the lawyers like to say 'should have known', at the time to be illegal, should MIT continue to permanently and eternally (quoting Prof Bear, see footnote below) carry the name 'Picower' on a major research lab and professorships (not to mention honoring the Picowers with a portrait in the lobby)? I think not.

        One possibility is MIT take its cue from the Jewish Theological Seminary in the 1980's. They took the name Boesky off their Boesky funded library after they, and perhaps more importantly the rest of the world, found out how Ivan Boesky made his money.

        And what of the 50+ million of Madoff ponzi money accepted from the Picowers? Is MIT's position 'we've got it and we're going to keep it', the other Madoff investors be damned?

Are you embarrassed?
        With all the new information that has come to light in the last six months about the Picower/Madoff connection, aren't you (Picower professor or researcher) the slightest bit embarrassed to be a 'Picower' professor and to work at a lab named for Picower? What if Picower gets criminally indicted, what if he goes to jail, does that change your thinking?  I would like to see MIT and the Picower Institute begin to address the new information about the Picowers and how the Picower Institute at MIT was funded. To just sit mute as MIT has been doing is unacceptable.

Footnote --- After drafting this letter, I came across laudatory comments (below) about the Picowers by Prof Bear in his 'From the Director' column of the Winter 2009 issue of Neuroscience News. The column was apparently written in early winter 2009 after Madoff was arrested, but before Picower's inside status with Bernie became known.

        -- "Picower Institute for Learning and Memory at MIT is a permanent monument to the vision and generosity of Barbara and Jeffry Picower and The Picower Foundation."
        --(our current and future scientific accomplishments will be a part of the) "legacy of Picower philanthropy."
        -- "I have greatly admired the Picower's deep commitment" (to great societal causes including lessening human suffering from diseases of the brain.)
        -- "We will be eternally grateful for all the Picowers did"  (to make our Institute the best of its kind in the world.)

Footnote II --- It will be interesting to see the 990 filing of the Picower Foundation for 2008. Picower's recent court filing strongly plays up his role as Madoff victim, claiming the collapse of the Madoff ponzi "caused" the closing of the Picower Foundation, while simultaneously dancing around the issue of what fraction of the Foundation's assets were lost to Madoff. There are hints in the court filing that significant Foundation assets may not have been invested with Madoff when the ponzi collapsed. (Examples of the language: more than "half a billion" was left with Madoff in various accounts, close to a billion was invested with Madoff "at one time", and withdrawals would have been "accelerated" if he had known it was a ponzi.) If not all the Foundations assets were lost on Dec 11, 2008, then obviously concealing this fact for as long as possible would be consistent with Picower portraying himself as a major Madoff 'victim' who is deserving of sympathy not jail time.

    Madoff Trustee (Picard) suit against Picower (May 13, 2009)

    Picower's  reply to court (July 31, 2009)

    my Madoff page
10/8/09 email

To: Picower Foundation people

Jeffry Picower and the Forbes 400

       Jeffry Picower is included in the newly released 2009 Forbes list of 400 richest men in America at rank #371 with (conservatively) estimated wealth of 1 billion, but Forbes isn't counting the billions in Madoff money. Forbes notes Picower is "likely worth billions more" saying he is "alleged" to have extracted billions of dollars from Bernard Madoff's fund before it collapsed. I would point out that it's not just alleged, in Picower's court filing he confirms he received "billions" from Madoff.

        The latest estimate by the Madoff Trustee is Picower 'netted' 6 to 7 billion from the Madoff ponzi. At that wealth level Picower's rank on the 400 list would rise from #371 to around #30 putting him near Jeffrey Bezos, founder of Amazon (@ 8.8 billion), Edward Johnson, founder and owner of fidelity investments (@ 8 billion), Rupert Murdoch, owner of a media empire including Wall Street Journal (@ 6 billion), and Steve Jobs of Apple (@ 5 billion). Everyone knows what Bezos, Johnson, Murdoch and Jobs do, what they have contributed to society. What has Picower done, what has he contributed to society? How does Jeffry Picower belong with these people?

        Is it even remotely possible that a person starting as an accountant and lawyer (with no known, or at least no known substantial, inheritance), who never ran a large company, who never invented anything, could honestly accumulate so much wealth that he is now the 30th richest man in America? What are the odds!

        From the little we know about Picower it appears he likes to invest with crooks. He invested in the 1980's with Ivan Boesky, and Boesky was a crook. In later years Picower invested most of his money (24 accounts, including the Picower Foundation) with Madoff and Madoff was a crook. Nor was Picower just another investor with Madoff, Madoff created a phony 'buy & hold' portfolio exclusively for Picower and over the years showered more ponzi cash on Picower than anyone else.

        My review of the Picower Foundation IRS 990 filings (Picower Foundation's Mind Boggling Short Term Investment Gains, 9/11/09) shows 27 of 27 stocks added to the portfolio from 2001 to 2007 go up in value in the first year with the minimum gain 14% and an average gain of 50%. What are the odds? Picower in his court filing says (I quote), "Defendants account returns (includes Picower Foundation account) were not implausible". So I ask again is Picower: Insane, Senile, Nitwit, or Slimeball?

        So given the facts on the table about Jeffry Picower, facts that are pretty well established and independent of whether or not Picower is criminally indicted, what are the odds that the bulk of his wealth and the money he gave MIT was honestly acquired?
10/11/09 email

Picower Foundation Trustee's son leads Madoff investigation

        The well known fake Bernie blog (link below) leads with a Picower story. The guy who writes this blog, pretending to be Bernie Madoff, is close to the Madoff investigation. He reports that the son of Picower Foundation trustee, and long time lawyer for portrait boy Jeffry Picower, William D. Zabel, is now a key player in the U.S. Attorney's Office that is leading the Madoff investigation.

        He gossips about Picower being a possible "person of interest" in the Madoff investigation and that Picower in Zabel's son might have an inside man who could possibly tip him off in time to flee the country if he was about to be criminally indicted.
10/14/09 email to Theresa M. Stone, MIT Treasurer & letter published in 'The Tech' (10/20/09)

Open letter to MIT Treasurer, Theresa M. Stone, about Jeffry Picower Donations

        MIT's favorite individual donor, Jeffry Picower is likely soon to be bankrupted. The Madoff Trustee has a 7.2 billion clawback suit against him (his lawyer has already said he's ready to make a deal), and it's likely the IRS will have big claims too, because Picower got billions in phony tax loss statements from Madoff.

        As I see it, Picower's a motivated donor if ever there was one! Here's my suggestion: Ask for the 39 million that Picower 'earned' in 2006 in just two weeks via the accounting magic of stocks bought four months before the account was opened.  The Madoff Trustee repeatedly uses this example to show that Picower was in bed with Madoff and his gains were fraudulent. Perfect. If MIT can get this 39 million, it can clean it up. Do you really think the Madoff Trustee would sue MIT for the return of a few measly million Picower dollars?

        Sure the Picowers' money might be tainted, but that didn't stop MIT from accepting 10 million a year from the Picowers 2001 to 2005. MIT has made no public comments that it regrets accepting this 50 million for the Picower Institute for Learning and Memory, so why not ask for more? It's probably as close to free money as MIT is ever going to see. Offer to name something else after them, they seem to like this.

                                                                Don Fulton, MIT 64   (Oct 20, 09 issue of 'The Tech', top of page 4)
10/14/09 email

To: Picower Foundation people & MIT Treasurer

Please Mr. Picower can we have some more, or Jeffry Picower makes a quick 39 million

        In middle of April 2006 Jeffry Picower opens a new Madoff account (called 'Decisions 6') and funds it with a wire transfer of 125 million dollars. The account statements show the money is invested in 57 stocks that with a little accounting magic were purchased (near their lows) in Jan 2006 "four months before" the account was opened! Within two week after the account has been opened there's a sweet 39 million (31%) gain. A few months later Picower removes his original 125 million, leaving the phony profits to continue growing. That's how it done in Picower land: huge quick guaranteed gains with virtually no downside risk.

        So my suggestion to MIT, if it doesn't mind accepting dirty money, which the record seems to indicate is not a problem, why not send Jeffry or Barbara Picower an email and ask for this 39 million to fund a new lab or building. Maybe offer to name something after them, they seem to like this.  After all, from Picower's point of view it's easy come easy go, since it's probably going to get clawed back. From the Madoff Trustee's point of view this 39 million was 'earned' a little too easily and belongs to the victims. From MIT's viewpoint a motivated donor! It's almost free money.

        Picower's lawyer has already indicated he wants to make a deal to settle the 5.1 billion claim (whoops, I forgot, the Madoff Trustee has just raised the claim to 7.2 billion) that the Madoff Trustee has against him. If MIT doesn't grab more Picower cash now, the Madoff Trustee and IRS are probably going to get nearly all of Picower's money. MIT doesn't want this, does it, when a few million more Picower dollars could be doing good work right here at MIT? What's the likelihood the Madoff Trustee will sue MIT for return of a few measly million Picower dollars?  If 0.039 billion goes missing, who's going to complain or even notice? It's just a rounding error when the claim is 7.2 billion. Here's a sample email you could send the Picowers:

Dear Jeffry and Barbara
        You know that 39 million you made in two weeks in 2006 that the nasty Madoff Trustee keeps going on and on about saying the gain was fraudulent. Well we here at MIT have some cool ideas (-- ideas here --) as to how that 39 million could be put to good use right here on our campus. And we'll name (--labs or buildings here --) after you too, if you want. So how about it, could you send us a check for that 39 million real soon before the nasty Madoff Trustee grabs it? It can only improve your reputation as a great philanthropist. How about if we arrange for another picture with President Susan Hockfield?
        And so maybe the money's a little hot, but we won't complain. Have we said anything about the 50 million you gave us for the Picower Institute for Learning and Memory? Good luck, hope you can stay out of jail without having to flee your 28 million dollar Florida home. Go Picower!

                                                                 Your friends and supporters at MIT

10/21/09 email

Curious case of Picower Foundation Trustee Gerald C. McNamara

        Gerald C. McNamara, Picower Foundation trustee for at least the last decade, is apparently (see footnote below) a Managing Director of Goldman Sachs. In other words McNamara, unlike all the other Trustees (excluding Jeffry Picower), is a financial guy. If any of the independent trustees would be likely to notice funny business in the Picower Foundations 990's investment portfolios I would think it would be him. What's really curious is McNamara works at Goldman Sachs. Why is this curious? Consider this news story (with confirmation by Madoff whistle blower Markoplolos):

        "More than a decade ago bankers from Goldman Sachs' asset management division were despatched to Bernard Madoff Investment Securities to discover how the legendary fund manager maintained such consistently good returns ... One former Goldman partner said: "I remember the guys came back baffled. Madoff refused to let them do any due diligence on the funds and when they asked about the firm's investment strategy they couldn't understand it. Goldman not only black-listed Madoff in the asset management division but banned the brokering side from trading with the firm too." (UK Telegraph, 20 Dec 08)

        Markoplolos, the famous Madoff whistle blower, confirms this. One of his red flags in his 2005 SEC filing was that Goldman Sachs would not deal with Madoff.

        So here we have a Picower Foundation trustee for a decade who is a senior financial guy (Managing Director) of a firm that for a decade has black listed Madoff and will not deal with him! Isn't this interesting! Did McNamara know that Picower Foundation's assets were managed by Madoff?  How could he not know? Didn't he have a responsibility to know? Picower Foundation 990's (at least one of them), easily found online, showed the bulk of the Foundations assets residing at "B. Madoff".

        Has anyone at MIT picked up the telephone to see what Picower Foundation trustee Gerald McNamara at Goldman Sachs has to say about the 'too good to be true' performance (& other weird anomalies) of the Picower Foundation's portfolios as reported in its 990s during his tenure as trustee?

Footnote  -- Identifying trustee 'Gerald C. McNamara'

        For the last seven years the Picower Foundation 990's list the address of its trustee 'Gerald C. McNamara' as simply c/o Picower Foundation, but in earlier years 990's an address was given. A little searching finds a 'Gerald C. McNamara, Jr', age 55, with the same street address for Picower Foundation trustee 'Gerald C. McNamara' shown in the 990's for years 1998 to 2000 (300 West End Ave, Apt 8A, New York, NY 10023). In a 1984 New York Times wedding announcement we find the wedding of 'Gerald C. McNamara, Jr', an employee of Goldman Sachs and son of late Gerald C. McNamara a securities broker. Goldman Sachs currently lists a 'Gerald C. McNamara, Jr' as a Managing Director (appointed 2001).
10/30/09 email
To: Picower Institute professors

Reporter Mary Jacoby on Jeffry Picower

         Mary Jacoby is a reporter (bio below) who has followed Jeffry Picower longer than anyone else. She did a pre-Madoff expose on his medical "self-dealing" in 2001 (story link below)  Her story explores how the rights to a potentially valuable drug developed by research funded by the Picower Foundation 'somehow' ends up back in Jeffry Picower hands. Her opinion of Jeffry Picower since then, I think's fair to say, has been pretty low, examples

    ---  "It took me about 30 minutes looking at public records to figure out that (Jeffry) Picower was likely engaged in massive self-dealing"

    --- "There were red flags around Palm Beach billionaire Jeffry Picower for years"

      As top medical/scientific researchers this should be right up your alley. Were you aware at the time (2001) of Picower's alleged self-dealing involving drug rights? Did you inform MIT of your concerns?

                                                                 Don Fulton    (2001 Picower self-dealing story)
11/4/09 email

William Zabel's amazing effort to save Picower's ass

        If Jeffry Picower can be said to be the benefactor, or 'father', of the Picower Institute (ignoring for the moment the regrettable fact that nearly all the wealth the Picower Foundation showered on MIT came from an illegal ponzi scheme), then William D. Zabel is the Picower Institute's 'godfather'. William D. Zabel, age 73, is not exactly a legal unknown. Zabel, Harvard Law School cum laude and Princeton Univ BA summa cum laude, is a name partner of a 350 lawyer NYC law firm (Schulte Roth & Zabel) founded in 1969, trustee of 100 million dollar Soros Charitable Foundation, trustee of New York University, trustee of The New School, chair of board of directors of Human Rights First, and many other honors. He even wrote a book, "The Rich Die Richer and You Can Too", by William D. Zabel, 1996. And Zabel and Madoff were both trustees of the Picower Institute for Medical Research.

        Zabel in his personal legal work has long specialized in working with the super rich. He did George Soros' divorce (Soros is the 29th richest person in the world says Forbes) and is a trustee of Soros' charitable foundation. And of course Zabel has been closely associated with Jeffry Picower for at least 20 years, some call him Picower's consigliere. Zabel and his firm wrote the Picower defense to Madoff Trustee's 7.2 billion clawback lawsuit. William D. Zabel filed the papers in 1989 establishing the Picower Foundation and has been a trustee of the Picower Foundation for all its years. Statements released to the press by the Picower family at Jeffry Picower's death came from Zabel, who identified himself as Jeffry Picower's personal lawyer.

       In an 9/29/09 email to me from Sam Cooke (& indirectly Prof Bear) of the Picower Institute for Learning and Memory it was suggested that Jeffry Picower should be considered innocent until proven guilty. But I say look at the facts, including Picower's 60+ page reply to the court that doesn't even attempt to rebut or explain the detailed allegations of fraudulent account manipulations leveled against him by the Irving Picard, the court appointed Madoff Trustee. Consider the following, which is either the most amazing coincidence or a demonstration of the kind of legal protection you can buy when your a billionaire.

Amazing lawyering
      Consider the amazing feat of lawyering Picower's lawyer Zabel just pulled off. Zabel managed or helped  (for details see articles by Mary Jacoby at MainJustice) to get his own son, Richard B. Zabel, appointed in early Oct 2009 by U.S. Attorney (Preet Bharara) to head the Southern District of New York Criminal Division. That's right Zabel, whose client Jeffry Picower is facing indictment as one of the Madoff insiders and main beneficiary of the ponzi, manages to get his own son (!) appointed to head the prosecutors office that is running the Madoff investigation and is responsible for issuing Madoff related criminal indictments!

      Is this unbelievable lawyering or what? Maybe it's a first. Billionaires just do not live in the same world as the rest of us folks. Of course, Richard Zabel recused himself from the case because his father is Picower's lawyer, but somehow I remain skeptical. As a little side benefit William Zabel gets some protection for himself too, because as trustee of the Picower Foundation he had a responsibility to see to it that foundation's assets were prudently invested. (And he kind of screwed up on that one.)

      And how does Jeffry Picower reward his long time lawyer for this incredible lawyering? He drops dead two weeks later! You can't indict a dead man, so all of Zabel's incredible lawyering is wasted. I wonder if Jeffry mailed the check to Zabel for 'services rendered' before going for his last swim.

      Picower Institute's 'godfather', William D. Zabel, has been looking at the Picower Foundation's 990 fabricated portfolios for 20 years! These portfolios with their too good to be true gains and inconsistencies were a revealing and unique window into Madoff. Zabel was in the perfect position to see these red flags. If he didn't see them, maybe it's because lawyers often make it their business not to 'see' certain things that could be troublesome. A lot of Madoff insiders and hangers on in their quest to get filthy rich apparently decided it was better not to know exactly what Madoff was doing, even though it was probably clear to most of them that Madoff was running a scam of some sort.
12/10/09 email

Reading Picower's Will --- a new Picower Foundation
(or Time to kiss April Freilich's ass?)

       At Jeffry Picower's death he was one of the richest men in the country. He is known to have netted about 1 billion from the sale of Alaris Medical and 7.2 billion from the Madoff ponzi in just the last 13 years alone. This means the source of 90% or more of Picower's wealth (remember, he had been 'investing' with Madoff long before 1995) was the Madoff ponzi. For reasons not yet explained Madoff dumped a large fraction of all the cash his ponzi ever raked in into the various accounts of Jeffry Picower including the account of the (old) Picower Foundation. The Picowers have voluntarily returned none of this money to the Madoff victim pool and are now being sued by the Madoff Trustee for return of 7.2 billion. The news headlines say the Picowers would consider returning only the money withdrawn in the last six years (about 2.4 billion) to settle the case. In other words Jeffry and Barbara Picower's position has been, and with Jeffry Picower's death remains Barbara's position, that any Madoff money stolen more than six years ago that somehow (mysteriously) ended up in their Madoff accounts is now theirs to keep! I think this one fact should tell anyone all they need to know about the character of Jeffry and Barbara Picower.

        Picower updated his Will on Oct 15, 2009 incredibly just ten days before he is found dead at the bottom of his swimming pool. The Will specifies that all his wealth remaining after family, friends and employees are provided for is to be used to fund a new non-profit foundation, a new Picower foundation, whose scope, directors and trustees are outlined in the Will.

        MIT was the major grantee of the old Picower Foundation, receiving 51 million dollars since 2001, and MIT is even mentioned in the Will. Picower in the Will "requests", but importantly does "not direct" (a distinction he makes) 25 million go to MIT in the future for the Picower Institute for Leaning and Memory. Hence, I suspect there's some interest at MIT as to how the new Picower Foundation will be set up. In that vein I have read the Picower Will (available online) and hereby offer a little summary, a decoding if you will, of Jeffry Picower's Last Will and Testament in the context of his dirty Madoff connections.
Decoding Jeffry Picower's Will
        Firstly, the old Picower Foundation that funded the Picower Institute at MIT is dead, "in no event (are funds to go to) Picower Foundation created 1989", says the Will. However, a new charitable tax exempt foundation is to be set up, identified only as the "New Foundation", that will do pretty much what the old Picower Foundation did. The Will says,  "I request, but do not direct, that directors allocate half of the funds for medical research and the remaining half for charitable purposes."  Picower sets aside about 1/4 billion for family, friends and employees with the balance of his estate to fund the "New Foundation."

        The 64 dollar question is, of course, how much in the way of assets will Picower's new foundation have. Currently the court appointed Madoff Trustee is suing Jeffry and Barbara Picower for return of 7.2 billion, and the IRS may very well have big claims too considering the billions in phony tax loss statements Madoff is known to have generated for Picower (at his request). Hence the assets of the new foundation could be anywhere from zero to many billions of dollars. Potentially it could be much larger than the old Picower Foundation and a behemoth in the non-profit foundation world.

        From the bequests in the Will the scope of the Picower's organization is laid bare. The bequests fall into three groups: family, foundation related, and minor employees. Picower gives 200 million (plus property) to his wife Barbara Picower (age 67), 25 million to his daughter Gabrielle Picower (age 37), 2.5 million to each grandchild (if any, none are named), and 200k to his niece Rhonda Bienes (who may be disabled). Five minor employees (maybe household help) get bequests ranging from 200k to 50k plus 25k to five of their children.

        Barbara is to continue on about as before as director of the New Foundation. There is no evidence that Picower's daughter Gabrielle has ever been involved in the family's (charity) business, or will be seriously involved in the New Foundation, although she is allowed to apply to be a trustee if she wishes. Gabrielle Picower as of 2006 is listed by New York University School of Education as an instructor and candidate for PhD.

Foundation related bequests
        Two long time Picower Foundation trustees who are not to be trustees of the New Foundation get small bequests: Martin Post MD gets 100k and William Zabel, who is also the Picowers' personal lawyer, gets 200k.

        One big winner in the foundation related bequests is a new trustee for the New Foundation, Joshua  H. Hochschuler (age 36) & family, who get bequests totally about 4.5 million. Joshua, who owns a few ice cream stores in Dallas (featuring premium gelato!), gets three million. Three million is probably a lot of money to a man running a small business. He is the son of Dr. Stephen Hochschuler (age 67) who gets 1 million. Dr. Stephen Hochschuler is a well known back doctor and probably is either a buddy of Picowers or maybe he once treated Picower. An additional 450k is split by three kids in the Hochschuler family. The Will identifies the Hochschulers, father and son, simply as "my friends" even thought they live in Arizona and Texas while the Picowers live in Florida. Dr. Stephen Hochschuler has visited MIT. In 2005 he was a member of the Picower Advisory Council created to advise the leadership of the Picower Institute and MIT.

        The really big non-family bequest winner in the Will is Picower's long time assistant and business partner April Freilich (age 56), who gets about 14 million. Ms. Freilich gets 10 million, plus principal on 1.5 million loan to her and husband forgiven, plus her daughter, Samantha Freilich (age 25) gets 500k. April Freilich is appointed co-executor of the estate, jointly with Barbara Picower, and for this she gets another two million. In the New Foundation not only is she to be a trustee (replacing Jeffry Picower), but she is second in line behind Barbara Picower to run the New Foundation. The Will says, "If she (Barbara Picower) ceases to act, April (Freilich) shall act as Chairman of the Board of the foundation."

        April Freilich is listed on SEC filings as CEO of several of Picower's business entities, but her main claim to fame is in the court filings of the court appointed Madoff Trustee, Irving Picard. He spends considerable ink describing in detail her participation in various, and fraudulent, Picower/Madoff account manipulations, like her making specific requests to the Madoff team to 'adjust' past months returns to achieve the desired degree of phony gain (or sometimes losses) in Picower accounts. The Madoff Trustee's clawback suit (5/12/09) says "Freilich and Defendants (Jeffry and Barbara Picower) knew or should have known that they were participating in fraudulent activity". The basis for the charges of Freilich's participation in fraud is strong as Madoff kept detail records of communications with Picower and the Madoff file record is supported by a cooperating witness, Frank DiPascali, Bernie's chief fabricator (now in jail), who was Freilich's main Madoff contact.

        Combining the Will's bequests with info from the Madoff Trustee court filings it's pretty clear the (old) Picower Foundation was run by just three people: Jeffry Picower, Barbara Picower and April Freilich. With Jeffry Picower dead it looks like the New Foundation will be run by two people: Barbara Picower, with title of chairwomen but doing pretty much what she did in the old foundation, and backing her up April Freilich, who is to be a trustee and will replace Barbara as chairwomen if she steps down. There are five named trustees for the New Foundation: Barbara Picower, April Freilich and Gerald McNamara (of Goldman Sachs), who is held over from the old Picower Foundation, plus new trustees: Joshua Hochschuler, the Dallas ice cream man who was showered with 4.5 million in bequests, and Susan C. Frunzi (no bequests) who replaces lawyer William Zabel as a trustee. Frunzi (age 50) is a lawyer in Zabel's large NY law firm (Schulte Roth & Zabel) and specializes in setting up tax exempt foundations.

        Forgive my skepticism, but my take on the Picower's multi-million dollar bequests to new trustees ice cream man Hochschuler and assistant Ms Freilich (plus their family members showered with big money too), is Picower buying loyalty. The fact that most money is passed not as cash but via trusts, no doubt helps insure future loyalty giving Picower influence from the grave. Historically loyalty in the Picower/Madoff world has meant looking the other way when fraud is involved.

       April Freilich is a decade younger than Barbara Picower (age 67), is co-executor of the Picower estate and is designated to run the new Picower foundation (New Foundation) if, or when, Barbara steps down. So MIT, is it time to start kissing April Freilich's ass to be sure of a seat on the new (dirty) Picower foundation gravy train?
Jeffry Picower Last Will and Testament bequest summary

Bequests -- family
                 Barbara Picower (wife) --- 200 million + property
                 Gabrielle Picower (daughter) --- 25 million
                 Grandchildren (if any) --- 2.5 million each
                 Rhonda Bienes (niece) --- 200k

Bequests -- foundation related
                 April Freilich (30 year business partner) --- 10 million, forgivness of 1.5 million loan,
                                                                                             2 million as co-executor of estate
                            Samantha Freilich (daughter) --- 500k

                 Joshua  Henri Hochschuler (new trustee) --- 3 million
                            (Dr.) Stephen Hochschuler (father) --- 1 million
                            Jessica Hochschuler (daughter) --- 250k
                            Jonah Hochschuler (son) --- 100k
                            Caleb Hochschuler (son) --- 100k

                 William Zabel (retiring trustee & personal lawyer) --- 200k
                 Martin Post MD (retiring trustee)  --- 100k

Bequests -- minor employees
                 Joel Clark ---  200k
                           Madison and Zoe Clark  --- 25k each
                 Saliha Hernandez -- 150k
                          Corey, Yasmina, Blake Hernandez --- 25k each
                 Yvonne Yu -- 200k
                 Ana Leston --- 75k
                 Christina Bertuccio --- 50k

Link to Jeffry Picower's Will

25 million for MIT is found on top of p13.
1/4/10 email

Ask his brother-in-law?

          Michael Bienes was featured on camera in the hour long Frontline show on the Madoff ponzi (5/12/09). He was the only Madoff insider who would talk to Frontline. He was the Mr. "Easy, peasy... I never worked hard... God wanted me to be rich" guy, who a Florida newspaper has characterized as the "fabulously wealthy Fort Lauderdale benefactor."  When Frontline asked him if he understood how Madoff made his money, he said no, saying, 'I probably wouldn't have understood if he had told me', adding ''I don't know how an airplane flys, but I know it flys.'

        Bienes started off as an accountant working for Madoff's father-in-law (Saul Alpern) and later with his partner (Frank Avellino) the two were key players in the 60's and 70's establishing Madoff as a money manager, steering thousands of their small accounting customers to Madoff, bringing Madoff hundreds of millions, until the SEC shut them down in 1992 for operating without a license. The SEC found Avellino & Bienes had "kept almost no records" even though they were managing 440 million dollars (all given to Madoff) of their customers money ( “my experience has taught me to not commit any figures to scrutiny” said Avellino, also an accountant!) and Madoff sent in his personal lawyer (Ira Lee Sorkin) to represent them. (NYT 1/16/09)

        And what's this got to do with Picower and MIT?  Michael Bienes was Jeffry Picower's brother-in-law!  Perhaps Bienes should have asked his big time investor brother-in-law Picower to explain what Madoff was doing. And surely Picower must have learned from his brother-in-law  Bienes that Madoff's returns were so unbelievably steady & high that Avellino & Bienes in the early days were offering to their customers "guaranteed returns" up to 20% per year. Did Picower smell a rat? Or maybe like Feynman he liked the smell of rat.

        This little family tie-in between Picower and the Madoff team just recently came to light with the release of Picower's Will showing a bequest to Rhonda Bienes, identified as Picower's niece. Drip, drip, the more we learn about the Picowers the deeper their hip boots sink in the Madoff slime.
1/20/10 email

Barbara Picower speaks

Barbara Picower speaks
        For most of the last year following the arrest of Bernie Madoff in Dec 2008 for running the worlds largest ponzi Barbara and Jeffry Picower said virtually nothing on the public record (aside from a court filing). But with Jeffry Picower's death in Oct 2009 and the filing of his Will in Nov 2009 Barbara Picower released a public statement, undoubtedly vetted by her consigliere and Picower Foundation trustee, William Zabel, that purports to give Jeffry Picower's views. Here it is as reported by the New York Times:

       In a statement released Monday night, Mrs. Picower said her husband “was determined that we would put Madoff behind us, reclaim our good name and reverse the damage Madoff’s fraud had, not only upon our lives, but upon the many deserving institutions and people we were blessed to support.”  The new foundation will allow his “charitable legacy” to continue after a settlement is reached with the (Madoff) trustee, she said. (New York Times 11/9/09)
        Let's parse this statement. She starts talking about trying to 'Reclaim our good name' (see postscript), but what I find most interesting is the second part of the sentence:
"reverse the damage Madoff’s fraud had, not only upon our lives, but upon the many deserving institutions and people we were blessed to support."
        'Deserving institutions', of course, includes the Picower Institute for Learning and Memory at MIT, which has been the largest recipient of Picower Foundation cash. Did Barbara accidentially blurt out the truth in this statement? That MIT, by accepting stolen money, has been irresponsible and has damaged its reputation for integrity. This is the song I have been singing in my mini-MIT/Picower email campaign of recent months. And here we apparently have Barbara Picower, quoting Jeffry Picower, telling you the same thing! If anyone should know about taking money from crooks, it's Barbara and Jeffry Picower.

        Remember Picower Foundation assets were not 'invested' with Madoff in the usual business sense. The court appointed  Madoff Trustee, Irving Picard, using the results of a massive forensic accounting of Madoff records, says the three people who ran the Picower Foundation (Barbara & Jeffry Picower and their associate April Freilich) were active participants in fraud with Madoff. "The Trustee's lawsuit contended that the Picower accounts with the Madoff firm were “riddled with blatant and obvious fraud” that a finance professional like Mr. Picower should have detected immediately." (NYT 11/9/09) My own little analysis of the 990 portfolios confirms this.

        The facts are that Madoff, for reasons as yet unexplained, simply handed over to the Picowers huge wads of ponzi cash year after year for a net total of 7.2 billion says the Madoff Trustee in the last 13 years alone. To put this in perspective the Madoff Trustee has traced, and is suing to recover, all the money Madoff paid to his immediate family who worked at the Madoff business (Madoff's brother, two sons, and niece), and it totals only 199 million.

        Picower gets 7.2 billion and the immediate Madoff family gets 0.199 billion or less than 3% of the money Madoff shovelled to Picower! Does this pass the smell test with you? It doesn't with me.

Aside --- Stanley Chais
        The only other Madoff investor known to have gotten wads of ponzi cash beside Picower is Stanley Chais. Chais net cash was about 1/7th of what Picower got. Chais is in his 80's and reportedly in bad health, but nevertheless the government has formally indicated that he is the subject of a criminal investigation for his Madoff related activities. (Jeffry Picower is dead and you can't indict a dead man.)
        Hey Barbara, if want to reclaim your good name, how about starting by issuing a statement explaining this: How is it that for 20 years you ran a foundation whose 'investment earnings' were completely phony and you and Jeffry (supposedly) never noticed? Explain how this was possible, given that the phony portfolios were actually detailed in all your 990 filings. My own study of your Picower Foundation 990 portfolios for the last seven years showed statistically impossible (Mind Boggling) short term gains. Barbara, are we supposed to believe you (or Jeffry) never questioned how it was that every stock added to the Picower's Foundation portfolio went up (a lot) in its first year, year after year after year?

Where is IRS 990 filing for 2008?
        It's now 2010 so where is the Picower Foundation IRS 990 filing for 2008? It was due Aug 15, 2009. The government barely taxes earnings of private foundations if they agree to give a few percent of assets to charity each year and to make public their finances. This is the deal. The Picower Foundation was in business at least for 50 of 52 weeks in 2008, so where is the 2008 IRS 990 filing disclosing its finances?

        You say maybe the Picowers were too busy (doing what?) to file Picower Foundation IRS forms. Nay, nay. I suggest you looks at the nation's 990 filing repository (,  enter 'Picower Foundation'). What you will find (as of the date of this writing) is that in 2009 the Picowers filed amended returns for 2006 and 2007. For 2006 and 2007 those pesky (phony) stock portfolios with their Mind Boggling Short Term Gains are now gone. If someone was of a skeptical turn of mind, like me, they might think the Picowers' were burying the evidence. Too bad someone didn't archive the original 990 filings. Oh, wait, someone did, me. And I will put them online if there is a need.

                                                                                Don Fulton

Full MIT Picower email trail and Tech letters at this link:

postscript --- Funding cutoff in Dec 2008
       Barbara might also explain why with billions of Madoff assets in the bank (so to speak) she and Jeffry in Dec 2008 chose to suddenly cut off funding to those whom they had regularly supported. Other big Madoff losers didn't do this: Carl and Ruth Shapiro Foundation said, "all current pledges will be honored." Mark Bear is reported to have called the loss of Picower funding a "huge setback" and for some in the Parkinson's Consortium the sudden cutoff in funding was traumatic. To continue funding at the 2007 level would have cost a tiny 0.023 billion per year. This was what, too much, for a couple of 'big philanthropists' like Barbara and Jeffry sitting on assets of 2.4 billion to 7.2 billion? (The Picowers' lawyer, Zabel, has talked publicly about offering 2.4 billion to settle the lawsuit by the Madoff Trustee, saying even after setting aside 0.2 billion for Barbara to live on, this would still leave plenty left over for a new foundation specified in Picower's Will.)

        The sudden funding cutoff wouldn't by any chance have been motivated by the desire of Barbara and Jeffry to portray themselves as victims of Madoff would it? Were they perhaps hoping that their status as Madoff's biggest 'victim' would dissuade investigators from looking too closely at Jeffry's smelly Madoff accounts? (Hint, this didn't work!)
2/1/10 email (The Tech appears to have reedited this letter after this email causing the URL to this page to disappear from the published version) (see Tech letter #4)

Picower money is too dirty to accept

Dear Don,

Thanks again for your continued watchfulness on this issue. I’ve made a few, slight stylistic changes to your original submission, but by and large it’s what you’ve sent us. The updates are attached, and also included below. We’ll run this in our next issue, which is the first one of the spring term, on Tuesday, 2/2/2010.


Joseph Maurer
Opinion Editor, The Tech
MIT Class of 2012

Picower Money is Too Dirty to Accept

        When MIT is offered millions of dollars, I suspect there's strong pressure to just say 'thank you' and not look too closely from whence the money comes. The new Brain and Cognitive Sciences building at Main and Vassar Streets was in part funded by a 50 million dollar gift from Jeffry and Barbara Picower. Jeffry Picower recently died, and according to his Will, MIT is probably going to be offered an additional 25 million dollars of Picower money sometime in the next 12 months.

        MIT should reject this money. The collapse of the Madoff Ponzi has laid bare how Jeffry Picower got to be so rich, and it's not pretty. The Picowers' money is too dirty to accept.

        The court appointed Madoff Trustee (Irving Picard) is suing the Picowers for return of 7.2 billion and has made public in court papers a detailed and convincing case that Jeffry Picower and his wife Barbara, who ran the Picower Foundation that funded the Picower Institute of Learning and Memory at MIT, were active participants in fraud with Madoff. The Trustee found the Picowers' Madoff accounts riddled with blatant and obvious fraud (backdating, phony tax loss statements, and unrealistic returns), and he argues they knew their investments with Madoff were a sham.

        I did my own analysis of the Picower Foundation stock portfolios (contained in IRS 990 filings) and found a pattern of (statistically) impossible short term investment gains. Madoff shoveled out billions to the Picowers, far more money than to anyone else, constituting about 90% of Jeffry Picower's wealth, 35 times more money than to Madoff's immediate family. It just doesn't pass the smell test. Before his death, Jeffry Picower had his chance to rebut the Trustee's allegations in his own court filing. I've read it and find it vague and unconvincing.

        Over the last six months I have laid out to MIT in a series of emails the case that in accepting what amounts to stolen money from the Picowers, not to mention honoring them by naming buildings, labs, and professorships after them, MIT risks damaging its integrity. Say no to any additional Picower money, and start planning the erasure of their name and influence from MIT.

        My full MIT/Picower mini-campaign can be found at this link:

Don Fulton ‘64
references for the editor

2/8/10 email

Where did the money to fund the Picower Institute at MIT really come from?

        Sure Jeffry Picower made a bundle from the sale of Alaris Medical Systems, but money is fungible.  (If you don't know what this means, look it up.) Picower Institute for Learning and Memory at MIT was funded in years 2001 to 2005. In 2001 the Picowers' Madoff withdrawal was 821 million and 10.2 million goes to MIT. In 2002 922 million from Madoff and 10 million to MIT. In 2003 1,025 million from Madoff and 10 million to MIT. In 2004 480 million from Madoff and 10.2 million to MIT. In 2005 468 million from Madoff and 10.2 million to MIT. Total (2001 to 2005): 3,716 million from Madoff and 50.6 million to MIT.

        On paper the Picowers' withdrawals from their Madoff accounts were just a change in asset allocation, a shift from equity to cash, but as the Picowers well knew the Madoff cash coming their way was not from legitimate investments. The Madoff cash flowing to the Picowers annually was really income (like dividend income); it was annual cash being throw off by whatever scam Madoff was running.

        It's difficult for ordinary people to grasp the staggering amount of income this couple had in these five years. MIT's 50.6 million was 1.36% of the Picower's 3,716 million dollar income. The Picower Foundation IRS 990 filings for these years show non-MIT donations were about 100 million, so the fraction of their 3,716 million income the Picowers' gave away in these years was only 4%. A measly 4%! Really generous! Some philanthropists they are! I give a larger fraction of my income to charity than this, and I suspect many of you do too.

        Could part of the story be, as some suspect, that some of the withdrawals paid to tax expert Jeffry Picower were for him to hide overseas in tax havens for the Madoff family?  Either way I look at it, it's just another data point confirming my (really) low opinion of the Picowers.
2/15/10 email

Did Barbara Picower trigger the Madoff ponzi collapse?

        Less than 72 hours before Madoff confesses to the FBI, we find Madoff in his NY office chairing a meeting with eight Madoff insiders, six of whom are on the Madoff victims list and are known to have been big investors with Madoff. These are people Madoff made very rich. The richest of the rich there this day is Barbara Picower. The purpose of the meeting as listed on Madoff's personal calendar was support for a small Florida charity, Gift of Life, that provides help to jewish leukemia victims. (Information about this meeting comes from Bernie Madoff's long time personal secretary, Eleanor Squillari, in a Vanity Fair article, June 2009.)

        Madoff's ponzi did not collapse overnight. As the financial crises of 2008 deepened, deposits faltered and withdrawals rose causing Madoff's bank account to shrink and shrink. By Thanksgiving 2008 Madoff was desperate to raise cash, and he began putting the squeeze on his insiders and feeders. Fairfield Greenwich, Madoff's biggest feeder, responded to Madoff's pressure in late 2008 by starting a new Madoff fund that they marketed heavily, but with disappointing results. One of the attendees at the meeting was feeder and pretty boy Robert Jaffe (now being sued by the SEC). His father-in-law, Carl Shapiro age 95, who was one of Madoff's earliest investors, is known to have responded to Madoff's call for cash with an additional 250 million only a week earlier. It's now known that Madoff needed much more cash than Shapiro's 250 million to stay afloat. But there was someone at the meeting who could potentially provide the cash Madoff needed, Barbara Picower.

       The Picowers had received 2.4 billion in the last six years from Madoff and an additional 4.8 billion in the previous seven years, a substantial fraction of all the ponzi cash ever paid out. While the ostensible purpose of the meeting that day in Madoff's office was charity, it was a charity that Barbara Picower apparently had little interest in, because the Picower Foundation records show only tiny grants to the Gift of Life in the last three years. Yet there she is, the ultimate Madoff insider, Barbara Picower, 1,500 miles from home, sans Jeffry, summoned by Madoff supposedly to help his pet leukemia charity. (Leukemia runs in the Madoff family. It attacked one of Madoff's sons, who recovered, and Madoff's nephew, Peter Madoff's son, had died from it.)

        It's (almost) inconceivable to me that Madoff, now desperate for cash, doesn't have a side meeting with Barbara Picower this day to try and recover some of the billions he had paid out to her and her husband over the years. Had the Picowers given away the Madoff cash to charity? Not by a long shot. At 0.023 billion/year in charity giving (990 number for 2007) 7.2 billion dollars will last a long, long time. What had the Picowers done with all the billions Madoff had showered on them? Did Jeffry hide some overseas for Madoff?  Was it liquid? The answer is (outside of the principals) nobody knows.

        I sure would like to have been a fly on the wall at that side meeting. Note Madoff had leverage over the Picowers too. The Picower Madoff files contained evidence of backdating fraud and phony tax loss statements specifically requested by the Picowers' agent, April Freilich (who received over 10 million dollars in Picower's Will). However, there is no indication that the Picowers returned any of their cash to Madoff near the end, and in fact there are hints in their court filings that they may have been doing the opposite, continuing to make withdrawals. Maybe she (and/or Jeffry) thought Madoff was bluffing or exaggerating his need for cash.

Summary of the argument --- Did Barbara Picower trigger the Madoff ponzi collapse?

Relevant facts:
        a) Madoff Trustee says Picowers are a 'net winners' of the ponzi, and sues the Picowers for return of 7.2 billion they received from Madoff in the last 13 years.
        b) Picower Foundation IRS 990 filings show Gift of Life received 5,000 in 2008, 1,500 in 2007, 5,000 in 2006. For the Picowers these are tiny gifts; the average Picower donation is 160,000 = [23 million/144 charities]

        Dec 8, 08 (Mon) --- Madoff's personal secretary in an eight page Vanity Fair article (June 2009) makes a fleeting mention of Barbara Picower, saying Barbara Picower attends a meeting in Madoff's office on Mon the week he is arrested for a charity the Gift of Life.
        Dec 9, 08 (Tues) --- Bernie reportedly 'confesses' the ponzi to his brother Peter, who does nothing.
        Dec 10, 08 (Wed) --- Bernie reportedly 'confesses' the ponzi to his sons Mark and Andrew, who turn him in.
        Dec 11, 08 (Thur) --- Two FBI agents arrived at Madoff's apartment door at 8:30 AM. Madoff in his bathrobe invites them in and tells them "it's all just one big lie". (Bloomberg news)
        Dec 12, 08 (Fri) --- "Madoff Turned in by Sons After Confessing $50 Billion Fraud" (Bloomberg news headline)

        Barbara Picower was known to quip, 'Jeffry enjoys earning the money, and I enjoy giving it away', but maybe, just maybe, Barbara Picower was not all that distant from the crook who made her and Jeffry Picower filthy rich.
(2/25/10 email)

Latest Madoff news

        Madoff's Director of Operations, Daniel Bonventre, was arrested today, the sixth arrest in the Madoff ponzi. If you read the criminal complaint against Bonventre (below), it's clear that he was ratted out by Frank DiPascali (it's full of "according to DiPascali"). DiPascali was Madoff's #2, the guy who dealt directly with clients and ran the day to day operation of the ponzi. DiPascali is providing so much cooperation to the criminal prosecutors that he has been released from jail, and prosecutors have said they will provide an extraordinary letter to the sentencing judge. (DiPascali May Get 'Extraordinary' Letter, 2/19/10 WSJ)

        The relevance of this to the Picowers and their #2 April Freilich is this: The civil suit by the Madoff Trustee seeking to recover 7.2 billion from the Picowers, describes incriminating records, directions, and conversations between Jeffry Picower's agent, April Freilich, and Frank DiPascali. So DiPascali's extraordinary cooperation in the criminal investigation is probably bad news for Barbara Picower and April Freilich. And today we have evidence Frank DiPascali's cooperation is beginning to lead to more criminal indictments, even relatively small cheeses like Bonventre. Stay tuned....

        There's an interesting little tidbit in  Bonventre's criminal complaint. The complaint details how the Madoff ponzi almost collapsed in late 2005/early 2006 from lack of cash to meet withdrawals. Madoff didn't have the cash to meet 250 million in withdrawals by four unnamed investors. (For perspective Picower's Madoff withdrawals are known to have been 468 million in 2005 and 165 million in 2006.) The 2005 ponzi cash crises was ridden through by Madoff getting a loan of 150 million from the bank using as collateral 150 million in bonds loaned by an unnamed investor. I bet you can count on one hand the number of Madoff insiders who had the ability to lend Madoff 150 million on short notice, and one them (almost for sure) was Jeffry Picower.

Link to Daniel Bonventre criminal complaint:
(3/12/10 email)

Analysis of early Picower Foundation investments (1989-1990) --- more evidence of fraud

        From an archive I was able to obtain the investment pages of the IRS 990 filings for the first two years of the Picower Foundation. The Picower Foundation was funded in its first year (1989) by a 2 million dollar gift from the Picowers followed by a 12 million dollar gift the following year. The first equity investments of the Foundation show up in the 1990 IRS filing with a portfolio of 12 stocks.

        Just a glance at the Picower Foundation investment portfolio of twenty years ago (attached) shows something a little odd. When the Foundation's money first goes into stocks, it is divided evenly not by dollar amount, but by # of shares (30 thousand shares each for 11 of 12 stocks). I think it's fair to say that this is not how investment professionals would typically diversify a multi-million dollar stock portfolio. But things really get interesting when we look at the first year equity gains of the 1990 portfolio. We see the same 'too good to be true' pattern I documented for later years (2001 to 2007) of the Picower Foundation  --- everything goes up and the short term gains are great.

        12 of 12 stocks purchased in 1990 increase in value with gains ranging from 4.8% to 23.8% (average gain 10.06%) as measured from the day of purchase to the end of the year (15.462 million end of year valuation with cost basis 14.048 million). But look at the purchase dates. All the stocks were purchased in a five day window in early Dec of 1990, so at the 12/31/90 valuation date the stocks have been held only about three and half weeks! A 10% average gain (worst of 12 stocks had +4.8% gain) in 3.5 weeks is pretty sweet, and if annualized this gain is an astounding 140%.

        Taken in isolation the consistent and high 1990 short term gains, while very suggestive, do not have the statistical rigor to 'prove' backdating or manipulation, because the stocks were all bought about the same time, and while 10% market moves in less than a month are very rare, they do occur. However, to time the purchases just prior to such a strong market move implies fantastic timing (or backdating). But taken in context with the 2001 to 2007 gains of 27 of 27 stocks going up short term over a seven year period, the 1990 'too good to be true' short term investment gains strengthen the statistical case for blatant fraud in the Picower Foundation investment portfolios. Also it extends the years of likely fraud all the way back to 1990, a time span of nearly twenty years.

        So again the question arises ....

        How the could the Picowers, Jeffry and Barbara, not have noticed the 'too good to be true' character of their short term returns, or were they in fact well aware and reveled in them?

                                                                                   Don Fulton

Please read the 'update' (below), where I report what I found when I did a little crosschecking...

Here (or attached) is the portfolio page of the 1990 Picower Foundation IRS 990 filing. The gain for each stock is 3rd col from right ('Unrealized Gain'). Note every stock is up with the poorest performer (in percentage terms) being Coca Cola at +4.8%. The purchase date of the stocks is the first column. [Let me comment on the first column. It's headed 'Date'. Can we be sure this indicates the stock purchase date?  Yes. Firstly, what else could it be? Secondly, all years of the Picower Foundation use the same eleven column format, and in some years the first column is specifically headed 'Trade Date' (see 1997 portfolio header attached)].

        I wrote the above analysis taking at face value the stock valuations shown in Picower Foundation 1990 portfolio. To tie up loose ends I sought out a stock historical database (BigCharts, ref below) and checked a few share prices. What I discovered was very revealing. The 1990 portfolio had 'on its face' a pattern of gains that were statistically unlikely and hence suspect, but a deeper look showed the case for fraud in the portfolio to be nearly certain.

Here's a sampling of historical stock prices (from the above referenced database) for stocks of the 1990 portfolio:

                     Abbot Labs (ABT)
                                   12/3/1990                          43.5 to 44.5 daily range
                                   12/31/1990                        45.00 closing

                    American Express (AXP)
                                   12/3/1990                          20.375 to 20.875 daily range
                                   12/31/1990                        20.625 closing

                   Caterpillar (CAT)
                                   12/3/1990                          41.75 to 42.75 daily range
                                   12/31/1990                        47.00 closing

                   Coca Cola Co (KO)
                                   12/4/1990                          45.625 to 47.00 daily range
                                   12/31/1990                        46.50 closing

                   Johnson & Johnson (JNJ)
                                   12/3/1990                          70.5 to 71.125 daily range
                                   12/31/1990                        71.75 closing

                    Minnesota Mining & Manufacturing (MMM)
                                   12/5/1990                          81.75 to 83.625 daily range
                                   12/31/1990                        85.75 closing

        In each case the year end stock price from the database agrees exactly with portfolio year end stock price (column labelled 'Price'), so the database stocks are the portfolio stocks. One thing that jumps out from the database numbers is that there clearly was no across the board 10% market surge in the final weeks of 1990. I confirmed this with a check of the Dow Jones Industrial average which only rose 2% from the Dec 3-7, 1990 to Dec 31, 1990. So where did the 3.5 week across the board 10% average gain come from?

        Look closely at each stock's trading range, which I list for that stock's purchase date, and compare it to the purchase price/share of the stock in the portfolio (column labelled 'Unit cost'). In every case (in every case!) they disagree with the portfolio purchase price/share lower than the stock's minimum for the day, in most cases by a dollar or two per share.

        The conclusion is obvious. The purchase prices (and/or trade dates) in the portfolio have been doctored (fabricated) to give the appearance of substantial investment gain. The gains are faked, they are not real market returns. This fraud is blatant. In a quiet market all 12 stocks in the portfolio are made to appear to rise substantially by the simple technique of showing a purchase price lower than the actual price. There is nothing subtle here. This had to have obvious to Jeffry Picower, who is generally described as a 'professional investor'.

Where does the money come from?
        But the Foundation assets have grown by 1.4 million, and this is real money in the sense that higher assets support higher levels of charity giving and research. (By 2007 the Foundation assets will have grown to nearly one billion!) So where does the 1.4 million dollars come from? It's a good bet it comes from the Madoff ponzi. It looks like from its earliest days the Picower Foundation was feeding on the Madoff ponzi teat.

        Why do I say the Madoff ponzi? Consider these facts: Jeffry Picower was a true Madoff insider with family connections to the Madoff world going back 40 years. All the assets of the Picower Foundation were lost when the Madoff ponzi collapsed in 2008. The Picowers ended up with far more Madoff ponzi cash in their pocket than anyone else in the world, 7.2 billion (net) in withdrawals just from 1995 to 2008 says the court appointed Madoff Trustee who is suing the Picower estate for its return.

        This analysis of the Picower Foundation IRS filings of 1990 greatly strengthens the case for systematic fraud, year in and year out, of Picower Foundation short term investment gains for the whole of its twenty year history.

Link to complete Picower/MIT email trail, including analysis of the 2001-2007 IRS Picower Foundation filings:

Link to historical stock database:
(12/17/10 email)

Another view of Jeffry Picower's role in the 65 billion dollar fraud

       For your amusement and edification included here is the 2nd anniversary column from 'fake Bernie'. Writing as Bernie Madoff, fake Bernie is grumbling that those who follow the cash suspect that 'Jeff P.' (Jeffry Picower, ultimate Madoff insider, MIT's major benefactor and portrait boy) was the center of the 65 billion dollar fraud.

     Fake Bernie's column ( is well known in the Madoff world. It has
been published almost daily for two years, and the author appears to be tightly plugged into the Madoff world. I
once saw a TV news story that 'outed' its author. He jokes that the FBI and criminal investigators regularly read
his column.
                                                                                Don Fulton

Cast of characters

Jeff P.   Jeffry Picower         MIT's favorite big time donor and portrait boy,
                                                       long time Madoff investor and Madoff friend for 30 years
Carl      Carl Shapiro             Long time Boston million dollar philanthropist (age 97),
                                                      long time Madoff investor and Madoff friend for 40 years
Dopamine    Bob Jaffe          Carl Shapiro's son-in-law, neighbor and buddy of Madoff and feeder who
                                                       specialized in the Boston and Palm Beach socialite set

All the of the above, self identified as Madoff 'victims', were named in a famous Wall Street Journal front
page story (May 2009) that listed eight Madoff insiders who were attracting the attention of the criminal
investigators. Shapiro and Jaffe in Dec 2010 agreed to a 625 million dollar settlement with Madoff Trustee and
Justice Dept. Talks with Barbara Picower to settle a 7.2 billion clawback suit by Madoff Trustee against her and
her late husband are continuing.

Ike      Ira Lee Sorkin             Madoff's long time lawyer
Irv      Irving Picard                court appointed Madoff Trustee who is suing all of above
Bill Z.  William Zabel           Jeffry Picower's long time lawyer and trustee of the Picower Foundation
                                                           that gifted MIT 50 million
Bill Z.'s son   Richard Zabel     son of Picard's lawyer, William Zabel. In Oct 2009 Richard Zabel was
                                                           appointed to head the Southern District of New York Criminal Division.

That's right, the son of the Picower's lawyer has a major say as to which of the Madoff insiders gets criminally indicted, and boy is fake Bernie happy about this! (I discussed the details of this in 11/4/09 email.)

Bernie (BLM)  Fake Bernie     as Madoff writing from jail
Ruth         Ruth Madoff              Bernie's wife
Frank        Frank DiPascali        Madoff employee who was Picower's ponzi contact. Has been arrested,
                                                            pled guilty and is cooperating with investigators to unravel the ponzi
Jodi          Jodi Crupi                 Madoff employee who fabricated portfolios for some insiders.
                                                             Recently arrested by the FBI.

Pauli         Paul J. Konigsberg   Accountant for Madoff's family charity and a buddy of Madoff's (He is
                                                             not the accountant for Madoff Securities, who Madoff bought off,
                                                            and who has been arrested.)
Markopolos    Harry Markopolos   whistle blower who was repeatedly ignored by SEC
Sonny, S.M., Mikey Beans, & Walter Noel are salesman, who collected billions in cash to feed the ponzi

2nd Madoff Anniversary (Dec 10, 2010):
From: (fake) Bernie
To: Ike

(first section edited out, not relevant to Picower)

       Sure, Markopolos and those other conspiracy nuts might suggest there was a cabal of sorts, consisting of at
least half a dozen ("if not more"), who were "far from blinded by greed", but with eyes wide open, they
perpetuated the billion dollar piggy bank from which they each profited for years.

     The suggestion that I was the ‘mastermind’ seems like bullsh*t to them when considering the division of
cash over the years. Ruth has been kvetching about the same thing for years, trust me!

    Jeff P. (Jeffry Picower) His ‘cash in’ was how much? I actually don't remember, but I've got a call in to Jodi
to pull the deposit slips. Let’s say it was $100 mil or even $200 mil people are asking why would I send him $6
billion over two+ decades? They're saying he's the guy that masterminded the whole thing. Good thing that dead
men tell no lies, right? Or at least, good thing that they think he's really dead. Ha.

     Carl? (Carl Shapiro) He put in how much at the outset? $20 million?...and he took out over a bil over the
years!!...Yes, I know it look like he got clipped for 250 big ones at the closing bell. Big deal! But, why he would
write a check for $650 million to ‘settle’ with Irv, and deprive all of his heirs from inheriting a family fortune?
That's his problem, not mine. But, with a son-in-law like Dopamine, if I were him, I'd torch the cash in the
fireplace first!

      Paulie? OK, so, maybe he's an expert in duplicitous accounting. I think that's a harsh thing to say, even if he
always made us laugh whenever he did those 3-card monty tricks at our dinners. Remember those? Ha. Great
times! And sure, he was part of the club (I hate the word "cabal"!) with S.M., Mikey Beans, and Frank, and was
tied to the teet for more than 30 years. But suggesting that "he was COO Jeff, who was more like Vito Corleone,
while I was playing the role of Sonny"; it just doesn't seem fair.

      On the topic of consiglieres: Sure, you were the outside counsel to this band ever since they first got
tripped up. But, let's face it, you were smart enough not to ask stupid questions!

     That shagezt, Walter Noel? He wasn’t part of any cabal! What idiot would think that? He was just the
figurehead of Greenwich “family”, and his value was the crew under his command talk about famiglia! Ha!

      All I can say right now is what a piece of luck for all of the boys involved that Bill Z.'s boy is doing what his
old man tells him to do.! Can you imagine how many indictments would be flying around if his kid didn’t have
that job?!

     Don't let anybody think that I was nothing more than the CEO that answered to a Board of Directors. This
isn't the time. Another year or two maybe.
(12/xx/10 email) Dec 2010 trustee filing agains Kohn repeatedly uses phase for money she gets from Madoff as  "stolen Customer Property"

Meet Picowers' (newly arrested) account manager

        Recent arrests in the Madoff case, a fraud labeled "monumental, indeed unprecedented" by District Judge Richard J. Sullivan (2/11/10 in his order approving bail for Madoff associate Frank DiPascali), allows us to put a name and face on the Picowers' money manager in the Madoff organization. It appears to have been Annette Bongiorno, who was arrested by the FBI on 11/18/10, almost two years after Madoff was arrested. She is charged with multiple accounts of conspiracy, securities fraud, and tax evasion with a maximum sentence of 75 years.

        The billion of wealth of the two Picowers, Jeffry and Barbara, was (and amazingly for the time being still is) roughly comparable to the size of MIT's endowment. While MIT has a large team of highly credentialed money managers managing its billions of endowment, the Picowers appear to have had their billions managed by Annette Bongiorno, a HS graduate from Queens and formerly Bernie Madoff's secretary. (A 2009 photo of Annette from NY Daily News is attached). Bongiorno's clients got super-sized returns, often exceeding 50% to 100% , compared to the thousands (4 to 8 thousand) of ordinary Madoff investors who got about 12%/year. Annette earned money for her 'special' clients the old fashioned way, she stole it from the other Madoff investors!

2009 photo of Annette Bongiorno from NY Daily News

        The US Attorney's (Preet Bharara) office says Annette Bongiorno managed 8.5 billion in accounts for a couple hundred of 'special' Madoff clients (family, friends, and inside investors like the Picowers). The Picowers dominated the 'special' client list, indeed all of Madoff clients, having withdrawn (net) at least 7.2 billion! The extent of this domination can be seen in a graph (attached), drawn by a forensic accountant (Joseph Looby) hired by the Madoff Trustee to review Madoff books (exhibit #4 of his 10/16/09 court filing).

Cash flow for thousands of ordinary Madoff acounts (gn) vs 244 insider Madoff accounts (or)

green/Frank: (ordinary) accounts managed by Frank DiPascali
orange/Other: (insider) accounts managed by Annette Bongiorno
(from forensic accountant, Joseph Looby, hired by the Madoff Trustee to review Madoff books
10/16/09 court filing, exhibit #4)

        It shows dramatically the difference in cash flow between the ordinary Madoff investors and 'special' group of (244) Madoff clients that included the Picowers. At root a ponzi is a cash-in/cash-out business, what account statements say is almost incidental. The graph shows the cash flow of the special clients vs the cash flow of thousands of other Madoff investors over the last 13 years of the ponzi. The 'special' Madoff client accounts (in orange, managed by 'other', now known to have been Annette Bongiorno assisted by Joann Crupi, arrested on the same day), consistently ran a negative cash balance (-12 billion when the ponzi collapsed). In contrast the accounts of the thousands of ordinary Madoff customers (in green, managed by 'Frank' DiPascali) consistently ran a large positive cash balance (+19 billion when the ponzi collapsed). Looking at this graph it is clear that what the ponzi did year after year was to shift (more accurately, steal) billions from the ordinary Madoff investors and pay it out to the favored insiders!

        Compare the Picower's (net) 7.2 billion in withdrawals to the negative 12 billion net balance of all 244 'special' Madoff customers. Clearly the Picowers were the big gorilla in the Madoff world, their withdrawals dominated the outflow and were so huge they ended up with the bulk of the (traceable) billions of Madoff ponzi cash. Maybe the reason the ponzi operated so long was that it served to make a bunch of insiders, like Jeffry and Barbara Picower, unimaginably rich.

        The Picower estate is being sued by the court appointed Madoff Trustee for 7.2 billion. (Compare this amount with another long time Madoff inside investor, Norman Levy, now deceased, whose children settled with the Madoff Trustee for 220 million.) A court filings had indicated in April 2010 that a settlement between the Picowers and the Madoff Trustee was "imminent", but it's now Dec 2010 and the negations drag on because other Madoff investors, those to whom the Trustee will not pay anything, calling them net winners of the ponzi, are suing the Picowers too. Thus in effect all the Madoff investors are suing the Picower estate, because all know that's where the bulk of the (traceable) billions in ponzi cash went.

        So the wait goes on to see if Barbara Picower will be left with sufficient cash to follow up on the request in Jeffry Picower's Will that MIT be offered an additional 25 million. Yes, 25 million in dirty funds, the source of which is now known, for a fact, to be mostly money stolen from other Madoff investors. There have been no leaks as to how the negotiations are going, and no hints as to how much, if any, money will be retained by Barbara Picower after the suits are settled. Guesses range from zero to billions. If substantial ponzi funds do remain in her hands, it will likely be only because of legal limits imposed on clawback recovery, and perhaps because of the death of her husband (Jeffry), which would have aborted any criminal investigation of his role in the ponzi. (Before his death Jeffry Picower had been named in a front page story in the Wall Street Journal as one of eight Madoff insiders being looked at by criminal investigators.)

        The big picture question is --- Why did so much Madoff ponzi cash flow to the Picowers?  The Picowers have never offered an explanation. To the extent they have said anything it is that were just another innocent victim of the nefarious Bernie Madoff. The Madoff Trustee doesn't believe this (see his court filings and 60 Minutes interview), I don't believe it, and frankly I don't see how anyone who looks at the public facts in this case (including my analysis of Picower Foundation investments) could buy the line that the Picowers were just innocent victims of Madoff. The evidence saying otherwise is both overwhelming and unrefuted.

        The (public) evidence seems to indicate (at least to me) that tax avoidance lawyer Jeffry Picower was probably some sort of conduit, fence, and/or money launderer for Madoff. In the common use of the term he was a crook. (An editor of Forbes magazine called me to discuss the Picower/MIT connection, and he told me he considers Jeffry Picower to have been a crook.) Maybe Jeffry Picower didn't actually steal the money personally, but he was a multi-billionaire, and he could pay for any service. You could even argue, based on the split of money between the Madoff family (100 to 200 million) and the Picowers (7.2 billion) that the Picowers hired Madoff to steal for them!

        Why? Maybe to make them multi-billionaires, to make them (especially Barbara) even more prominent as charity donors (giving away other peoples money!). Read Jeffry Picower's Will. Have you seen the photo of Jeffry and Barbara smiling as they sat next to MIT president Hockfield and smiling for the camera outside the new Picower building. The Madoff family played this game of 'generous' donor too. Mark Madoff, Bernie's son, was on the board of Lincoln Center, the seat effectively bought for him by Madoff family contributions to Lincoln Center to the tune of over 100,000.

        It is now nearly two years after the largest financial frauds of all time came to light. Two years of investigative work documented in court filings shows that Jeffry Picower was deeply involved in the Madoff ponzi. The Picowers' early claim that they were merely innocent victims of Madoff is now pretty much of a joke. Barbara's role in the ponzi is less clear, but I know this, for nearly twenty years she signed off on IRS 990 filings of the Picower (family) Foundation that contained fabricated Madoff portfolios as phony as three dollar bills. And consider that according to the US Attorney the chief fabricator for special accounts, like the Picowers', was Annette Bongiorno! He details how Annette specialized in back dating, the same technique that the Madoff Trustee details that Jeffry Picower knew was being used to get his high returns.
        And yet with all this history the portrait of these two (slimeballs) still hangs in the lobby of an MIT building that has their name over the door. MIT's position is what, it doesn't matter how dirty the money, it doesn't matter if it's stolen, if the gift is big enough, we will take it and honor the giver? Is this what MIT has become?

        I have always been proud to be an MIT graduate, but not when I see it selling its integrity by taking huge wads of cash from a questionable source, and later when a scandal explodes and it is clear the money it took was stolen, it keeps its corporate head down and says nothing.
        As an MIT alumnus I get letters asking me to make gifts and bequest to MIT, and I am in a position to do so, but MIT's position is what? If the gift is big enough, it doesn't matter how dirty the money, we will gladly take it and honor the giver? Is this what MIT has become? Its integrity is for sale? It is willing to (in effect) launder tainted and stolen money to expand?

        In the case of the Picowers huge wads of cash are taken from a questionable source, and later when a scandal explodes and it is clear the money MIT took was stolen, what happens? Nothing. The research staff of the newly donated facility just points at corporate ('it's not our job'), and corporate keeps its head down and says nothing waiting for the scandal to blow over. All the while the portrait of these two donating slimeballs hangs in the lobby of an MIT building that has their name over the door.
12/18/10 email and 1st submitted posting (published as post #121) to NYT lead front page article (12/18/10) announcing Picower settlement

Picower settles for 7.2 billion --- Some perspective on Barbara Picower's statement

         Barbara Picower (after nearly a year of negotiation) has settled the lawsuit against her (and her late husband's estate) for the full 7.2 billion, while releasing what I consider to be very self serving statement. Below is a posting I made to the NYT 12/18/10 settlement story.
                                                                                                    Don Fulton

I have followed this case closely, so let me list some of the facts missing from Barbara Picower's statement.

-- For 20 years Barbara Picower ran the nearly one billion dollar Picower Foundation, the family vehicle for charity donations. As a tax exempt organization, it filed with the IRS annually (IRS form 990) and these filings all contained fabricated Madoff portfolios as phony as 3 dollar bills. I have reviewed them and written a report. I found statistically impossible short term gains (27 of 27 stocks go up in their first year), portfolio inconsistencies from year to year, and in early years it appears that Madoff's inept fabricators generated short term gains by the simple (but easily discoverable) strategy of showing stock purchases below their daily trading range. All the 990 forms were signed off by Barbara Picower as Executive Director.
-- Jeffry Picower's 7+ billion of wealth would put him at about #30 on the Forbes 400 near Jeffrey Bezos, founder of Amazon (@ 8.8 billion), Edward Johnson, founder and owner of fidelity investments (@ 8 billion), Rupert Murdoch, owner of a media empire including Wall Street Journal (@ 6 billion), and Steve Jobs of Apple (@ 5 billion). We all know what these men have contributed to the world. What is a non-entity tax avoidance lawyer like Jeffry Picower doing in this company? You can thank Bernie...
-- If you follow the cash in the Madoff world (7+ billion to Picower and 100-200 million to the Madoff family), an argument can be made that Picower was front and center in the fraud. It could even be argued that (for unknown reasons) Madoff seemed to be working for Picower. Just how is it out of thousands of Madoff investors, out of 244 family and friends with special Madoff accounts, that Jeffry and Barbara ended up with a huge fraction of the ponzi cash? Can you explain this to me Barbara?
-- Soon after Madoff was arrested, Barbara Picower told medical researchers they were supporting that their grants would stop, giving the explanation that the Picower Foundation had lost all its assets in the Madoff ponzi. How is it that a couple with 7.2+ billion in assets couldn't recapitalize their family foundation with say 100 million, enough to support their giving pattern for a few more years. Are they the cheapest super rich people alive, or were they, as I suspect, just playing the Madoff victim card.
-- Barbara's statement emphasizes that Jeffry Picower was not charged with illegal conduct. But the government is not going to indict a dead man (Jeffry died in Oct 2009, within a year of Madoff's arrest). Also since Oct 2009 the head of the Southern District of New York Criminal Division, which is running the Madoff investigation is Richard B. Zabel. And who is Richard B. Zabel? Incredibly he is the son of Picower's long term lawyer, William D. Zabel! (Look at the lawyer's name on Barbara's statement)
-- The Trustees filing against the Picowers (both Jeffry and Barbara) to recover 7.2 billion lays out the details of fraudulent account manipulations in Picower's accounts (backdating, purchases before accounts are opened, totally unrealistic (like 950%) ''investment' gains), and he ties the account manipulation to requests from Picower. In the Picowers' reply to the court they make a few blanket denials, but the Trustee's detailed allegations of account manipulation are not rebutted.
-- Trustee Picard and his chief lawyer Sheehan in a 60 Min interview were very candid about Picower, saying Picower was not a rube and gets this \"off the charts\" statement showing a 950% return. If the Trustee's allegations and conclusions are correct, then Jeffry Picower was not an innocent Madoff victim, he was an active participant in a fraud.
-- I would suggest that is more likely that Barbara settled for the whole 7.2 billion (after nearly a year of negotiation!) not because it is \"what Jeffry would have wanted\", but because the case laid out by Trustee was so strong and detailed that it is likely she would have lost in court.
12/18/10 email and 2nd submitted posting (published as post #99) to NYT lead front page article (12/18/10) announcing Picower settlement

Picowers as philanthropists

        My second posting to the NYT lead front page article (12/18/10) announcing Picower 7.2 billion settlement with the Dept of Justice and Madoff Trustee.

        Are the Picowers great philanthropists?  Leaving aside the not so minor matter that they have for years been giving away mostly stolen Madoff dollars, the answer is no. The IRS 990 filings of their family foundation (Picower Foundation, run by Barbara Picower, 50 hr/week she reports to the IRS), presumably their main conduit to charity, show the following grant totals:
        2001         32 million (includes 10 million to MIT)
        2002         28 million (includes 10 million to MIT)
        2003         28 million (includes 10 million to MIT)
        2004         32 million (includes 10 million to MIT)
        2005         28 million (includes 10 million to MIT)
        2006         20 million
        2007         23 million
        For a couple with wealth of 7 billion to 10 billion these numbers are ridiculously small. Just a few tenths of 1% of their wealth per year, and a tiny fraction of their annual Madoff 'investment' earnings!
12/18/10   3rd submitted posting (published as post #120) to NYT lead front page article (12/18/10) announcing Picower settlement)

Earnings on Madoff money not returned
Ridiculous claim that settlement is 'what Jeffry would have wanted'
Why future Picower grant should be considered tainted

        I don't understand other posters thanking Barbara Picower. As some other posters have noted, the biggest problem here is that Barbara Picower has returned only the net withdrawals from the ponzi, but not one cent in interest! In effect the Picowers have had a 7 billion long term loan from other Madoff investors (without their consent or knowledge) with an interest rate of zero. In the Times story Diana Henriques notes that Jeffry Picower's accounts at Goldman were worth about 10 billion. This could very well be the 7 billion in Madoff cash plus billions earned on this money over the years. I don't see that Barbara has any moral right to keep billion in earnings on stolen Madoff money, but apparently she does not agree. Not only did she not return it, she doesn't even mention it in her statement.
        Do others find her ridiculous little statement self serving? She expresses her sympathy for other investors, yet it seems to me that the primary responsibility for the year or so delay in settling this clawback suit must be hers, because the amount (finally) agreed to is exactly what the Trustee sought.
        She says the \"settlement honors what Jeffry would have wanted\". I find it hard to read this with a straight face. When exactly did she figure out he wanted the full amount (7.2 billion) sought by the Trustee returned? Did he tell her before he died in Oct 2009, if so, then why was not this case settled long ago? Did maybe she have a seance to ask him from the grave? In fact there is a public record. While Jeffry Picower was alive, the Picowers filed a response to the clawback suit with the court. I've read it. Somehow I must have missed the part where Jeffry said it was fine with him to pay the Trustee 7.2 billion. After Jeffry's death, when negotiations with the Trustee began, the Picower's attorney (Zabel) suggested about two billion would be fair settlement.
        Barbara says she now wants to return to philanthropic work. (Why I ask, did she stop in Dec 2008? Perhaps to get sympathy as a Madoff ponzi victim?) It will be interesting to see if charities are so greedy, so morally obtuse, that they will take money from her. I expect she will say, I returned all the Madoff money, so future grants are clean. Not in my book. First, there is the matter of the unreturned gains on the 7 billion, and second, once money is commingled, you can't uncommingle it. Her money is forever tainted.
9/11/09 original research email and mailed hardcopy (with highlighted portfolio attachments)

Review of 501(c)(3) Picower Foundation
990 filings 2001 thru 2007

Don Fulton
Sept 11, 2009

Picower Foundation's Mind Boggling Short Term Investment Gains

Executive Summary
        I have reviewed the Picower Foundation IRS 990 filing for the last seven years. I found one case where the cost basis of a capital gain is not consistent with the stock history. I found four cases where a stock suddenly appears in the portfolio showing a purchase date years earlier, but is not included in the portfolio for the earlier years. Some of this has been noted before by a Madoff researcher, but I have made some new discoveries, including strong evidence of systematic backdating fraud in the foundation's investments.

        In my review I found that every stock purchased (total of 27) in the last seven years appears to have been backdated. With backdating it's easy to pick (short term) winners because it's like betting on a race after it has been run. The 2001 990 short term (unrealized gain) record looks a little suspect showing nine stock purchased that year and all nine rise substantially (18% to 53%) in the following months. By 2007 the case for fraud is overwhelming. From 2001 thru 2007 27 stocks total have been added to the portfolio and every single one (all 27) rose substantially (14% to 127%) from the purchase date to Dec 31 of the purchase year. (Madoff's fabricators were not subtle, apparently their guidance from either Bernie Madoff or Jeffry Picower was never show a loss when adding a stock to the portfolio. I guess they counted on grantees not checking their 990s' too carefully. The Madoff Trustee alleges that Picower "dominated" his Madoff accounts and "directed" the stock purchases.)

        I also found little kickbacks to Ruth Madoff in the Picower Foundation grantee list.

        For years MIT has received large contributions from a 501(c)(3) private foundation run and funded by Jeffry and Barbara Picower of Florida (Picower Foundation). For years 2001 thru 2005 MIT received about ten million dollars each year from the Picower Foundation and in later years have received 200,000 a year. The five ten million dollar donations were used to fund and build a new building for a brain institute (re)named the Picower Institute for Learning and Memory and a large portrait of Jeffry and Barbara Picower was hung in its lobby.

        Jeffry Picower has emerged from obscurity into the limelight in 2009. He has been identified as a Madoff insider with what is delicately termed 'special access' to Bernie by the Madoff Trustee. He has been named by the Wall Street Journal as one of eight Madoff insiders that criminal investigators are looking at. He has been sued by the Madoff Trustee (Irving Picard) for return of 5.1 billion dollars cash that he received from Madoff, far more net cash than anyone else is known to have received from the Madoff ponzi. The money Picower received, including funds received by the Picower Foundation, are characterized by the Madoff Trustee as "other people's money", in essence stolen money. And as is now known it was stolen, at least in part, from other non-profits and charities! About 1% of the 5.1 billion in stolen/ponzi Picower money is now sitting on the MIT campus in the form of building 46 and endowed professorships of those who occupy it.

        It turns out that all of the Picower Foundation assets were invested with Bernie Madoff and had been for many years, so a review of the annual 990 filings of the Picower Foundation gives a window into Madoff and how honestly the Picower Foundation was run by Jeffry and Barbara Picower. (990's list Barbara Picower as the Executive Director at 50 hr/week and Jeffry Picower as Trustee at 25 hr/week, but Jeffry Picower states in his recent (7/31/09) court filing that he was the trustee "charged with making investment decisions" for the foundation.)

'Madoff' in the Picower Foundation 990's
        Do the Picower Foundation 990's mention Madoff? Some do. The 2001 filing shows 70% of the foundations assets residing at "B. Madoff" (no address). In later filings 'Madoff' is not associated with assets, but it does show up several times in the form of 'Ruth Madoff'. The grantee list contains entries like this: "Queens College Foundation, Ms. Ruth Madoff, $5,000". Here we have Jeffry & Barbara Picower providing little kickbacks to Madoff in the form of small (for them) donations to Ruth's college alumni fund or the Madoff cancer charity.

Review of Picower Foundation's 990s
        I recently reviewed all seven the 990 filings of the Picower Foundation (2001 thru 2007) that are available from Foundation Center (990's resource center), focusing on the investment performance of its half billion or so portfolio. The Foundation's portfolio is totally different from Madoff's famous split-strike strategy portfolio he used with most clients, which combined rapid trading of blue chip stocks with S&P 100 options. The 990's portray the Picower Foundation portfolio to be a simple, conventional blue chip/bond portfolio (no options) with typically two dozen or so large stocks that slowly turn over mixed with treasury bonds for risk reduction.

        According to the Madoff Trustee Picower had such 'special access' to Bernie Madoff that Madoff crafted (with lots of Picower input alleges the Madoff Trustee) a 'buy and hold' portfolio exclusively for Picower's several accounts including the Picower Foundation account. Picower in his recent court filing also characterizes his Madoff portfolios as "buy and hold". It is now known, of course, that Picower's 'buy and hold' portfolios were all part of the Madoff ponzi and that no stocks were ever bought. At the end of 2007 the Picower Foundation's 990 shows it as having assets of nearly one billion dollars, so it was a major component of the ponzi.

        Using the 990 forms I have tracked the performance of the Picower Foundation portfolio (2001 thru 2007). It's easy. It took me no more than a couple of hours using just a printer and calculator. All the equity is listed alphabetically, fits on a single page, and is in the same format on each 990. The value of each stock on the last day of the year is given along with purchase date, cost basis, and unrealized gain/loss. A list of realized gains and losses is also included. In some years there was no equity buying or selling at all.

        Prior to my analysis of the Picower Foundation 990's the only mention I have seen in the press of the Picower Foundation 990's is by a serious Madoff researcher who writes under the name Mrs Panstreppon, here, ("Bernie Madoff: Anomalies in the Picower Foundation 990s", July 16, 2009). She noticed that four stocks bought in 2005 increased in value by 44% (62 million dollar gain) by the end of the year, but it turns out this was only the tip of the iceberg.

Portfolio performance (as measured by) total assets
        If one looks only at the bottom line of the Picower Foundation portfolios, there is no evidence of excess returns. When the market tanked in 2001 and 2002, the portfolio contracted from about 700 million in 2000 to 482 million at the end of 2002. In the market recovery years of 2003-2005 the portfolio recovered, but weakly as in these years it was more heavily into bonds. At the end of 2006 the market value of the Picower Foundation portfolio was 686 million, which was less than it had been six years earlier. Of course, some of the reduction in assets is due to grants, but this was not the dominant factor as grants in some years were in the 2% to 3% range rising to a little over 5% in years when MIT was getting 10 million a year. The portfolio value did significantly grow in 2007 (to 958 million), but 40 million of this was a contribution by Jeffry Picower (of Madoff cash, no doubt). With its relatively small number of stocks and concentrated positions some volatility in such a portfolio is to be expected and the 2007 bounce was due to strong performance from several stocks that were shown in the portfolio as bought in earlier years.

Little red flags
       If someone just looked at box I on page 1 ('Fair market value of all assets at end of year') of the Picower Foundation 990's and its variation over the years, there was little to indicate that its investment portfolio was not just what it pretended to be: a long term buy and hold, conventional large stock/bond portfolio with mediocre performance. However, a little closer look at the portfolio does reveal some strange anomalies, some little red flags.

        For example, in 2001 two sales of Citigroup Inc are shown with a 710% gain in just seven months. (I don't think so babe!) It might be suggested that this entry is just mislabeled and refers not to Citigroup stock, but to Citigroup options. Nope, I quote from Picower's recent filing with the court, "The Defendants BLMIS (Madoff) account statements during the years referenced in the Complaint did not reflect any options trading."

        Occasionally some stocks just pop up in the 990 portfolios showing a purchase date years earlier, but they are not listed as being in the portfolio on earlier years' 990's. For example, in 2002 CarMax shows up with a 11/28/01 purchase date, but it's not in the 2001 portfolio. In 2003 Cavco shows up with the same 11/28/01 purchase date, but it's not in the 2001 or 2002 portfolio. In 2004 Eagle Materials shows up (twice), again with the same 11/28/01 purchase date, but it's not in the 2001, 2002 or 2003 portfolio. Finally in 2007 American Inter Group shows up with a 12/26/00 purchase date, but it's not in any of the earlier 990's. Did anybody at MIT or the Picower Foundation notice these (let's be polite and call them) portfolio anomalies?

Flashing red flag --- Short term (unrealized) gains
        However, if anyone had thought years earlier to ask the simple question:

                            How did newly purchased stocks perform?

then a totally different picture of the Picower Foundation portfolio performance emerges. Now the performance is spectacular, well it's beyond spectacular, its outrageously spectacular. It is for all practical purposes (a good engineering term) statistically impossible. It's not how stocks perform, it's been rigged.

        It's important to understand that 990 Forms are not filed with the IRS until well into the next year (if a three month extension is filed, which it sometimes was, this can be as late as Nov). So 990's investment performance for each year is reported to the IRS well after the year has ended. Therefore the place to look for account fraud is in the performance of stocks acquired during the year, because here choice of stock and purchase date could potentially be made after the end of year when performance of all stocks are known. So this is where I looked, and sure enough what I found in Picower Foundation 990's portfolio results short term (2001 to 2007) is clearly fraudulent.

My findings
        In seven years (2001 thru 2007) there were a total of 27 stock purchases, and going through them I found that not one (not one!) of the 27 stocks went down between its purchase date and the end of its first year (Dec 31)! Every stock increased in value in the following months with gains ranging from 14% to 127%. What are the odds? The worst performer in all 27 purchases had a very nice increase of 14% in a few months! The average increase on all 27 purchases was an astounding 50% on stocks held just a few months!

        Why, you may ask, if many millions of dollars were added to the portfolio by having all the purchases apparently backdated and fraudulent, why is the long term performance of the portfolio so mediocre? After the first year if a stock remained in the portfolio, as it usually did, then the market determined its future valuation. What happened was the pump up of the portfolio with backdated short term gains was not sufficient to overcome the long term drag caused by poor stock selection and poorly time changes in the equity/bond ratio. So while the Picower Foundation's portfolio's performance long term was poor to mediocre, my findings show it was not from want of trying by Madoff/Picower. They pumped as much phony gain short term into the portfolio as they could, but in the end they were just not able to fully control the valuation of a portfolio that Picower wanted to put forward as 'buy and hold'.

        I will mail a paper copy of the equity pages from seven years of 990's with all the equity purchases highlighted in yellow, but for now here is a brief summary of what I found:

            2001 --- nine stocks bought. Here are the gains on these individual stocks during 2001.
                    +38 %
                    +53 %
                    +24 %
                    +22 %
                    +48 %
                    +18 %
                    +30 %
                    +28 %
                    +30 %
At the end of 2001, it's 9 for 9.

            2004 (in 2002 and 2003 no stocks were bought) --- two stocks bought. Here are the gains on these individual stocks during 2004.
                   +107 %
                    +87 %
At the end of 2004, it's 11 for 11.

            2005 --- four stocks bought. Here are the gains on these individual stocks during 2005.
                    +27 %
                    +77 %
                    +46 %
                   +38 %
At the end of 2005, it's 15 for 15.

            2006 --- six stocks bought. Here are the gains on these individual stocks during 2006.
                  +127 %
                    +31 %
                    +35 %
                    +28 %
                    +30 %
                    +63 %
At the end of 2006, it's 21 for 21.

            2007 --- six stocks bought. Here are the gains on these individual stocks during 2007.
                  +122 %
                    +40 %
                    +65 %
                   +63 %
                    +14 %
                    +88 %
At the end of 2007, it's 27 for 27.

        Talk about consistency! Did anyone at MIT, at the Picower Institute for Learning and Memory or at the MIT financial office, or the director or any  trustee of the Picower Foundation ever notice this barely believable short term investment record that got less and less believable every year? Did MIT make any effort to vet Jeffry Picower? Did MIT have any idea what the source of his wealth was? Or was MIT blinded by someone dangling a 50 million dollar pledge under its nose?

How to explain these phenomenal short term gains?
        How to explain these phenomenal short term gains?  The odds of picking 27 winners in a row approaches metaphysical zero, so I explain it by saying the stocks purchased and purchase dates on the 990's were obviously chosen after the year was over. The portfolio shows obvious signs of backdating, the gains were simply fabricated. Backdating, of course, along with other illegal account manipulations, is precisely what the Madoff Trustee (Picard), based on a forensic analysis of Madoff files, has charged Picower with being complicit in in his various Madoff accounts. Of Picower's accounts in general the Madoff Trustee found Picower's account records to be "patently false on (their) face".

        But isn't Madoff, not Picower, responsible for the backdating fraud? Not according to the Madoff Trustee (Picard). In his suit against Picower he alleges that Picower "dominated" his Madoff accounts and "directed purported purchases and sales of securities within (his) accounts".

        I have now confirmed this backdating pattern extends to the Picower Foundation account records for years 2001 thru 2007. But let me note a crucial difference:

        The Madoff Trustee got access to all the Madoff/Picower records and revealed the illegal account manipulations in Picower accounts only in 2009, but the 990 Picower Foundation filings, with their strong hints of portfolio fraud, have been widely available in the public domain for years.

        Jeffry Picower in his recent filing to the court provides us with his explanation of the performance record of his various Madoff accounts. He says Benie was a great stock picker and overall gains were not out of line with results achieved by some high risk hedge funds. That's it, that's his explanation, he sees no fraud. So based on his response to the attack on him by the Madoff Trustee, I ask the question of the name over the door, portrait on the wall, major MIT donor boy Jeffry Picower. Is Jeffry Picower

                        a) insane?   or
                        b) senile?   or
                        c) nitwit?   or
                        d) complete slimeball, who is going down for his role as an insider
                            in the largest financial fraud of all time, very likely with charges
                            of tax evasion?

I'm betting the answer is d).

MIT's defense?
        If MIT ever decides to speak to what has turned out be (in essence) their taking more than 50 million dollars in stolen money from the Picower Foundation, their explanation is likely to be something like this. The Picower Foundation at the time was a well known private foundation, and its record of grantees over the years include a huge number of large reputable institutions.

        My response is, this is absolute true. While many of the grantees of the Picower Foundation are small and relatively unknown, it is true that the grantee list includes iconic NY institutions like the American Ballet Theatre, Metropolitan Museum of Art, and the NY Public Library and even Beth Israel Deaconess Hospital, part of Harvard Medical School. However, for years 2001 thru 2005 when MIT was receiving 10 million a year from Picower the other institutions in most cases were only receiving 100 to 200 thousand (1% to 2% of what MIT received). So while all bear some responsibility for taking tainted Madoff/Picower money, as I see it MIT as the major grantee of the Picower Foundation in recent years bears most of the responsibility.

What's to be done --- pull a Boesky?
        So what's to be done? Of course, one possible solution is return the 50 million to the Madoff Trustee for distribution to Madoff investors, which includes other non-profits and charities.

        Another possible (ass covering) solution is suggested by how the Jewish Theological Seminary handled a somewhat similar situation with Ivan Boesky in the 1980's. Boesky had donated 2 million to Jewish Theological Seminary for a library, and they named it after him. When Boesky turned out to be a crook and got fined 100 million dollars (eventually he was dragged off to jail) for insider trading, the Seminary had a little problem. Their solution was to get 'permission' from Boesky to rename the library. "The bronze letters that spell out the Boesky name on the library building at the seminary campus at 3080 Broadway, at 122d Street, will be removed shortly, the (Jewish Theological Seminary) officials said." (NYT 11/26/86)

        Has MIT given Barbara or Jeffry Picower a call? How about calling Boston developer Norman B. Leventhal, who has been a Picower Foundation trustee all these years and in whose name MIT graduate fellowships (funded by the Picower Foundation) have been awarded.

                                                                           Don Fulton
                                                                           MIT 64
                                                                           Sept 11, 2009

     Picower Foundation 990's

    Madoff Trustee (Picard) suit against Picower (May 13, 2009)

    Picower's reply to court (July 31, 2009)

My Picower letters published in the independent MIT newspaper 'The Tech"

8/28/09 first Tech letter published (about a month delay because Tech rarely publishes in summer)

10/14/09  Second letter published in the MIT newspaper 'The Tech', a follow up to my Aug 09 letter. Also sent via email to MIT Treasurer. Due to title change I wonder if some people won't pick up on the sarcasm and will read it straight?

        My title: Open letter to MIT Treasurer, Theresa M. Stone, about Jeffry Picower Donations
        Tech editor changed title to: MIT Can Benefit from Picower

11/13/09 3rd published Tech letter
        (also posted to the NYT Dealbook Picower article (11/13/09), so it should be known to Google)

2/2/10 4th published Tech letter
        The URL to this page was supposed to be included. The Tech Opinion editor routinely emails me a copy of my edited letter prior to publication, and it was there. One of the purposes of this letter was to summarize (for those unfamiliar with Picower and his Madoff connection) the case for not accepting more Picower money, but the other was get this link out for anyone interested in more detail. (The Tech recently updated the 'look' of its opinion page, which account for the difference in style.)

Summer 2009 article on Picower by Tech Editor
        In the quiet summer months of 2009 the Tech carried a long, comprehensive article by one of its editors (link below) reviewing the MIT/Picower relationship. This article was the first MIT publication I am aware of that hinted at the depth of Picower's involvement with Madoff and his ponzi. Some excepts from Tech editor Robert McQueen's July 2009 article follow:

MIT Picower Institute Suffers From Madoff Losses
           By Robert McQueen, ASSOCIATE EDITOR, July 8, 2009

      ... Investigators are now scrutinizing some of Madoff’s biggest investors, who benefited from the scandal. One of the largest investigations is targeting Barbara and Jeffry Picower of the Picower Foundation, who supposedly withdrew $5.1 billion since December 1995, according reported by ProPublica.

        Attorney Irving H. Picard filed a complaint against the Picowers on May 12 of this year. In the complaint document, Picard accuses the Picowers of having full knowledge of Madoff’s Ponzi scheme. The document claims that Jeffry Picower demanded fictitious gains from Madoff, who would then purchase backdated securities to fake profits. In one example reference, Picard claims that Madoff opened new accounts in April 2008 that backdated to January 2008, resulting in a fictitious gain of $39 million in less than two weeks. In effect, Picower asked for money, and Madoff delivered.

        Picard goes so far to state that the Picower Foundation was “dominated by and used merely as the instrument of [Jeffry] Picower to advance his personal interests rather than corporate ends.” As evidence, he points out several cases when the Picower Foundation benefited from annual return rates of more than 100 percent. Some rates were even as high as 950 percent per year.

Various postings

10/26/09 I made two postings on Main Justice web site to Mary Jacoby's article on Picower Foundation Trustee William Zabel (see below)

William Zabel, Picower Foundation Trustee

post #1
       A view into Madoff portfolio fraud has been available in the public domain for years in the form of the Picower Foundation IRS 990 filings. The portfolio used by the Picower Foundatioin purports to be a ‘buy and hold’ portfolio, which Madoff used only for a few favored investors plus family and employees says the Madoff Trustee. In the last seven years the 990 filings show all 27 of 27 stocks purchased by the Picower Foundation portfolio go up in value from purchase date to Dec 31 of the purchase year, minimum gain 14%, aveage gain 50% This is simply statistically impossible, and William Zabel, a trustee of the Picower Foundation for 20 years, claims he was unaware of any fraud prior to this year?

post #6
Follow up to post #1
        My detailed analysis of the Picower Foundation 990 portfolios (2001 to 2007), showing 27 of 27 stocks going up short term and sales of stocks not owned, is at link below. The portfolios in earlier years (1998 to 2000) also reek with improbable gains and loss avoidance. (scroll down to “Picower Foundation’s Mind Boggling Short Term Investment Gains”)

        How is it possible that in nearly 20 years Picower Foundation trustee Zabel, whose firm did legal work for the foundation, never seems to have noticed the ‘too good to be true’ investment gains and other portfolio weirdness?
Reporter Mary  Jacobs writing on Main Justice web site (10/26/09)
        Mary Jacoby bio: former reporter for the Wall Street Journal, Salon magazine, the St. Petersburg Times of Florida, the Chicago Tribune and Roll Call.

        A report on how Jeffry Picower 'managed' his Picower Foundation investments in 2007:

        -- "The civil complaint (by Madoff Trustee) describes Freilich’s participation in one alleged fraud involving Picower Foundation accounts.
        -- On May 18, 2007, Freilich indicated the Foundation needed “$20 mil in gains” for January and February and “want[ed] 18% for year[] 07 appreciation,” but that she had to check the numbers “with Jeff.” On information and belief, “Jeff” is Defendant Jeffry Picower. Five days later, on May 23, Freilich told BLMIS that the numbers she had provided earlier were wrong, and the Foundation “needs only $12.3 mil [in gains] for” January and February 2007
        -- Accordingly, the Picower Foundation’s May 2007 statement reflected millions of dollars in securities transactions for the months of January and February 2007 that collectively resulted in a purported gain to the account of $12.6 million.
        -- But those transactions had never appeared on the foundation’s January or February 2007 statements, the complaint says. The result was an apparent $54.6 million increase in Picower Foundation assets, to $765.9 million in May 2007 “because the May 2007 statement was (and subsequent statements were) based on an entirely different account history: one in which various trades had taken place more than 15 months earlier, resulting in entirely different positions and values,” the complaint says." (Mary Jacoby | October 26, 2009)