play video As details emerged about investment strategy used by Bernie Madoff, seen "skulking" out of his apartment today by New York Post photographers, players on Wall Street said it "raised red flags which should have been obvious to the banks and investment firms that promoted Mr. Madoff." The Wall Street Journal reports that Madoff's strategy involved buying stocks and at the same time trading options contracts designed to limit his losses. But several traders "concluded that while Mr. Madoff's stated strategy was valid it would have been impossible to execute with the amount of money he was managing." A client statement made available to The Journal, showing a typical transaction from November 12, makes this glaringly obvious. That day Mr. Madoff bought his client $500,000 worth of stock and purchased 11 options contracts. To make his strategy work across the wide range of clients he represented, Mr. Madoff would have had to purchase 22,000 options contracts to protect just $1 billion, although he claimed to be representing $17 billion. When Madoff's firm was questioned about this by potential investors they always said that they traded contracts "over-the-counter", meaning off the recorded exchange, leaving open the possibility that his strategy might be possible. Article on the Wall Street Journal
Last Monday Pointer wrote: "If one person of the Obama-circle should have known what the governor [Blagojevich] was playing they should have reported that to the FBI immediately." Today we know that it happened indeed.
Don Babwin, Huffington Post CHICAGO — Shortly after his 2002 election, Gov. Rod Blagojevich told Rep. Jesse Jackson Jr. he didn't appoint the congressman's wife as lottery director because he had refused him a $25,000 campaign donation, a person familiar with the conversation told The Associated Press on Tuesday. "Blagojevich went out of his way to say, 'You know I was considering your wife for the lottery job and the $25,000 you didn't give me? That's why she's not getting the job,'" the person said, speaking on condition of anonymity because of the ongoing federal investigation. Jackson's name has played prominently ever since Blagojevich was arrested last week on corruption charges, including allegations that he tried to sell or trade President-elect Barack Obama's vacant Senate seat for personal gain. Jackson has been identified as one of the candidates Blagojevich was considering for the seat, and a criminal complaint said his supporters were willing to raise $1.5 million for the governor if he picked the congressman. The complaint quotes Blagojevich as saying on federal wiretaps that an associate of the candidate offered to raise money for him if he made the Jackson appointment happen. Jackson spokesman Kenneth Edmonds declined to comment on the account of the exchange shortly after Blagojevich's 2002 election but said the congressman, the son of civil rights activist Jesse Jackson, has approached federal investigators to discuss the governor and others for years. "He has shared information with federal prosecutors about public corruption during the past several years, including information about Blagojevich and others," Edmonds said. Randall Samborn, spokesman for the U.S. attorney's office in Chicago, declined to comment, as did Blagojevich spokesman Lucio Guerrero. Jackson has openly sought the Senate position but denies initiating or authorizing anyone to promise anything to Blagojevich on his behalf. The congressman has said federal prosecutors told him he is not a target of their investigation. The person did not know whether Jackson's wife, Sandi, who has since been elected to the Chicago City Council, had asked for the state lottery job. At the time, Blagojevich was the first incoming Democratic governor after years of Republican rule and had scores of state jobs to fill. "The governor had kind of penciled Sandi in as lottery director and then asked for contributions from the congressman," the person said. Sandi Jackson did not immediately return a call to her office seeking comment. In April, the Chicago Tribune reported that an examination of campaign donations to Blagojevich showed that three in four donors who gave exactly $25,000 received administration favors such as state board appointments or contracts. It's also the same amount of money that figured prominently in the testimony of a government witness in the political corruption trial this summer of political fundraiser Antoin "Tony" Rezko. Ali Ata, the former executive director of the Illinois Finance Authority, testified that Blagojevich spoke encouragingly about getting him a job in his administration after he personally brought him a $25,000 campaign contribution. Rezko, who raised more than $1 million for Blagojevich's campaign fund, was convicted of shaking down companies seeking state business for campaign contributions. The person familiar with Jackson's discussions also said Tuesday that Jackson has spoken with federal investigators about a 2006 meeting with Rezko at which the two discussed a proposed airport in Peotone, long considered a possible location for a third Chicago-area airport. The person said Rezko told Jackson, a longtime proponent of the airport, that Blagojevich wanted to control the airport's board, but Jackson balked.
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