Dan's Papers - July 3, 2009

Last Friday, Ruth Madoff agreed to give up her claim to the Montauk oceanfront home in Hither Hills that she and her husband Bernie have owned and enjoyed for the last 15 years. The home will now go on the market.

Until this past Friday, Ruth had claimed that the Montauk property was not part of her husband's ill-gotten gains. She had filed a lawsuit saying that the Montauk home, along with the duplex on Fifth Avenue and the home in Palm Beach, were all part of $80 million in personal assets that she owned which were not now and never had been part of the $65 billion Ponzi operation her husband ran ruining thousands of families during the last 20 years. She has agreed now to give up all her claims to these assets in exchange for a smallish pot of $2.5 million in cash, which will at least allow her to live relatively modestly and keep food on the table, which is more than can be said for those who were victimized by this scheme.

According to John Keeshan, a prominent Montauk realtor, the property - a traditional six-bedroom home built in the colonial style - will probably be put on the market for about $6 million. Even with fewer house numbers and potted plants on the Old Montauk Highway, which have been removed by souvenir hunters in recent days, there seems little doubt that this is what the property will fetch. A big plus for the lucky purchaser of this property is the possibility that billions of dollars in cash might be buried either under the lawn or in a secret sub-basement under the regular concrete basement in the house. It could be. And it is worth looking into.

Madoff is currently languishing in jail, awaiting a sentencing that will likely put him in a low to medium security prison in Fort Dix, N.J., Allenwood, Pa. or Otisville, N.Y. for the rest of his life because people handed him millions of their savings for him to invest and instead he just kept it. Occasionally he did throw off high returns here and there to keep people believing he was the financial wizard he claimed to be.

Where did the vast bulk of the money go? The amounts gathered up from the victims by the feds don't even total $2 billion.

Somewhere, it seems, there has got to be $63 billion stashed away, unless he spent it. But he didn't. Although he did spend quite a bit of it, for a man with $63 billion, which would make him the richest man in the world, his homes and boats didn't amount to much when you added it all up. Furthermore, his wife and sons lived well, but not as you might think someone who was the richest man ever might. Perhaps he kept the money somewhere because he knew that if he lived at the level he actually had the money to live at, people would have suspected the truth of the matter.

Was his family involved in the scheme? Bernie was arrested in December. If his wife and kids were involved in this, they would have been indicted by now. They have not. His sons say they haven't spoken to him since the day he was arrested. His wife would not have made the claims she recently did if she knew where the money was.

Apparently, Bernie had this huge staff of financial people working in several offices in New York and London, but when the moment came for the actual trades to be made, Bernie took the paperwork into a locked room to meet up with his accountant (who also has been indicted), and then like the great financial wizard he was, didn't make the trades.

So I repeat: Where is it? When the feds closed in and Bernie gave himself up, the cupboard was bare. Buried treasure in the Hamptons is nothing new. The pirate Captain Kidd buried gold and diamonds in great trunks filled with treasure on Gardiner's Island in 1688, while John Gardiner, the owner of the island, was forced to watch. (Kidd said he'd kill him if he dug it up.) The island is tucked in between Montauk and Amagansett, for those who do not know.

After Kidd gave himself up in Boston and was taken back to England and then hung, Gardiner sent a message out that he knew where the treasure was. Today, the treasure is back in London with the Royal Jewels in the tower.

No one knows yet who will be selected by the Feds to broker the sale of the Madoff house in Montauk, but when the name of the broker or brokers is revealed, prospective buyers will be able to walk through the property, kick the white columns out front and sit in the lawn furniture. Keep an eye out for a shovel stuck in the ground in the yard. Or maybe some fresh concrete down in the basement.

This home could be the best purchase you'll ever make.

By the way, did you notice that the accountant involved in the "trades" was paid a mere $300,000 a year for his services, while manipulating fraudulently more money than the gross domestic product of the Republic of Bulgaria? What was this man thinking?