Treasury yields soared and prices correspondingly plunged on June 10th, 2009. The benchmark 10-year note briefly touched the four percent level after the United States Treasury sold $19 billion of 10-year notes and Russia said it would further reduce its share of U.S. debt. This was the highest yield for the benchmark since October 15, 2008 when the credit markets were in the throes of seizure.

During the past few months, Toomre Capital Markets LLC ("TCM") has been quite busy tending to other matters (like client engagements). Hence, Lars Toomre in particular has had limited time to write for this website. However, as often happens behind the scenes, a client contact called to pick Lars' brain about what might be his macro perspective on yesterday's events. That I shared with the client and I also told him a few ways that I would be positioning investment portfolios if I were responsible for the management of fixed-income or equity assets. This client also strongly urged that I also share with the readership of this website a brief write-up about my first statement, which was "It is all about convexity!"

The bond market in general is having fits because of the large amount of Treasury supply that is needed to fund the stimulus package as well as what some regard as the profligate spending of the new Obama administration and Democratic Congress. Hence, Treasury interest rates in general have backed up from the excessively low levels they reached while investors of all types fled to the relative safety of Treasuries. The reader might well remember just a few short months ago that no one wanted to own any type of risky asset.

Both the Treasury and major equity markets are back to levels roughly about where they stood as the events around the bankruptcy of Lehman Brothers and the rescue of AIG took place. Eight months have elapsed during that period. During that period, both equities and bond yields have been much lower. The United States Federal Reserve stepped in with various alphabet soup programs in attempt to maintain some amount of liquidity and to prevent an absolute seizure in the money and credit markets. Hence, the Federal Reserve balance sheet has expanded massively and quite quickly.

While this expansion has occurred, there has been a major move to get consumers with troubled mortgage debt to refinance into more traditional mortgage instruments. Much of that origination occurred at lower interest rates. The resulting securities are now held in large part by either FNMA/FHLM or the Federal Reserve under one of the purchase programs introduced in the last year. Also many of such recently originated mortgage-backed securities are now "under water" or below the origination/purchase cost.

People sometimes forget how much negative convexity there are in mortgage-backed securities, particularly when yields shift by about 150 basis points or more. What start out as securities near par with a duration slightly in excess of four, now become discount securities with durations around six years. (Remember longer durations imply that for a given amount of yield increase, there will be a bigger price drop for a longer duration bond.) The refinance option still residing with the homeowner keeps is far out of the money, and hence the effective duration of the mortgage pool is now much longer. The question is how much longer and what is the over-all consensus in the market about how long that option is going to remain out of the money.

For about a dozen years now, late-night TV has frequently had advertisements from a financial firm known as J.G. Wentworth. On June 1st 2009, that firm, formally known as JGW Holdco LLC, and two of its subsidiaries, J.G. Wentworth LLC and J.G. Wentworth Inc., entered Chapter 11 bankruptcy protection after the company allegedly "encountered liquidity problems amid a tightening credit market".

This relatively-small financial firm repeatedly pitched the concept that one could sell insurance contracts known as structured settlements "to raise cash now". Rather than receive a stream of payments in future years as specified in an annuity insurance contract that is part and parcel to a structured settlement, the beneficiary of that structured settlement could receive a sum of cash from J.G. Wentworth "now". In exchange, the beneficiary would give up all future claims to the annuity cash flows and the funder, J.G. Wentworth, would receive them instead.

Many individuals and firms have long avoided the structured settlement sector of the financial markets, particularly on the purchase side of the transactions. Most sellers of structured settlements are what one would call "retail" customers. Frequently, these customers are less sophisticated in one way or another. Often the customer is at least middle-aged, if not older; is in a diminished physical state; and has encountered some type of financial stress that is leading to the consideration of the sale of the structured settlement annuity contract.

In such a condition, it often is not clear to a seller whether a proposed transaction price is fair or not, especially when potentially pressured by an aggressive broker who promises to get the seller cash now. As with all retail-oriented businesses, the "downsides" (risks) of entering into the transaction are rarely well-explained. Further the total fees to be paid to the broker and/or principal are often concealed or less than completely disclosed.

The Microsoft Internet Explorer browser in its various implementations is so frustrating to deal with, especially in its various non-standard ways of rendering XHTML elements and CSS mark-up. Working with Internet Explorer version 7 during the past few days, I am reminded well why we here at Toomre Capital Markets LLC ("TCM") fled first to Firefox and then more recently to Google's Chrome as our web browser of choice. Unfortunately, though, slightly more than sixty percent of this site's visitors still use Microsoft IE for browsing content here. Hence, website changes still need to be correctly rendered with IE as well.

Over the past few weeks, we have been doing quite a bit of working on the plumbing so to speak that enables this website to function. At its core, the public side of this website relies on the excellent Content Management System known as Drupal. The core software was upgraded to the most recent Drupal release 6.12 and all of the more than sixty or so modules were upgraded as well. We also have begun implementing a number of new features like the ability to print content in a printer friendly format, an ability to e-mail content to professional contacts and the ability to share content with various social network sites.

As part of that overhaul, we also have rewritten the core Drupal theme that will be used to display various website pages to the user. That new theme is working really well in both the Chrome and Firefox browsers. However, of course, the Microsoft IE browser has other thoughts. It appears not to recognize some CSS selectors or maybe not implement them at all. Other CSS selectors seem to have padding and/or margin issues that are throwing neat rows of graphical elements out of whack.

Hopefully, it will only take a short while to track down solutions to each of these Microsoft IE specific issues. Until then, we will hold off on putting the new theme into daily production. Thank you for bearing with us during this upgrade and redesign process. We are off to find some tools that might assist with the debugging of what is going on with the IE rendering engine.

Toomre Capital Markets LLC ("TCM") first wrote about the use of credit default swaps ("CDS") as a means of insider-trading back in October 2006 in the post Possible Insider Trading Using Credit-Default Swaps?? On May 5th 2009, the Securities and Exchange Commission finally filed its first case alleging that credit-default swaps were used to facilitate illegal insider-trading activities. Hopefully, this will be just the first of many such cases filed involving the abuse of insider information and the credit default swap market.

According to this story on Bloomberg News written by David Scheer, the SEC has now alleged that a Deutsche Bank AG salesman, one Jon-Paul Rorech, 36, passed on information about a pending bond sale to a now former Millennium Partners LP money manager, one Renato Negrin, 45, who then bought credit default swaps that resulted in profits of $1.2 million once the VNU high-yield bond transaction was formally announced. The securities market regulator wants these two individuals to forfeit "unlawful trading profits" and pay unspecified fines. “Rorech and Negrin checked their integrity at the door and schemed to engage in insider trading of CDS to the detriment of investors and our markets,” Scott Friestad, the SEC’s deputy enforcement director, said in the statement announcing the lawsuit.

Toomre Capital Markets LLC ("TCM") has long suspected that Ruth Madoff was an active co-conspirator with her husband Bernie Madoff in his massive Ponzi scheme. (A reader, for instance, might want to review the TCM post Ruth Madoff: Rube or Accomplice to Bernie? ) Now Federal investigators seem to agree as they are "working around the clock" to freeze the assets of Ruth Alpern Madoff.

On Sunday March 15th 2009, The New York Post published the article Ruth In Crosshair$. This article suggests that federal authorities are working feverishly to prepare a filing asking a Federal judge to formally freeze all of Ruth Madoff's more than $93 million in assets as soon as possible. "The US attorneys will be in court in the next week or so to tell a judge that they believe Mrs. Madoff's assets are derived from ill-gotten gains and that they should be frozen for a certain period of time while the investigation is ongoing," an SEC source said.

The judge will then decide whether there is sufficient reason to believe her assets were legitimately earned or whether they were the proceeds of her husband's $65 billion Ponzi scheme. "You do not need the case to be nailed down, you just need to be able to convince the judge that there is a strong probability that the funds in question came from crime," the source said.

The article continues with additional information about a possible forthcoming criminal indictment. "Law-enforcement sources also told The Post that the asset freeze would be just the first step in a one-two punch against her as prosecutors work furiously to build a criminal case." In the past week, Mrs. Madoff has had needed to part legal counsel with Ira Sorkin who now principally is representing the legal interests of her husband. Ruth Madoff's new criminal defense lawyer, Peter Chavkin, apparently declined to comment on these developments.

On Thursday March 12th 2009, Bernie Madoff pled guilty to all eleven counts associated with his vast and long-running Ponzi scheme. He did so without a plea agreement and hence did not disclose any information about who else might have been involved in the scheme. Hence, many questions remain about the small group of accounting firms that were connected with Bernie Madoff's activities in one form or another.

Ahead of the plea hearing, The New York Times published an article written by Leslie Wayne and William K. Rashbaum entitled Investigation Into Madoff Fraud Turns to a Small Circle of Accountants. This article discloses that a number of investigative agencies are making inquiries into Friehling & Horowitz, Sosnick Bell, Konigsberg Wolf & Company and Avellion & Bienes. Apparently Paul Konigsberg and Steven Mendelow, both affiliated with Konigsberg Wolf, have been subpoenaed for more information about their relationships and involvement with Bernie Madoff's fraud scheme.

In this article, Lars Toomre and Toomre Capital Markets LLC ("TCM") were quoted. The specific quote was: “Who takes their accountant on a ski trip?” said Lars Toomre, head of Toomre Capital Markets, a Greenwich, Conn., financial risk analysis firm that maintains a Web site on the Madoff scandal. “Konigsberg is always around Madoff.” (For those visitors to this website looking for more information, feel free to click one of the many links that will take you to further information.)

As TCM has written previously on this website, it is extremely unlikely that Bernie Madoff committed this massive fraud over more than twenty years without the help of others. We are likely to read in the coming weeks and months that Madoff's accountants either willingly assisted Madoff or turned a blind eye to his supposedly amazingly consistent returns. What is really amazing is that all of the accountants associated with Madoff have claimed through their lawyers that they lost "millions" in the Madoff fraud.

Has anyone paused to ask how modest accountants of rather middle-class means somehow accumulated millions of dollars through their professional services work? Toomre Capital Markets LLC is not familiar with many accountants or CPAs who became multi-millionaires through their professional work. Are you? What were the sources of the "millions" of dollars that they supposedly subsequently lost in the Madoff investment pool?

About three weeks ago, Toomre Capital Markets LLC ("TCM") wrote about Annette Bongiorno, Bernie Madoff's former long-time secretary, in the post Annette Bongiorno, Madoff Aide Falls Under Suspicion. On Monday March 9th 2009, Ms. Bongiorno is back in the news on the front page of the Markets section of The Wall Street Journal.

In the article entitled Madoff Aide Allegedly Got Fake 'Tickets' of Trading, WSJ reporter Amil Efrati reveals that Ms. Bongiorno allegedly directed two assistants to create the bogus trading "tickets." These tickets documented the purported trades, which in turn resulted in gains that were in line with Mr. Madoff's steady annual returns.

"The two assistants to Ms. Bongiorno, Semone Anderson and Winnie Jackson, did clerical work and helped generate stock-trade confirmations for client accounts, which purported to show gains that were later applied to client accounts. The confirmations are now believed to have been fictitious, according to a court-appointed trustee who is liquidating the Madoff firm. Ms. Bongiorno, 60 years old, was once Mr. Madoff's personal secretary and later oversaw some of the firm's oldest accounts. The two assistants were interviewed by the U.S. attorney's office for the Southern District of New York through what are called proffer agreements, in which prosecutors agree not to use their statements against them as long as they tell the truth, according to people familiar with the matter."

Given that Ms. Bongiorno apparently also actively raised funds for the Madoff fraud from her neighbors in Queens New York, this new information highly suggests to Toomre Capital Markets LLC that Ms. Bongiorno will likely be facing some criminal penalties of her own. Surely, if she was ordering the creation of bogus trade tickets, she must have known for some period that Bernie Madoff's investment operation was a scam. If she further profited from fees received from managing so-called "RuAnn" feeder accounts for friends from her old neighborhood, federal prosecutors are likely to come down on her hard. Of course, though, she might have some juicy information about the possible participation of say Ruth Madoff, Peter Madoff and/or either of the sons, Andy or Mark Madoff that just might mitigate her criminal penalties.

This WSJ article also reveals that Federal prosecutors have recently turned their attention to a separate group that handled many of the institutional investment accounts mired in the Madoff fraud. "That group was headed by Frank DiPascali Jr., 52, who hasn't yet been asked to speak with prosecutors, according to a person familiar with the matter. Mr. DiPascali's lawyer declined to comment on his client's behalf. Mr. DiPascali referred to himself as the "director of options trading" at the firm and Mr. Madoff told investors he executed trades, despite the fact that a court-appointed trustee found that no trading occurred for at least the past 13 years. Prosecutors have asked at least three employees who worked under Mr. DiPascali about his role in the firm, according to a person familiar with the matter. The employees, Eric Lipkin, JoAnn Crupi and Robert Cardile, who is Mr. DiPascali's brother-in-law, also had proffer agreements with prosecutors."

On Friday February 21st 2009, Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC on behalf of Securities Investor Protection Corp. ("SIPC"), held his first meeting with investors who were defrauded by Bernie Madoff. At that meeting, Mr. Picard said "We have found no evidence to indicate that securities were purchased for customers' accounts'' for "perhaps as much as 13 years.'' It was "cash in and cash out,'' he said. In short, the detailed monthly statements sent to investors were pure fiction.

This disclosure is important to the defrauded investors since it makes it more likely that each investor will be able to recover up to $500,000 from SIPC rather than $100,000 that would be available if there were actual securities held in the Madoff accounts. "We are operating out of a crime scene,'' Picard said at the meeting. He added that his office has received 2,350 customer claims as of noon yesterday. Those claims exceeded about $US1 billion, Picard told reporters after the meeting. "That's my recollection, plus or minus,'' Picard said, adding, "I can't tell you today how many of the 2,400 claims will be allowed.''

Mr. Picard told the assembled investors that his office has located Madoff firm books and records at its Manhattan offices, the basement of its Third Avenue building, at a warehouse and at a "backup site.'' "At the warehouse, we recently inventoried approximately 7,000 boxes and that's in addition to the file cabinets worth of materials we found at the premises and that we've been able to review under the watchful eye of the FBI,'' Picard said. "We're getting a feel for how this operation worked.''

Mr. Picard also reported that he found no separation between the company's broker-dealer division and its investment advisory unit. "We have found nothing to suggest there was any difference, any separateness,'' Picard said at a meeting today with Madoff clients in US Bankruptcy Court in Manhattan. "It was all one.'' Picard said he reduced overhead for the Madoff firm by about $300,000 a week. When he came in, it had about 175 or 180 employees, he told the clients. Now he has only 60, including 45 at the market-making operation, which he said are necessary. The trustee told the investors that he wants to sell the firm's market-making unit in "a matter of weeks.'' "That appears to have some value,'' he said. "We're in the process of getting some bids.''

Frank Avellino and Michael Bienes nearly fifty years ago started working at the accounting firm run by Ruth Madoff's father, Saul Alpern. Sometime around that time, they and Saul Alpern began referring clients, friends and associates to Bernie Madoff's fledging securities firm. Along the way, they formed a successor firm to the Alpern firm and then began to primarily focus on fund raising in their guaranteed notes that were in turn invested with Bernie Madoff through their firm Avellino & Bienes.

In late 1992, the Securities and Exchange Commission sued these two accountants and two others, Steven Mendelow and Edward Glantz (and his son Richard), together with their respective firms for selling unregistered notes. As a result, they disbanded their investment vehicles and supposedly returned all funds to their investors. Apparently, though, a significant number of investors then turned over their returned assets directly to Bernie Madoff where accounts at Bernard Madoff Investment Securities were opened in their names.

According to investors who have come forward after the Madoff scheme was exposed, Frank Avellino, Michael Bienes, Steven Mendelow and Richard Glantz never completely ceased raising additional funds for Bernie Madoff. While the vehicles and mechanisms they used subsequent to the SEC lawsuits are less well documented, each apparently continued to direct investors to Madoff.

Shortly after the Madoff arrest was disclosed, Michael Bienes suddenly resigned from the Board of Directors of the prestigious Broward Center for the Performing Arts in a short one sentence letter. As Bob Norman of the Broward-Palm Beach New Times writes, "Since the scheme collapsed, he and wife Dianne have dropped out of Fort Lauderdale life and, sources say, emptied their Bay Colony estate of their possessions."

The Tuesday February 27th 2009 edition of The Telegraph (London) contains an article entitled Madoff Aide Falls Under Suspicion written by James Quinn. This article concerns one Annette Bongiorno, who served as a long-time employee to Bernie Madoff and who apparently was active in recruiting friends and associates from her former Howard Beach neighborhood in the borough Queens as investors in the Madoff investment scheme.

Apparently Annette (Argese) Bongiorno lived next door to Frank DiPascali, Bernie's chief assistant and self-proclaimed chief financial officer of Madoff's investment operation. She started working for Bernard Madoff Investment Securities sometime during the 1980s when there were no more than three dozen employees and the firm was located downtown near Wall Street. During those early years, Mrs. Bongiorno was Bernie Madoff's personal secretary as well as performing various clerical duties, particularly for long-time investors with Bernie.

In more recent years, Mrs. Bongiorno apparently moved to a house worth $2.6m in Manhasset, Long Island. Her husband Rudy is a retired electrician. One might reasonably wonder how a former secretary and city electrician might be able to afford such a relatively expensive property. Perhaps it was due to the compensation from running what were known as "RuAnn" accounts? What management fees and/or commissions were paid to this couple for the funds that their friends and associates invested with Madoff? Were those fees ever disclosed to anyone?

Particularly in recent weeks, Toomre Capital Markets LLC ("TCM") has been extremely busy helping a client implement a custom financial application that is quite complex and truly a modern distributed system. The data, tools, work rules and analytics embedded within this new application are certainly cutting-edge and should help this client further extend their leadership in their particular sector of the financial markets. What is more, this new system should allow this client to truly take their business to the next level on a real-time basis with true Enterprise Risk Management.

TCM primarily assisted this client with some custom analytic code written in the MATLAB technical programming language that takes advantage of that specialized language's strengths with arrays and mathematical calculations as well as a quite powerful set of graphical user interface ("GUI") tools. Like the original Collateralized Mortgage Obligation ("CMO") code that Lars and Aldon wrote at Lehman Brothers more than twenty years ago, this new analytic code allows for the real-time pricing and sensitivity analysis of a relatively new type of cash flow that ultimately will be securitized should the securitization markets revive. The input variations to the analytic model are almost infinite and allow for the effective pricing of many variations of life insurance policies.

One of the noted strengths of the Toomre Capital Markets LLC team is helping our clients connect the hidden dots of financial information, risk management and structured finance modeling. We are especially good at uncovering and honing in on that crucial information or aspect of a financial model that is a key to value / risk determination. If the reader's organization needs some assistance in this area, with their financial models or specifically with detailed MATLAB financial modeling, please feel to contact us so that we might discuss your issues further. As the above client notes, TCM is particularly adept of dealing with those complex financial problems with lots of "hair balls."

Toomre Capital Markets LLC ("TCM") has been consumed during the few weeks doing the "real" work of our consulting company — that is serving the needs of our paying clients. As a result, with client projects occupying so much of our working day, we have had little spare time to focus further on the Bernie Madoff fraud scandal. Hence, TCM's postings on this subject have been lighter than usual and the moderated comments have not been addressed as quickly as usual.

Please bear with us as the work crunch continues a bit longer. However, even at this early hour of the morning of Thursday February 5th 2009, TCM would like to highlight two pretty remarkable events that have occurred in the past day with regard to the Bernie Madoff affair. The first concerns the quite amazing and frank testimony of Harry Markopolos in both his written testimony and his oral remarks and answers. How could anyone not admire a man long on the tail of the Bernie Madoff? And how could one not come away with a heady admiration of the way that he thoroughly dissected the regulatory failures that allowed the Madoff affair to thrive for so long?

Mr. Markopolos' written testimony is a must read!!! And in his oral testimony, he stated that there are maybe another dozen Madoff "feeder funds" lying in the weeds not yet willing to disclose their near complete losses? Who might those European funds might be? Toomre Capital Markets LLC intends to return to Mr. Markopolos' testimony in the next few days when there is a bit more free time. In the meantime, definitely read what the mainstream media has to say about the unheard Madoff whistle-blower and his Congressional testimony.

The second item that TCM would like to briefly highlight is the document that AlixPartners LLP, a Dallas company hired as the claims agent by the trustee overseeing the liquidation of Bernard L. Madoff Investment Securities. That document was filed in New York federal court on February 4th and contains approximately 13,000 people and/or entities that have thus far been identified as either having had an active account with Bernie Madoff at the time of his arrest or had previously done so. This list of information is truly fascinating!!!

Toomre Capital Markets LLC ("TCM") was very surprised to read the February 3rd 2009 headline on the TimesOnline website entitled Madoff Victims Could Reach 3m, Say Lawyers. Acccording to the article,

Javier Cremades, president of Cremades Calvo-Sotelo, the Spanish law firm, said: “Our calculations are that at least three million people were affected by the Madoff affair, three million people who could be directly or indirectly affected by the case.”

The estimate is based on information collected from over 30 firms around the world who are representing the victims of the alleged pyramid fraud conducted by Mr Madoff.

Mr. Cremades, whose firm has filed a US lawsuit in the name of 600 victims who claim they lost €120 million (£108.5 million) in total, said the overall amount involved could turn out to be higher than the $50 billion which has been estimated so far.

Call TCM skeptical of such exaggerated and sensational claims. Assuming that the total size of the Bernie Madoff Ponzi-like fraud is the $50 Billion that Madoff apparently confessed to his sons and the FBI agents on the day of his arrest, dividing three million people into $50 billion suggests that each victim lost close to $17,000.

From all press reports, Madoff and his "feeder funds" had minimum account sizes multiple times larger than this amount. For instance, in the lawsuit Mr. Cremades above is involved with, the 600 investors allegedly lost something in excess of $150 million or something like $250,000 per investor. Taking the statistics further, Mr. Cremades claims of such a large victim pool suggests just for his own clients, each has approximately 14 indirect associated victims.

TCM supposes that families in Spain could be far larger than the averages in the United States. However, it is difficult to imagine that each family accounts for more than four of those indirect "victims". Where do the additional "indirect" victims come from?

One of the largest individual investors who were defrauded by Bernie Madoff was Carl Shapiro and his wife Ruth. He was a major philanthropist who contributed to a number of charities, particularly in the Boston area. One of his beneficiaries was Brandeis University, which has seen its support from key philanthropists cut sharply and is likely facing operating shortfalls in coming years. This has resulted in the university trustees making the very difficult decision to put up a prized art collection up for sale. As a result, are Mr. Cremades and his legal associates including the approximately 5,500 students and perhaps another 5,000 faculty, administrators and staff as part of the Madoff indirect victim pool?

Taking the logic of this inclusion of indirect victims, surely one or more of the philanthropists who were scammed by Bernie Madoff contributed funds to the United Way or the American Red Cross. Why not then include the millions of Americans who will be affected because those charitable organizations have less funds to carry out their various missions? If one were to do so, newspapers could scream in their headlines that tens of millions scammed by Madoff. Of course, if they were to do so, some like TCM might question the underlying assumptions and statistics.

On Friday January 30th 2009, Maxam Capital Management LLC, yet another "feeder fund" to Bernie Madoff, sued its own auditors for not detecting the alleged fraud at Bernard Madoff Investment Securities. Apparently the Maxam Absolute Return Fund LP placed all of its $280 million in holdings with Madoff. That fund has now sued McGladrey & Pullen LLP and Goldstein Golub Kessler LLP for professional negligence on Jan. 30 in Connecticut state court. The case is Maxam Absolute Return Fund LP v. McGladrey & Pullen LLP, Connecticut Superior Court (Bridgeport).

According to the complaint, while the auditors issued opinions that Maxam’s financial statements conformed with general accounting principles, they “negligently relied solely on documents created by Madoff and sought no independent confirmation that trades had been executed or that assets existed.” The complaint continues “Assets were grossly overstated based on fraudulent trading tickets and fraudulent account statements provided by” Madoff.

From Bloomberg News, "Goldstein Golub, based in New York, did the Maxam fund’s 2006 audit, according to the complaint. McGladrey & Pullen, based in Bloomington, Minnesota, did its 2007 audit after Goldstein Golub partners joined that firm. McGladrey & Pullen General Counsel Richard Miller didn’t immediately return a call for comment. Two phone numbers for Goldstein Golub in New York ring through to RSM McGladrey Inc., a professional-services firm that “operates in an alternative practice structure with McGladrey & Pullen,” according to its Web site. Goldstein Golub no longer conducts audits, according to the complaint."

Darien, Connecticut-based Maxam Capital Management LLC was started in 2006 by Sandra Manzke after she left Tremont Capital which she founded in 1985. Tremont Capital suffered major losses due to the money that it had placed with Madoff. Ms. Manzke apparently started in investing almost exclusively with Madoff after she started her new firm. There are conflicting reports about how Maxam marketed itself and whether it highlighted itself as women and/or minority owned in order to attract investor funds as a start-up.

Michael D. Sullivan is a local accountant in Fort Lauderdale, Florida. According to this article in the January 31st 2009 edition of The Sun Sentinel, he is the founder and managing partner of S & P Investment Group which collected "tens of millions of dollars from friends, colleagues and fellow church members and invested it with Bernie Madoff." Several of his more than 150 investors indicated that they were referred to Mr. Sullivan by local accountants Frank Avellino and Michael Bienes or met him through his and Mr. Avellino's membership at Christ Church in Fort Lauderdale.

According to this article, S & P Investment Group was formed with partner Greg Powell in 1991 and closed it down two years later. In 1992, Mr. Sullivan began to send investor funds to be managed by Madoff. Mr. Sullivan, Mr. Powel and accountant Steven F. Jacob opened SPJ Investments in 1999, contributing $100 million into the venture at start up, according to records filed with the Florida Secretary of State. There are no records on file for the entities S & P Associates, P & S Associates, or Guardian Angel Trust, all of which were apparently partnerships in which individual investor funds were bundled up and then passed onto Bernie Madoff.

Later the article suggests that many of his investors came from Avellino & Bienes ("A&B"). Apparently for six years in the 1990's, the three men and their companies occupied the same floor at 6550 Federal Highway in Fort Lauderdale. Thus, Toomre Capital Markets LLC ("TCM") suspects that Michael Sullivan and his partnerships were the vehicle that Michael Bienes in particular used to help investors who had invested in the unregistered A&B notes keep their money with Madoff after the SEC enforcement action at the end of 1992.