The old place was swanky.

It has a 24-hour doorman and river views, but the real appeal of 377 Rector Place—a building that is about as bland as a luxury tower can be—lies in its name: Liberty House. Particularly if one is about to start a 10-year prison sentence.

The New York Post reports that Peter Madoff and wife Marion have moved into a $3,200-per month one-bedroom rental in the Battery Park City building. For someone who has agreed, as part of plea bargain, to the criminal forfeiture of $143.1 billion, including all real estate and personal property, a rental is definitely the way to go.

The new place: not bad. Way nicer than prison.

Of the couple's vast, ill-begotten fortune, Marion was allowed to keep $771,733, an amount that still seems like a fortune to most of us, if not a vast one.

Madoff frère pleaded guilty in June to helping his brother bilk investors out of out billions, although he maintained that he had no idea that by falsifying business records he was helping to perpetrate what may go down in history as the greatest Ponzi scheme of all time.

A claim that was dismissed by US District Judge Laura Swain as “frankly, not believable,” according to the Daily News

The Madoffs needed someplace to stay, having just sold their 7-room co-op at 975 Park Avenue for $4.6 million.

While the provenance of Mr. Madoff's former pad might bother some potential buyers, all proceeds of the sale go to victim restitution. Sources have said that the Madoffs weren't even allowed to keep their dishes and other basic household items. Time for an Ikea run?

Mr. Madoff has less than a month to enjoy his liberty, Liberty House or the view of Lady Liberty in the New York Harbor. He's scheduled to start serving his sentence on February 6, thanks to a delay he was granted to attend his granddaughter's Bat Mitzvah.

As for the properties belonging to the rest of the Madoff clan, they will likely hit the market in the not-too-distant future as prosecutors and trustees make their way through the massively complicated fraud case. These include Andrew Madoff's $4.3 million apartment at 433 East 74th Street and Mark Madoff’s $6 million Soho apartment at 583 Broadway Avenue, where he committed suicide. Both of the brothers' Greenwich homes are also in the mix.

kvelsey@observer.com

Scott Rothstein

Lawyer Scott Rothstein was living high back in 2006. The Bronx-born boy turned Florida legal eagle led the life of the .1 percenter, which, in his words consisted of "the ability to do whatever you want, whenever you want, wherever you want, by whatever means you can think of."

Back in 2009, Mr. Rothstein, however, his house of cards came crashing down when the feds caught wind of his side project, a "structured settlement" plot that evolved into a $1.2 billion Ponzi scheme. Now serving a fifty-year sentence in a Floridian federal penitentiary, another house in Mr. Rothstein's once stacked deck has disappeared: a home once belonging to Mr. Rothstein, then seized by the U.S government, has sold for $5.09 million, city records show.

The "United States of America" is listed as the seller on the property deed, with an address of One Saint Andrew's Plaza, the U.S. Justice Department's location in New York City. The buyer purchased anonymously through the entity "Valen LLC," which appears to belong to a foreigner.

According to a listing from Douglas Elliman agent Sabrina Saltiel, the buyer will have "BREATHTAKING SKYLINE AND RIVER VIEWS" (emphasis hers) from their new pad. The two-bedroom, two-bath place is inside 151 East 58th Street, a.k.a. One Beacon Court a.k.a. the Bloomberg Building. The 42nd-floor home comes "fully equipped with top of the line everything," which comes as little surprise considering that Mr. Rothstein likes, well liked, all things opulent. "I tend toward the flashy side, but it's a persona. It's just a fucking persona," he said. We wonder how his persona is liking those orange jumpsuits. Flashy indeed!

Mr. Rothstein lived a rockstar life, with raucous sex parties where, we imagine, he didn't just make it rain stolen money, he conjured up whole damn hurricanes. We can only imagine what that midtown apartment has seen!

Sex parties or no, Mr. Rothstein bought the place with his wife, Kimberly, in 2008 (just one year before his arrest) for $5.95 million. Perhaps unsurprisingly, the government sold it at a loss of almost one million dollars, after an initial asking price of $5.4 million. We can hear his victims grumbling from their beachfront Tampa pads now.

eknutsen@observer.com

But an NBA player running an entire ponzi scheme? That'd be impressive. And in former New Jersey Nets and Milwaukee Bucks player Tate George's case, it kind of is, especially when you consider the magnitude of the lies he told, and who he targeted: he told his investors he had $498M more than he had in his portfolio.

What kind of investors would believe that?

Per Bloomberg:

Tate George...was charged with running a $2 million Ponzi scheme that targeted ex-professional athletes.

According to the FBI, George had been running the scheme since 2005, and is looking at 20 years in the pen if convicted. He spent the money on initial returns to investors and then in supporting his lifestyle, which included (among other things) child support and mortgages.

So much for that $500M real estate portfolio of The George Group.

Or their website.

Or that October 2008 Portfoilio features entitled "Success, by George!" about what a great guy he is:

Since he left the hardwood, he has gone on to launch the George Group, establishing the stable and substantial real development portfolio of the company that currently exceeds $500 million. His business education began with a degree from the University of Connecticut and continued with a real-world education in Wall Street banking in New York. Since the founding of the George Group, he has built relationships and raised millions of dollars for an extended variety of clients in the fields of commercial development, real estate development, and international finance, as well as the entertainment and sports industries. George's company, which has six employees in New Jersey and Florida, has put $51 million into three public/private redevelopment projects.

To be fair, Tate George isn't entirely a goon. He did make one of the most incredible buzzer-beaters in NCAA history:

Sadly, Conn then lost by one point to Duke in the Final Four, who then went on to lose by thirty points to the legendary 1990 UNLV Runnin' Rebels team that consisted of Larry Johnson, Stacey Augmon, Greg Anthony, George Ackles, and Anderson Hunt, coached by Jerry Tarkanian, who was later forced to resign from coaching UNLV when a picture of three of his players in a hot tub with Richard "The Fixer" Perry—his name was "The Fixer," there's not much else to know there—ended up on the front page of the Las Vegas Review Journal. Maybe this drew itself deep within George; maybe Tate George held onto the idea that criminals come out on top in the end for just a little too long.

Or maybe he thought he could run a Ponzi Scheme and get away with it, and he didn't. Either way, he's pleading not guilty, and is currently out on bail living at his mother's house in Newark.

Ex-NBA Player Charged in $2M Ponzi Scheme [Bloomberg]

fkamer@observer.com | @weareyourfek

Meet James Davis Risher and Daniel Joseph Sebastian of Florida. How they even amassed $22M out of Floridian teachers and retirees is pretty impressive in its own right, but even more so is the return they told investors they'd be getting them, and how they told their investors they were going about doing it: 14 percent to 124 percent, "by investing in public equity securities through a broker-dealer."

This is akin to Peter Dinklage taking 124:1 bets on him dunking over Yao Ming.

With the odds in his favor.

And then going and spending the money made with the bets on "jewelry, gifts, and property in North Carolina and Florida. Risher and Sebastian also paid themselves millions of dollars in phony management and performance fees."

A good sign your Ponzi Scheme Manager is an idiot? They're investing in real estate in Florida and North Carolina. A good way to tell your "Performance Fund Manager" is a Ponzi Scheme Manager? They are a former insurance salesman and a guy with a criminal record of mail fraud, money laundering, and securities fraud, who spent 11 of the last 21 years in jail instead of "growing a thriving retail brokerage business," which one of them said they did.

If you're thinking about pulling any empathy for anybody stupid enough to invest in these guys, remember: the people they frauded are the same people who are too frail to punch holes in their ballots. The clients' age ranges were generally between 65 and 90.

90. Which could explain how anybody could see this scheme without an ounce of skepticism: senility. Via the SEC:

Sebastian verbally told investors during telephone calls and meetings that they would never lose their principal investments in the fund. He even provided some investors with written guarantees from a company he owned that would reimburse any loss. In reality, Sebastian knew that the company had no assets to reimburse investors for losses, making his guarantee meaningless.

The best, of course, is how they named their funds:

• Safe Harbor Private Equity Fund
• Managed Capital Fund
• Preservation of Principal Fund

They never made it to the next logical progression in the naming of their funds, "Your Money Is Awesome And We Will Make It Awesomer Capital Management." And you know when the list of agencies the SEC thanks includes the U.S. Postal Inspector Service, it becomes clear that Barney Fife could've untangled the uncomplicated web of stupidity they wove themselves. For the record, unemployment peaked at 12% over the last 20 years in Florida, where the average teacher salary ranks 22nd in the country by state.

Hopefully they will go to jail for a very long time.

fkamer@observer.com | @weareyourfek

Joseph Perla outlines a pretty straightforward argument: Facebook's ads are ineffective, and so the company constantly has to find new rubes to bilk people into buying display ads on the site. Eventually, though, the jig will be up after everyone has wizened up to Facebook's awful ads, and then the company will no longer have any revenue, and people will really regret having been so eager to buy stock in the company.

It's a fun argument, like all "X is a Ponzi scheme" arguments are, but it rests on the assumption that Facebook can't find a way to make ads more effective and that Facebook has to make money on advertising. Both of those are debatable assumptions, but we're still pretty tickled by the image of Mark Zuckerberg and Bernie Madoff trading stories in the big house.

mtaylor [at] observer.com | @mbrookstaylor

Authorities accuse the 62-year-old ex-Madoff assistant of defrauding investors and helping keep Mr. Madoff's Ponzi scheme in motion. Says The Journal:

The Journal reports:

Ms. Bongiorno, who has been on home incarceration and subject to electronic monitoring in Florida, has had difficulty meeting the conditions of a $5 million bail set last month. Prosecutors also have raised concerns in recent weeks about her access to $2.4 million in "liquid assets," which they want to seize.

mtaylor [at] observer.com | @mbrookstaylor

The investor who's fallen into Mr. Picard's crosshairs, Jeffry Picower, was a talented money manager, generating $2 billion in returns while banking with Goldman Sachs. So it's a little odd, contends Mr. Picard, that Mr. Picower didn't seem to smell anything fishy about the Madoff fund. Says The Times:

The complaint filed against him last year by the Madoff bankruptcy trustee, Irving H. Picard, asserted that the profits on his investments with Mr. Madoff were equally stellar — but totally bogus. The complaint, which contended that a sophisticated investor like Mr. Picower should have recognized that Mr. Madoff was operating a fraud, sought the return of $7.2 billion — the amount by which Mr. Picower’s withdrawals from his Madoff accounts exceeded the funds he paid in over the life of the fraud.

It certainly does take a very clever investor to buy into a Ponzi scheme and then get out before the whole fraud comes crashing down.

Check out The Most Staggering Wall Street Surprises of 2010.>>

mtaylor [at] observer.com | @mbrookstaylor

After Mr. Picard went after HSBC, JPMorgan Chase and other deep-pocketed targets, investors have ramped up their efforts to get a shot at big winnings in bankruptcy court, The Times reports. They're offering former Madoff investors less money than the eventual potential award. The upside is that the funds will pay now, whereas the courts could take years to offer restitution, and the eventual outcome is uncertain.

One Madoff investor, who declined to be identified to protect his privacy, reported receiving letters from no fewer than six companies in the last two months. He provided copies of those letters, which offered to pay 20 to 34.5 cents for every dollar in claims. The firms making those bids included Contrarian Capital Management, a large Greenwich, Conn., hedge fund; Fulcrum Credit Partners of Austin, Tex.; and the Hain Capital Group of Rutherford, N.J.

One former Madoff investor told The Times that the best offer he's received is 30 cents on the dollar. A money manager from Third Avenue Management said that his firm had weighed the possibility of investing in Madoff payouts, but decided against it because the whole thing was too scummy. Apparently that's not the case for Contrarian, Fulcrum and Hain.

mtaylor [at] observer.com | @mbrookstaylor

Officers were called to 158 Mercer Street to respond to a report that Mark Madoff was hanging in his apartment.

He was found at 7:30 a.m. by his father-in-law, said police sources.

With him in the apartment was his 2-year-old child, said sources.

The Post also reports that Mark had been trading emails with his wife Stephanie, who sent a family member to check on her husband. Mark and his brother Andrew have denied knowledge of their father's fraud. The Wall Street Journal, in a large package marking the anniversary of the Madoff revelation, says that Mark had tried unsuccessfully to find work as a trader and then began to work on developing iPad applications. Stephanie changed her name to Morgan following the arrest of her father-in-law, and now lives in Florida. She said her family had received threats as a result of the scandal. Legal restrictions and personal choice had kept the Madoff brothers out of contact with their father and their mother, Ruth, The Journal reports.

Mark and Andrew were facing legal action from Irving Picard, the trustee in charge of recouping Madoff funds and face a separate suit from former Madoff employees. Mark had been lately using an email address containing neither his first nor last names, according to The Journal.

The brothers' attorney, Martin Flumenbaum, has issued the following statement:

Mark Madoff took his own life today. This is a terrible and unnecessary tragedy. Mark was an innocent victim of his father’s monstrous crime who succumbed to two years of unrelenting pressure from false accusations and innuendo. We are all deeply saddened by this shocking turn of events.

mtaylor [at] observer.com | @mbrookstaylor