Cohmad Securities

Cohmad Securities, whose name combines “Cohn” and “Madoff,” founded in 1985 by Bernard Madoff and Maurice Cohn, Madoff’s friend and former neighbor.[1] It is in the Business Services, N.E.C. industry in NEW YORK, NY. and has approximately 10 to 20 employees and annual sales of $1,000,000 to $4,999,999.


Business relations

Maurice "Sonny" Cohn owned 48% of Cohmad, and his daughter Marcia, who served as president and chief compliance officer owned 25%. Madoff owned 15%. Mr. Madoff's brother, Peter owned 9%, and Mr. Cohn's brother owned 1%, and another unnamed Cohmad employee owned 1%. [2] Cohmad received $67 million in generated fees from Madoff investments, from 2000-2008. [3] The brokerage firm lists its address as Madoff's firm's address in New York City. Cohmad employs Robert Jaffe, as vice-president.[4] Jaffe is married to Ellen Shapiro, daughter of Boston philanthropist Carl J. Shapiro, the founder and former chairman of apparel company Kay Windsor Inc. and an early investor and close friend of Madoff. Jaffe reportedly convinced the elder Shapiro to invest $250 million with Madoff just 10 days before Madoff's arrest.[5]

Cohmad had fewer than 650 client accounts, and made 99.7% of its sales from brokerage services to Madoff's larger broker-dealer. In its audited financial statements for the 12 months ending June 30, 2008, Cohmad said revenue from Madoff Securities totaled $3,736,829. Its total sales for the same period were $3,748,397.[4][6]

Bernard Madoff agents

Jaffe, a philanthropist, "worked the Palm Beach, Florida circuit", and attracted many Palm Beach Country Club members as investors."[7] Jaffe brought in 150 accounts and more than $1 billion to Madoff. Madoff paid Jaffe directly through accounts he kept with Madoff at much higher returns than earned by other investors. Between 1996 and 2008, Jaffe withdrew at least $150 million, and the SEC claims he was aware Madoff was engaged in fictitious trading.[2] Jaffe has said he received a commission of 1% to 2% from an investor's first profit, and he paid commissions to financial advisers who steered cash to Madoff's fund.[8][9]

Richard Spring, of Boca Raton, Florida, received payments from Cohmad for many years in exchange for bringing investors and investment ideas to Madoff.

Alvin J. "Sonny" Delaire Jr., whose late father, Alvin J. Delaire was a partner with Sonny Cohn in a previous venture, also recruited clients for Madoff's advisory business.

Civil lawsuits, investigations and revocation

On January 14, 2009, William Galvin, Secretary of State of the Commonwealth of Massachusetts, who is in charge of the state's securities issues, filed suit against Jaffe, a Cohmad broker for Madoff, who promoted Madoff's funds to wealthy investors in Massachusetts and Florida.[10] On February 4, compelled to testify, Jaffe invoked his Fifth Amendment right. Marcia Cohn, Maurice Cohn and Alvin Delaire, Jr. failed to appear. On February 11, 2009, Galvin filed a complaint[11] seeking to revoke the Massachusetts license of Cohmad Securities Corp., an accounting of all Massachusetts investors Cohmad referred to Madoff’s company, all the fees it earned doing so (more than $67 million), and a fine. It named Ruth Madoff as having withdrawn $10 million on December 10, 2008 and $5.5 million on November 25, 2008 from her brokerage account. It also cited $526,000 in referral fees paid from Madoff Investments, to Cohmad, to Vienna Bank Medici majority owner, Sonja Kohn, which she subsequently denied.[12][13] On May 28, 2009, Bank Medici lost its Austrian banking license. Kohn and the Bank are under investigation.[14]

On May 8, 2009, the Commonwealth of Massachusetts found the firm to be in “default” for not assisting regulators. Cohmad’s securities registration has been revoked, and they must provide an accounting of all fees the company or its agents earned for referring Massachusetts investors to Mr. Madoff's firm as well as, pay a $100,000 fine for failing to cooperate with the state securities investigation.[15]

On March 15, 2009, Federal prosecutors filed a notice in federal court declaring its intent to seek the forfeiture of the Madoffs' interests in Cohmad Securities.[16]

On June 22, 2009, Madoff Trustee, Irving Picard filed a claim against Cohmad, founder Maurice “Sonny” Cohn, daughter Marcia Cohn, Robert Jaffe, Richard Spring, Alvin J. Delaire, Jr., Stanley Mervin Berman, Jonathan Greenberg, Cyril Jalon, Morton Kurzrok, and Rosalie Buccellato, among more than two dozen individuals and trusts in U.S. Bankruptcy Court in New York.[17] The lawsuit claims that up to 90 percent of Cohmad’s income came from referring clients and that the firm had a “symbiotic” relationship with Madoff, having earned hundreds of millions of dollars from the fraud. The lawsuit seeks more than $100 million paid to Cohmad six years prior to Madoff’s firm declaring bankruptcy, and more than $105 million in profits Cohmad employees and their families withdrew from the investment accounts they held with Madoff. [1][2]

On June 22, 2009, the U.S. Securities and Exchange Commission (SEC) also filed civil fraud charges [18] against co-founder Maurice "Sonny" Cohn, president Marcia Cohn, and Robert Jaffe. The lawsuit alleges the company was Madoff's "in-house marketing arm" and critical to Madoff's scam. Cohmad representatives were paid for funds they brought into the firm but not for any putative increase in the investments' value. Withdrawals were treated as a loss, which "suggested that profits generated by Madoff were fictitious", although Madoff changed the arrangement in 2002 for Maurice Cohn, and began paying him $2 million a year.[2]

Jaffe has filed requests with the Courts to dismiss the SEC and the Picard cases. The cases are Picard v. Cohmad Securities Corp., 09-AP- 1305, U.S. Bankruptcy Court, Southern District of New York (Manhattan), and SEC v. Cohmad, 09-cv-5680, U.S. District Court, Southern District of New York.).[19]


  1. ^ a b
  2. ^ a b c d Scannell, Kara; Frank, Robert (June 23, 2009). "SEC Files Fraud Charges Against Cohmad, Co-Founder in Madoff Case". The Wall Street Journal. 
  3. ^ Lauricella, Tom (April 11, 2009). "Feeder Fees Topped $790 Million". The Wall Street Journal. 
  4. ^ a b "". [dead link]
  5. ^ ""Jaffe Tarnished as Feds Investigate Madoff", Palm Beach Post (December 20, 2008)". 
  6. ^ "Cohmad Securities at". 
  7. ^ Frank, Robert; Peter Lattman, Dionne Searcey and Aaron Lucucchetti (December 13, 2008). "Fund Fraud Hits Big Names; Madoff's Clients Included Mets Owner, GMAC Chairman, Country-Club Recruits". Wall Street Journal. Retrieved December 13, 2008. 
  8. ^ Seib, Christine (January 21, 2009). "Madoff associate skips court hearing - Times Online". London: Retrieved 2009-04-26. 
  9. ^ "Cohmad Securities, Robert Jaffe face tough questions about Madoff ties | - See the news". Retrieved 2009-04-26. 
  10. ^ ""William Galvin Sues Salesman Robert Jaffe -- Demands Testimony", Boston Herald (January 15, 2009)". 
  11. ^
  12. ^ Groendahl, Boris (February 12, 2009). "Medici's Kohn says did not get Madoff payments". Reuters. 
  13. ^ "Galvin seeks to shut down firm with Madoff ties". The Boston Globe. February 11, 2009. 
  14. ^ Hansen, Flemming E. (May 28, 2009). "Madoff-Hit Bank Medici Loses License". The Wall Street Journal. 
  15. ^ Frank, Robert (May 9, 2009). "Madoff-Tied Brokerage Loses Its Registration". The Wall Street Journal. 
  16. ^ "Government Files Notice Seeking Madoff Assets". The New York Times. March 16, 2009. Retrieved April 30, 2010. 
  17. ^
  18. ^ The Wall Street Journal. 
  19. ^

External links

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