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Local Madoff Investor Loses Tens of Millions
Reported by: Jeff Powers
Email: jeff.powers@sandiego6.com
Last Update: 3/13 1:16 am
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Bernard Madoff
"I was at the very end of this guy's reign. He was so cool and so smooth, it defies belief," says Ed Calesa from his Del Mar home.
12 years ago, Ed Calesa began investing with Bernie Madoff. A shrewd and very successful businessman, Calesa was cautious with his money. "I did not buy into this 'it's too good to be true' if you're making an 8 or 9 or 10 or 11% return. That was lower than I was making with other managers," says Calesa.
Madoff would ensure that he would return between 10 and 11 percent to his investors every year. A concept that set him well apart from most money managers.
"He wasn't the guy that gave you the big return. He was the guy that gave you the safe return. If a money manager was doing well -- up to 40-percent -- Bernie would be up 10 or 11 percent. But if a money manager was losing money, Bernie would be up 10 or 11 percent."
But Calesa had questions about Madoff's investments and wanted to meet the man. Madoff agreed and the two met in New York last November.
"He answered every question that I had, beyond satisfaction. To the point that I left, called friends of mine, said we should all put more money with this guy. This was a month before he got arrested," says Calesa.
Madoff was arrested in December. The next day, Calesa and four friends had drinks at a local restaurant.
"There were five of us and at that table. Amongst the five people. -- I was one of the five -- we had collectively lost over $100 million. It was not an upbeat day."
But Calesa's anger isn't channeled at Bernie Madoff.
"I'll tell you the strongest feeling -- I have having spent a lot of time thinking and feeling my way through this situation -- and that is that the Securities and Exchange Commission belongs in prison."
Calesa says the SEC was given all the information they needed to stop Madoff's ponzi scheme and didn't act. He says the SEC wasn't asleep at the wheel, they were complicit in the greatest investment fraud scheme in history.
"The lesson I learned is no confidence in government, no confidence in oversight."
Calesa says he lost tens of millions of dollars in the ponzi scheme. But one of the things no one is talking about is the millions investors lost to the IRS. Every year that Calesa was a Madoff investor, he had to file a K-1 form with Uncle Sam and pay taxes on what is now money he never earned. So, say he made two million dollars a year from the Madoff fund, every year for 12 years he would pay about $800,000 in taxes.
According to Calesa, current IRS laws allow you to go back three years and re-submit your taxes. But for Ed, it's the other 7 or 8 years that's painful. There is a bill being introduced to congress right now that would change the number of years one could re-file with the IRS from 3 to 10 years.
The bill has been written specifically because of the Madoff scandal and the many investors that paid taxes to the IRS on money they never earned.
It may be some time before all the layers of this scandal are peeled away.
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