What's In a Name, You Ask. It Depends, I Say.

Bloomberg reported that Bernie Madoff’s daughter-in law, Stephanie, has filed a formal request to have her surname, and those of his two children, Audrey and Nicholas, legally changed to Morgan.

My compliments to Stephanie, not so much for the move itself but for the choice of the name. In preserving the family’s ties to finance, however indirectly, and keeping the children’s options open in the future, the name Morgan trumps Rockefeller or Carnegie any time.

But no matter how smart Stephanie is, she is the second best in the Madoff orbit as long as one Sonja Kohn is around. This latter woman even fooled me, and let me tell you, not as a boast, but as a tribute to her skills, that I am not easily fooled in matters of finance.

Yet, I was fooled, which is to say, completely, totally misled, upon reading that among Madoff’s “investors” were three Bank Medici funds.

Now, gentle reader, what would you have thought upon reading the same news?

If you knew anything about economics, finance, banking or European history, you would recognize the Medici name at once. It is synonymous with the rise of institutional banking

So, you would have thought exactly what I thought. Knowing that no institutional investors had a penny in Madoff funds – because everyone knew it was a sham operation – I said to myself that even the Medicis could not resist the temptation of high return in capital markets, however dubious the source of return.

That’s what you would have thought too and, if you read the story, you no doubt did.

It turns out the Medici Bank is the brain child of Ms. Kohn. In a nutshell, she returned from New York to Austria, and learned, to her delight, no doubt, that the Medici name was not protected. She registered it and started the “Medici Bank” which, after it had substantially grown, had a total of 16 employees. And, as to leave absolutely no doubts about her intentions, she commissioned a coat-of-arms for the new enterprise. That's how a Medici Bank with a coat of arms became a feeder to Madoff funds.

According to The New York Times, Sonja got money from Israel, Ukraine and the Russian “oligarchs”. In June 2008, she told The Voice of Russia “our history is a very conservative one”.

Our history.

OUR HISTORY!

You really have to read the whole article for yourself. One day, if the items on my do-list are reduced to a manageable number, I will return to Sonja Kohn and her world in detail. It is a fascinating story.

For now, here is a follow-up:

Prosecutors are looking into whether Mr. Madoff paid more than $40 million to Mrs. [Sonja] Kohn in exchange for turning three Bank Medici funds into feeder funds for his business … Mrs. Kohn received about … $11.5 million for research reports for which prosecutors were unable to find receipts … A spokeswoman for the former Bank Medici said Mrs. Kohn was “shocked” by the accusation that she received personal payments from Madoff and reject such assertions “vehemently”. Mrs. Kohn has not been charged with wrongdoing but Bank Medici surrendered its banking license in March.

She was shocked at the allegations. SHOCKED.

But it gets better.

Mrs. Kohn is now trying to rebuild her reputation in the Austrian banking industry. She renamed the bank 20.20 Medici, using the term with which optometrists describe perfect vision. Keeping the Medici name is a sign that Mrs. Kohn is not trying to “rid herself of what happened in the past,” [a lawyer for the bank] said. At the new venture, Mrs. Kohn plans to offer advisory and research services.

I do not know what has become of late of 20.20 Medici, but the name has stuck in the back of my mind. Perhaps because it sort of rhymes – in English, anyway. Perhaps the juxtaposition of a modern medical term with the name Medici is so stupid, so vulgar, so offensive – so Sonja Kohn – that it lodges itself in the subconscious, like the memory of a terrible accident.

Who knows, next time I need some objective, independent financial advice – say, about the value of some credit default swaps – I might give 20.20 Medici a ring.


P.S. (Mar 4, '10) - It was brought to my attention that the link to the Bloomberg story in the opening sentence is no longer valid; Bloomberg has taken out the story.

No matter. Here is a link to the aolnews. You want more, google "madoff name change morgan".