Something occurred to me almost immediately when the story of Bernie Madoff’s shipping watches broke: $1M seems an awfully low figure for 16 watches that a billionaire with a penchant for watch collecting might own. Very low, in fact, when considering that the $1M estimate also included other valuables like a diamond bracelet.
The shipment drew the attention of the prosecution as it was in violation of Madoff’s bail agreement. Not only could transferring valuables deprive investors from the ability to recoup some of their losses from the sale of the watches and jewelry, but moving assets away could also potentially facilitate Madoff’s fleeing prosecution. Especially when Madoff had $173M in checks against the fund’s remaining assets ready send to friends and relatives on the day he was arrested.
Madoff’s attorneys contended that the packages contained sentimental personal items and that Madoff hadn’t realized that the prohibition against transferring assets applied to personal property. Perversely odd as it might seem that $1M worth of jewelry might be considered mere trinkets of little consequence, the judge went along with and allowed Madoff to remain free under house arrest but with an order this time to provide a listing of his valuables and allow a private security firm to conduct periodic inventories.
An experienced watch collector has to wonder though if that $1M figure doesn’t seem a little low. After all, Madoff had access to billions of dollars and was even recently described in the New York Times as a man who was “an avid collector of vintage watches and took time each morning to match his wedding ring — he owned at least two — to the platinum or gold watch band he was wearing that day.” If only all of us shared such troubles in our morning routines…
But in poring through the news articles and wire services though I could never find any specific, itemized listing of the watches in question. The best I could find was things like “a gold watch, a diamond Cartier watch, a diamond Tiffany watch” and figures citing the quantity as 16 watches. And what sticks out about these names is that they’re the sort that are easily recognized by those not as familiar with watches: recognizable designer brand names and watches with obviously valuable diamond decoration. What about the rest of them? Might there be some “sleepers” that could well be at least as valuable?
Let’s crunch some numbers for a moment. According to the news stories, total value of the shipments was estimated at $1 million. Let’s assume that some of the other items mentioned in the shipments (mittens, jade necklace etc.) were valueless or close to it. The diamond bracelet of course can be difficult to value without knowing the size and quality of stones, but let’s just hypothetically estimate it at a very conservative (for our purposes) $100K.
That leaves only (!) $900,000 for 16 watches, from a billionaire watch nut who could have indulged his every opulent watch collecting whim. That’s leaves about $56,250 per watch, and at the three least three of them that were described likely exceed that average considerably. That $900,000 starts disappearing in a hurry and it begins to seem that the estimate may have been far, far too low.
No source or authority was cited for the $1M estimate by any of the articles I sifted through. The prosecution only described the source valuation in the passive voice, seemingly intentionally vague about its origins: “The government has been informed that the value of those items could exceed $1 million.” In fact, it would almost seem that the estimation may have simply come from the friend/family recipients themselves, as it’s been speculated that fearful of prosecution, they may have been the ones to have reported the shipments to the authorities in the first place. The accuracy of the $1m estimate then depends entirely on their knowledge and begins to seem increasingly prone to error.
So if we don’t know who made the valuation or if even if they know anything about watches, should we trust the estimate? Especially if the only watches specifically listed were those that even someone not knowledgeable about watches would easily recognize?
What if the remainder contained things like a Rolex COMEX Sea-Dweller, or one of the rarer variants of the Rolex Daytona chronograph with the “Paul Newman” exotic dials? Though watches like are steel watches originally sold at essentially retail pricing that could seem unremarkable to someone who didn’t recognize what they were looking at, but watches like these have sold at auction for hundreds of thousands of dollars recently. And then of course there are things like watches made of platinum and white gold, which outwardly might seem like less remarkable stainless steel watches but can sell for hundreds of thousands of dollars too. There are plenty of “sleeper” watches like these, and indeed sometimes that’s part of the fun in collecting and owning them.
Wonder if any of Madoff’s watches were sleepers?
If anyone should happen to come across more detail, I’d be grateful if you could let me know.