Breaking Down Bernie Madoff – Part III

Curiousity got the best of me. So I started doing some searching on the electronic trading platform Bernie built. They called it Primex. Its an electronic auction system for securities. According to media reports, it was the “brainchild of Bernie and Peter Madoff”

So I searched some more and saw this Feb 16th , 2000 press release: The basics of which are “SST’s B4B FIX combines robust object-oriented architecture with push-based TCP/IP messaging to provide an extremely fast and stable platform for both FIX connectivity and message processing. B4B FIX can be combined with SST’s B4B OMS(TM) in a seamlessly integrated order management system that generically integrates with B4B FIX to facilitate the straight through electronic trading process and improve the operational and connectivity efficiencies of its users.

“We are excited about satisfying Primex Trading’s strict requirements for high performance and reliability,” said Larry Gusto, President and CEO of Silicon Summit Technologies, Inc. “B4B FIX’s reputation for best performance and high-quality electronic securities trading software is the key value proposition that we offer. With B4B FIX pre-installed on the server located at broker/dealers’ premises, broker/dealers can take full advantage of the B4B FIX functionality for accessing the PRIMEX AUCTION SYSTEM.”

Some I’m thinking I may have found the company that wrote the software Madoff used on his lonely IBM Computer. The obvious next step is to find out more about Silicon Summit. So I did a search. It’s website is gone, but there are remnants of an old site with a company history that ends a week after the Primex deal. Maybe they got acquired, but I didnt find it. Of course in these situations, you use what limited information you have to fit the last hypothesis you made, which in my last post was that it was possible that the software company that wrote the software Madoff used for his fraud was no longer working on the code. Which would explain why he continued to use an old computer.

But wait, there’s more. So I did a search on the address of the company and boom, up comes this nugget:

TO: Silicon Summit Technologies, Inc.

(Formerly Larry Gusto Consulting Company, Inc.), Inc., Inc.
950 Tower Lane, Suite 1950
Foster City, CA 94404
Larry Gusto
dba Silicon Summit Technologies
1338 Orange Avenue
San Carlos, CA 94070


(For violations of section 25401 of the Corporations Code)

The California Corporations Commissioner finds that:

1. Larry Gusto formed several business entities, including the following:
Larry Gusto Consulting Company, Inc., a California corporation, incorporated on August
2, 1994, changed its name to Silicon Summit Technologies, Inc. (”SSTI”) on August 29,
1997. On June 21, 2000, Gusto also filed a fictitious business name for “Silicon Summit
Technologies.” On December 7, 2000, Larry Gusto incorporated, Inc.,
a Delaware corporation and subsequently changed its name to, Inc. on
November 29, 2000. According to public records, on March 22, 2001, Larry Gusto
merged SSTI into, Inc. On December 23, 2002, the California Secretary of
State suspended, Inc. All the foregoing entities were formed and controlled
by Larry Gusto and located primarily at 950 Tower Lane, Suite 1950, Foster City,

2. At all relevant times, Larry Gusto acted as the principal, president, chief
executive officer (CEO) and agent for the above-named entities.

Larry Gusto represented to the public that SSTI “is the leading provider of
e-finance products and services” and they “also provide to the financial services
industry everything from project management and business analysis to custom software
development and systems integration.”

4. Beginning in approximately 2000 and continuing thereafter, Larry Gusto
(”Gusto”) and/or others, acting in concert or participation with him, offered or sold
securities in the form of shares of common stock to the public and made, or caused to
be made, misrepresentations and omissions of material facts in connection with the
offers or sales of the securities to the public.

a. The misrepresentations of material facts include:

(1) SSTI was a leading provider of Financial Information Exchange
(FIX) messaging systems for electronic securities trading;
(2) SSTI had the software required for the FIX messaging system; and
(3) SSTI was in need of bridge financing and would be receiving
funding from Reuters.

b. The omissions of material facts include:

(1) SSTI had a long-standing legal dispute with programmers over the
FIX software and a court would order an auction of the software;
(2) SSTI had a civil judgment against it relating to disputes over FIX
(3) Inc. was a suspended corporation, not in good standing
with the California Secretary of State’s Office or the California
Franchise Tax Board;
(4) Gusto had multiple tax liens filed against him; and
(5) Gusto and his companies were defendants in several civil lawsuits.



The California Corporations Commissioner is of the opinion that Silicon Summit
Technologies, Inc., Larry Gusto Consulting Company, Inc.,, Inc.,, Inc., Silicon Summit Technologies and/or Larry Gusto offered or sold
the securities in this State by means of written or oral communications, which included
untrue statements of material fact or omitted to state material facts necessary in order to
make the statements made, in the light of the circumstances under which they were
made, not misleading, in violation of section 25401 of the Corporate Securities Law of 1968.

Pursuant to section 25532 of the Corporate Securities Law of 1968, Silicon Summit
Technologies, Inc., Larry Gusto Consulting Company, Inc.,, Inc.,, Inc., Silicon Summit Technologies and Larry Gusto are hereby ordered to
desist and refrain from offering or selling or buying or offering to buy any security in the
State of California by means of any written or oral communication which includes an untrue
statement of a material fact or omits to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made, not

This Order is necessary, in the public interest, for the protection of investors and consistent with the purposes, policies, and provisions of the Corporate Securities Law of 1968.

Dated: June 25, 2003
Los Angeles, California
California Corporations Commissioner
Supervising Counsel
Enforcement and Legal Services

Let me clear. This could all be a BIG BAG OF NOTHING. In fact, Im sure that it is. But you have to admit, its sometimes a long strange search trip we undertake when we are curious.

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About Mark Cuban 144 Articles

Mark Cuban is the owner of the Dallas Mavericks basketball team, billionaire internet entrepreneur, and chairman and owner of the high definition television channel HDNet.

Mark made business history when at the age of 32 he sold his computer consulting firm MicroSolutions to corporate giant CompuServe and became fabulously wealthy overnight. Cuban later did the same with yet another enterprise, the live streaming Internet operation, and sold it to Yahoo! for a record breaking price that pushed his own net worth into the billions.

He publishes his own blog at Blog Maverick where he speaks freely about basketball, technology, business, and the Internet.

Visit: Blog Maverick

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