Madoff Gives Details of Fraud

With Bernard Madoff sentenced and sitting in a jail cell, the mastermind of a Ponzi scheme on July 28, 2009 finally opened up about how he defrauded so many individuals. A lawyer for victims of Bernard Madoff’s Ponzi scheme says the financier told him during a 4 1/2-hour prison interview plenty of details about the fraud, including how it took place and how securities regulators missed catching him.

The victims’ lawyer said he planned to use what he learned from Madoff to add defendants to a lawsuit to be filed in Manhattan this week on behalf of investors harmed by the multibillion-dollar scam.

Madoff, 71, pleaded guilty in March and was sentenced to 150 years in prison. He was taken two weeks ago to the Butner Federal Correctional Complex, about 45 miles northwest of Raleigh, North Carolina, where the interview took place.

Authorities say Madoff cost thousands of investors over several decades at least $13 billion as he told them the money had grown to about $65 billion. By the time he was arrested in December, only several hundred million dollars remained in the accounts of his private investment business.

Madoff and his wife have relinquished more than $100 million in assets, and authorities have identified more than $1 billion in assets that can be distributed to victims, many of them elderly and living in the New York area and Florida.

A lawyer for Madoff was in the room as the lawyers asked questions designed to learn if there were new avenues to pursue money to compensate his victims.

The victims’ lawyer said Madoff continually apologized and said he did not believe there was money that was unaccounted for or had not been discovered by investigators. Still, the investors’ lawyer said he believed there was money that hadn’t been located, including overseas.

“But it might be in many different venues, and by that I mean I don’t think that Bernie knows where all the money is because money was paid out to feeders,” he said.

The victims’ lawyer said he expected to add to his lawsuit some defendants who worked for those feeder funds that sent clients to Madoff. He said his interview left him thinking that many people were negligent in the Madoff fraud, including the government’s watchdog agencies.

The SEC has said no evidence of wrongdoing by its staff has surfaced in connection with its failure to investigate credible claims about Madoff. But the top cop at the SEC resigned after receiving an angry dressing-down before Congress over the agency’s failure to detect the massive fraud scheme.

SEC Chairman Mary Schapiro has said the agency has been revamping itself, strengthening enforcement efforts and taking initiatives to protect investors following the Madoff scandal. The agency has undergone fundamental changes in recent months “that will reinforce our focus on investor protection and market integrity,” Schapiro told the House Financial Services subcommittee.

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