SEC Blew Chance to Expose Madoff’s Fraud in 2004

An investigator at the Securities and Exchange Commission warned superiors as far back as 2004 about irregularities at Bernard L. Madoff’s financial management firm, but she was told to focus on an unrelated matter, according to agency documents and sources familiar with the investigation.

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Madoff Trustee to Pay Out $100 Million by End of May

The trustee liquidating Bernard L. Madoff Investment Securities LLC said he has committed to pay $61 million to 125 claimants, will seek to approve $100 million in claims by May 25 and expects “significant” settlements of suits for the return of fictitious profits in the next few weeks.

Trustee Irving Picard said today that 8,848 claims have been filed in connection with 3,565 customer accounts at the defunct New York money management firm. Picard said he has recovered as much as $1 billion of Madoff-related assets for the Securities Investor Protection Corp. and that he has filed lawsuits to recover another $10.1 billion.

Every customer statement issued by Madoff’s firm was a “fiction,” Picard said today on a conference call. “Persons who are subject to these recovery efforts actually received money stolen from others. Congress specifically requires that these funds must be returned so that all customers share equally.”

Madoff, 71, pleaded guilty earlier this year to running the biggest Ponzi scheme in U.S. history and faces as much as 150 years in prison when he is sentenced June 29 in Manhattan federal court. Madoff, who Picard said hasn’t cooperated in the recovery of assets, is jailed in a federal prison in Manhattan.

Earlier this week, Picard sued lawyer and philanthropist Jeffry M. Picower and hedge fund Harley International (Cayman) Ltd. seeking the return of more than $7 billion.

Picower Sued

Picard sued Picower, individually and as trustee for the Picower Foundation, and several other related defendants seeking the return of $6.7 billion. The trustee said in the complaint filed May 12 in U.S. Bankruptcy Court in Manhattan that the Florida-based foundation got money from a $65 billion Ponzi scheme fraud at Madoff’s firm.

“At least $5 billion of this amount was fictitious profit from the Ponzi scheme,” according to the complaint. “In other words, defendants have received, at a minimum, more than five billion dollars of other people’s money.”

A total of about $12 billion was withdrawn from Madoff’s firm in 2008, including about $6 billion in the 90 days before the Madoff bankruptcy, said David Sheehan, a lawyer representing Picard. That money is a potential source for Madoff victims to recover some of their investments.

Madoff-Related Losses

Picard said that the Picower Foundation, which said in December it would close because of its Madoff-related losses, benefited from the Ponzi scheme for more than 20 years.

“In several cases, defendants’ purported annual rates of return were more than 100 percent, with some annual returns as high as 500 percent or even 950 percent per year,” according to the complaint.

The trustee also filed court papers demanding the return of $1.07 billion from Harley International for 14 transfers in the six years before the bankruptcy of Madoff’s firm. Six of the transfers were made within 90 days of the bankruptcy filing and total $425 million, Picard said.

Harley International, a hedge fund run by Cayman Island- based Euro-Dutch Management Ltd., withdrew the $425 million from “which it knew or should have known was non-existent principal and other investors’ money,” according to the bankruptcy court filing. Harley should have known “that Madoff was engaged in fraud,” according to the complaint.

At least 148 “purported trades” were listed on Harley International account statements from 1998 to 2008, according to the complaint.

The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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Madoff Trustee Starts ‘Hardship Program’ for Victims

The trustee charged with recovering assets for investors defrauded by Bernard L. Madoff has started a “hardship program” for individual victims to accelerate payments from the Securities Investor Protection Corporation.

The program, announced on Friday by the trustee, Irving H. Picard, requires individual victims to file an additional claim by July 2 to be eligible for an accelerated payment of up to $500,000 from S.I.P.C. Feeder funds, partnerships and other business entities are not eligible for the program, the trustee said.

In order to qualify, the trustee plans to evaluate each application based on various indicators of hardship. They include an inability to pay for necessary living expenses like food, housing, transportation and medical expenses; the necessity to return to work at the age of 65 or older; or declaring personal bankruptcy.

Hundreds of victims of Mr. Madoff’s vast global Ponzi scheme, many who are retirees, have lost their entire life savings and have been forced to sell their homes and move in with relatives. Mr. Picard is liquidating Mr. Madoff’s former firm and collecting assets, which will eventually be divided up among the victims of the fraud.

S.I.P.C., which provides insurance to customers of failed brokerage firms, can reimburse Madoff victims up to $500,000 each depending on how much they ultimately lost from the fraud.

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The Bernie Madoff Scandal: Further Asset Investigation

Her husband is the one accused of the biggest fraud in Wall Street history, but Ruth Madoff’s name also keeps coming up in investigators’ pursuit of assets linked to Bernard Madoff.

From mailing more than $1 million worth of jewelry and watches in violation of a court order, to withdrawing $15.5 million before his December 11 arrest and an attempt to separate $70 million in her assets from his purported fraud, Ruth Madoff has added intrigue to the case.

Married to the accused swindler for nearly 50 years, Ruth Madoff played no formal role at her husband’s company and has not been accused of any wrongdoing, but the revelations have raised eyebrows among those following the Madoff case.
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Madoff trustee: No securities bought for customers in 13 years

The trustee liquidating Bernard Madoff’s investment firm says his investigation has found no evidence that any securities were purchased on behalf of customers in at least 13 years.

Speaking at a meeting Friday morning of Madoff’s customers, the trustee, Irving Picard, said the firm’s customers can recover up to the $500,000 they’re entitled to under the Securities Investor Protection Act.
Customers who’ve lost more than that amount can also share in assets recovered by the trustee.

Picard was appointed under the Securities Investor Protection Act, which governs failed brokerages. He is liquidating Madoff’s firm, Bernard L. Madoff Investment Securities LLC. Picard said he’s received claims from 2,350 customers so far.

Madoff was arrested in December. He has allegedly admitted to running a massive Ponzi scheme that cost his investors as much as $50 billion.

Picard said he and his staff are sorting through 7,000 boxes found at a Queens warehouse that sheltered Madoff’s records and files at the firm’s offices “under the watchful eye of the FBI.”

Friday’s meeting is being held at the U.S. Bankruptcy Court in Manhattan, which is overseeing the liquidation of Madoff’s firm.

When seeking a Securities Attorney don’t just hire anyone. Do some research first. Do they have experience? Have they been successful with their defense? Who have their past clients been?

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Madoff Settles With SEC

The SEC announced a settlement with Madoff of its civil case. The terms of the settlement, the amount of disgourgement, and the amount of the fine have not been disclosed.

The settlement has no direct effect on the criminal case, which is ongoing.

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Madoff investor found dead

Thierry de la Villehuchet, a hedge fund adviser and investor whose firm said he lost $1.5 billion investing with Wall Street adviser Bernard Madoff, was found dead in his office in an apparent suicide Tuesday, police said.

Emergency personnel discovered the body of Villehuchet, 65, at 7:29 a.m. in the Madison Avenue office of Access International Advisors, police said.

Villehuchet suffered “cuts made to his arm, to his wrist and also to his bicep area, with a box cutter,” New York Police Commissioner Ray Kelly said at a news conference.

He also told reporters there were pills present, though it wasn’t clear whether any were ingested, and there was no suicide note.

The body will be examined and a toxicology report issued Wednesday, said Ellen Borakove, a spokeswoman for the New York medical examiner.

Kelly read a statement from Access International Advisors’ attorney saying the firm lost $1.5 billion by investing with Madoff, 70, a former Nasdaq chairman who is accused of operating a $50 billion Ponzi scheme.

Reached by phone, Madoff’s attorney, Daniel Horowitz, had no comment.

According to the Securities and Exchange Commission Web site, Access International Advisors no longer registers with the SEC.

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