Madoff Employees Helped Dupe Investors, U.S. Prosecutors Say

[marmar]

Madoff Employees Helped Dupe Investors, U.S. Prosecutors Say
By David Glovin, David Voreacos and Erik Larson


March 11 (Bloomberg) -- U.S. prosecutors shed new light yesterday on how they believe Bernard Madoff’s subordinates helped him operate a $64.8 billion Ponzi scheme, without saying whether those employees knew they were defrauding investors.

Madoff, 70, will plead guilty tomorrow to fraud, money laundering and perjury charges, his lawyer said yesterday. Madoff told 4,800 investors in November that their accounts held $64.8 billion, though their holdings were a “small fraction” of that, prosecutors alleged in 11 charges filed in Manhattan federal court.

The money manager told his employees to create false account documents and trade confirmations reflecting phony returns so as to transfer funds while giving the appearance of legitimate trades, and to generate false financial statements for regulators, prosecutors said. Those actions gave the appearance of a “legitimate investment advisory business,” according to the government, which said the investigation of the largest Ponzi scheme in U.S. history is continuing. No employees have been charged with any wrongdoing.

“The issue will be whether the government can establish that they knew what in the paper was in fact phony,” Christopher Steskal, a former federal prosecutor, said in a telephone interview. “If the facts show it, they will likely pursue those people. It seems improbable that he would do it alone.”

Madoff was arrested Dec. 11 and charged with one count of securities fraud for using billions of dollars from new investors to pay off old ones. Investors in Madoff’s New York-based firm, Bernard L. Madoff Investment Securities LLC, included celebrities, charities and money managers from around the world. .........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aFyAnotdg7oo&refer=home

[Hubert Flottz]

1. "Employees Helped Dupe Investors"

I believe that would make them criminals too, in the real world.

[GCP]

2. I think his wife should be up in the dock with him

From what I've read she was in it up to her ears.

[Hubert Flottz]

3. I think so too...

And if any judge lets her keep a dime of the stolen loot he should be put on trial next.

[Fleshdancer]

4. I knew this had to be the case

Didn't the initial reports on the Madoff scandal say that nobody else knew what he was doing? The idea that his employees didn't know what was going on is ridiculous.

[marmar]

5. Yup. Kind of like Ken Lay and Jeff Skilling saying only Andy Fastow knew of the Enron fraud......

n/t