Madoff Tipster Blasts SEC, Says He Feared for His Safety

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Harry Markopolos, the man who waged a decade-long campaign to alert regulators to problems in the operations of Bernard Madoff, is blaming the the Securities and Exchange Commission for ignoring his warnings.

FOXNews.com


WASHINGTON -- Harry Markopolos, a whistleblower who struggled for a decade to get regulators to stop the operations of disgraced money manager Bernie Madoff, slammed the Securities and Exchange Commission in his first appearance before Congress.

After the SEC ignored his attempts to alert the agency to Madoff's apparent fraud, Markopolos said he feared for his physical safety after his attempts to alert the SEC to Madoff's apparent fraud were ignored.

Markopolos told a House hearing Wednesday that there were no incentives for the SEC to find fraud and that they failed to understand the red flags he handed the agency, describing their failure as "a combination of incompetence and unwillingness to take on someone like Mr. Madoff.".

"That's why they shy away from the big cases," he said, adding later, "What you'll see is the SEC is busy protecting the big financial predators from investors and that's their modus operandi right now."

Asked by lawmakers if his warnings to the SEC could have been more explicit, Markopolos said, "I even drew pictures so I don't know how I could've been more explicit."

The SEC failed to act despite receiving credible allegations of fraud from Markopolos about Madoff's operations over a decade.

Markopolos said that "the SEC is ... captive to the industry it regulates and is afraid" to bring big cases against prominent individuals.

He said the agency "roars like a lion and bites like a flea."

Madoff, a prominent Wall Street figure and money manager, was arrested in December after confessing to his sons that he had lost more than $50 billion of investors' money in a Ponzi scheme, according to federal authorities.

Markopolos, a securities industry executive and fraud investigator, brought his allegations to the SEC about improprieties in Madoff's business starting in 2000 or earlier. He fruitlessly pursued the quest through this decade with agency staff from Boston to New York to Washington, but the regulators never acted.

Now thousands of victims who lost money investing in Madoff's fund, which was separate from his securities brokerage business, have been identified. Among them are ordinary people and Hollywood celebrities, as well as big hedge funds, international banks and charities in the U.S., Europe and Asia. Life savings have evaporated, foundations have been wiped out and at least one investor apparently was pushed to commit suicide.

And the SEC has been sustaining volleys of criticism from lawmakers and investor advocates over its failure to discover Madoff's alleged fraud, which could be the biggest Ponzi scheme ever, despite the credible allegations brought to it over years.

Markopolos has said he determined there was no way Madoff could have been making the consistent returns he claimed using the trading strategy he said he used. Before Markopolos' first appearance before a Congress on Wednesday, he had canceled planned appearances at two congressional hearings held last month.

"There was an abject failure by the regulatory agencies we entrust as our watchdog," he said in testimony prepared for the hearing that was posted Tuesday night on The Wall Street Journal's Web site.

Despite the detailed evidence he submitted to the SEC between 2000 and 2008, Markopolos said, the regulators did nothing. Because of their inaction, he said, "I became fearful for the safety of my family."

Madoff, who was at one point chairman of the Nasdaq Stock Market, and sat on SEC advisory committees, was "one of the most powerful men on Wall Street and in a position to easily end our careers or worse," Markopolos said in his prepared testimony.

He didn't respond to a request for comment Tuesday from The Associated Press.

Markopolos also is providing recommendations for revamping the SEC, which he called "nonfunctional" and harmful to the reputation of the U.S. as a global financial leader.

Also due to appear Wednesday before the House Financial Services subcommittee were five top SEC officials, including the agency's enforcement director, Linda Thomsen and the head of its inspections division, Lori Richards.

In December, Christopher Cox, then the SEC chairman, pinned the blame on the agency's career staff for the failure over a decade to detect what Madoff was doing. He ordered the SEC's inspector general, H. David Kotz, to determine what went wrong. Kotz has expanded his inquiry to examine the operations of the divisions led by Thomsen, who has been the enforcement chief since mid-2005, and Richards, who has held that position since mid-1995.

Thomsen and Richards were put on the defensive at a Senate hearing last week over the SEC's failure to uncover Madoff's alleged fraud scheme. Members of the Senate Banking Committee were scarcely satisfied with explanations given by the two officials and by Stephen Luparello, the interim chief executive of the brokerage industry's self-policing organization.

That organization, the Financial Industry Regulatory Authority, was headed until December by Mary Schapiro, President Barack Obama's new SEC chairman. She has said that because Madoff carried out the scheme through his investment business and FINRA was empowered to inspect only the brokerage operation, it wasn't possible for the organization to discover it.

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From what I've heard Sylvester Stallone lost $50 million with this guy. Of course that stings, but I'm sure he's probably worth at least $250-$400 million.

Kevin Bacon and his wife Kyra Sedgwick reportedly lost $40 million which left them with only money they had left in their bank accounts and land that they own.

[BettorsChat]

Thu Feb 5, 2009 6:19pm EST

By Martha Graybow and Grant McCool

NEW YORK (Reuters) - Hall of Fame baseball pitcher Sandy Koufax, actor John Malkovich and World Trade Center developer Larry Silverstein are among the well-known people on a list of customers of accused swindler Bernard Madoff, according to court papers.

Among the thousands of others on the roster are U.S. Sen. Frank Lautenberg of New Jersey; Fred Wilpon, owner of the New York Mets baseball team; imprisoned class-action lawyer Melvyn Weiss; Madoff's sons, Mark and Andrew and their children as well as Madoff's brother, Peter.

Filmmaker Steven Spielberg's Wunderkinder Foundation, Columbia University and the charity Jewish Funds for Justice are among other customers listed.

The 162-page document was filed late Wednesday with the U.S. Bankruptcy Court in New York as a court-appointed trustee liquidates Bernard L. Madoff Investment Securities LLC to recover assets for defrauded customers.

The nonprofit Securities Investor Protection Corporation (SIPC) has set a July 2 deadline for customers to make their claims. The customer list contains names and addresses of individuals and institutions. No amounts of money were given.

On Thursday, a person briefed on the list titled "Customers" said it was an all-encompassing list of people whose names were found in the trustee's examination of records, but not all of them were necessarily investors.

"It's not saying every one of the people on the list will have claims," said Ailis Aaron Wolf, who works with SIPC.

In all, five lists were filed with the court, labeled Customers, Vendors, Employees, Brokers/Dealers and Other Parties.

The Manhattan office of Madoff's firm was declared a crime scene after the 70-year-old investment manager was arrested on December 11. Madoff is accused in what authorities have described as the biggest Ponzi scheme in history. In a Ponzi scheme, early investors are paid with money from new investors.

The lists were put together by AlixPartners LLP, a firm specializing in bankruptcy claims, assisting the trustee, lawyer Irving Picard.

One of Madoff's lawyers, Ira Lee Sorkin, is also named on the customer list.

Sorkin declined to comment to Reuters on Thursday on whether he had invested with Madoff.

"I've been told it's a client list, and I've also been told it's a mailing list, so I think you need to check with the receiver or the trustee to determine whether these individuals are clients, customers, investors or just simply received mail," Sorkin said.

"My position from day one has been I will not discuss present clients or former clients," he said.

Trustee Picard said in a statement Thursday he will not issue tax forms for information on interest, dividends or securities transactions to customers of the Madoff firm for the tax year 2008 because "there are questions about the accuracy of the BLMIS (Madoff) financial records."

Picard said in court on Wednesday that $946 million has been recovered so far from Madoff's firm. He said, however, that gaining access to the firm's computers and examining 7,000 boxes of documents stored in a warehouse was taking time.

The customer list provides new details about the clients that the once-respected Madoff cultivated over the years -- people who live in affluent neighborhoods of Manhattan and parts of South Florida including Palm Beach and Boca Raton.

Also listed are the Madoff firm's outside auditors, David Friehling and Jerome Horowitz from the small Friehling & Horowitz accounting firm in New City, New York, as well as Madoff's wife, Ruth, and Madoff employees, including JoAnne "Jodi" Crupi and Frank DiPascali.

Among the financial institutions on the customer list are UBS AG, Bank of America Corp, BNP Paribas and Citigroup Inc.

Financiere Agache, a subsidiary of the holding company of French billionaire Bernard Arnault, was also on the list. Arnault is the head of luxury goods group LVMH and his Groupe Arnault holding firm controls Financiere Agache.

A spokesman for Financiere Agache told Reuters its account with Madoff had been inactive since 2004, although it had not been legally closed. The spokesman added that Financiere Agache had not booked any losses from the account.

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



Madoff client list peppered with big names | Reuters

[flarendep1]

Why isnt Madoff hanging from his balls in Times Square? Maybe that will send a message to these white collar crooks.

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Originally Posted by flarendep1

Why isnt Madoff hanging from his balls in Times Square? Maybe that will send a message to these white collar crooks.

He should be as they guy screwed over plenty of people including charities.