Is Madoff Probe Expanding?
Bernard Madoff is set this week to plead guilty to orchestrating a massive Ponzi scheme. But could we be in line for more guilty pleas before this is all over?
The Daily Beast reports:
[T]he [Madoff] investigation … has broadened to include a number of suspected co-conspirators, according to federal officials involved in the case.
The Daily Beast story — written by Lucinda Franks, whose byline identifies her as a Pulitzer-Prize winning journalist who was formerly on the staff of the New York Times — also reports that, according to sources, “several members of Madoff’s inner circle transferred assets to their wives, transactions thought to be laundered through an English bank.”
There are said to be three groups of possible co-conspirators, who could potentially be charged either criminally by the Justice Department, or civilly by the SEC.
In the first group are employees of Madoff’s firm who concocted false trades and sent out phony statements to thousands of unsuspecting clients.The second group is comprised of principals in feeder funds such as Cohmad Securities Corp. and Fairfield Greenwich Group, which funneled investor dollars to Madoff and received large fees for steering this business. If they were aware of Madoff’s fraud, they could face criminal charges; if they were not, they could be hit with civil charges for a lack of due diligence.
The third group is the target of an investigation that’s still in its early stages into money laundering through British banks, in which US and British authorities are cooperating. This group consists of solicitors, accountants, and others in London who may have assisted Madoff in transferring funds from client accounts to a Madoff entity that lists Ruth Madoff, brother Peter Madoff, and sons Mark and Andrew Madoff among its board members.
It’s not clear from any of this that any specific members of Madoff’s family, or his inner circle, are in immediate legal jeopardy.
But the Wall Street Journal appears to be thinking along similar lines (sub req). It notes:
Prosecutors alleged Tuesday that Mr. Madoff hired numerous employees with “little or no prior pertinent training or experience in the securities industry” and caused them to “communicate with clients and generate false and fraudulent documents.”
Its report doesn’t go as far as the Daily Beast‘s. The Journal says it’s still unclear whether prosecutors believe these people knew they were involved in a fraudulent scheme, and doesn’t explicitly say that the investigation has broadened beyond Madoff himself.
But it’s noticeable that the paper does take the time to lay out what’s known about the possible involvement in the scheme of five of Madoff’s relatives and associates — including his wife Ruth, who has hired her own lawyer, and his brother Peter, who was the chief compliance officer for Madoff’s firm.
With Madoff’s guilty plea soon to be safely in the bag, are these reports an indication of where prosecutors are going next?
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