From his jail cell, Madoff points finger at the banks
Thursday 17 February 2011
From his jail cell, the arch-swindler Bernard Madoff might finally be doing a little something to help the thousands of investors whom he bilked out of billions of dollars.
He couldn't have carried out history's largest-ever pyramid scheme, he says, without the "wilful blindness" of scores of banks and hedge funds, which put their own clients into the fraudster's fake investment business.
The trustee charged with recovering money for Madoff's victims is now suing many of those banks and so-called "feeder funds", and in a new interview from inside the medium-security Federal Correctional Facility in Butner, North Carolina, where he is serving his 150-year sentence, Madoff agrees that they were "complicit" in his frauds.
Although he has refused to help federal prosecutors working on potential criminal cases against his accomplices, he has spent time assisting the victims' trustee. As he said in his interview this week, "the facts are that I alone was present at certain meetings with these [banking and feeder fund] clients".
And with a smile flickering across his lips, Madoff said: "I'm reading more now about how suspicious they were than I ever realised at the time."
The interview is the first for publication since Madoff was arrested in December 2008, a day after confessing to his two sons, Andrew and Mark, that his purported $65bn investment business had been based on lies for two decades, and that he could no longer find enough new investors to fund all the withdrawals from existing clients.
On the second anniversary of that confession, Mark Madoff committed suicide in his New York apartment, burdened by the family name and mounting legal actions suggesting he knew, or should have known, about his father's crimes. Bernard Madoff said he did not attend his estranged son's funeral because to do so would have created an intolerable media circus for the rest of the family – and because the authorities at Butner told him he would not be allowed to go.
Madoff, "looking noticeably thinner and rumpled in khaki prison garb... seemed frail and a bit agitated compared with the stoic calm he maintained before his incarceration in 2009," according to Diana Henriques, who interviewed him for her forthcoming book, The Wizard of Lies: Bernie Madoff and the Death of Trust. Extracts from the interview, and from email correspondence between Henriques and Madoff, were published yesterday in The New York Times.
Madoff was once one of Wall Street's grandees, a chairman of the Nasdaq stock exchange and a frequent adviser to regulators. Yet, using an old computer in his Midtown Manhattan offices, Madoff had been fabricating statements showing thousands of fictitious trades on behalf of his often rich clients. Over the years, those clients handed him $20bn of their money, which he claimed had grown to $65bn with the help of a special trading formula.
Irving Picard, the trustee appointed to recover whatever funds he can, has so far found $10bn from settlements with several of the banks, feeder funds and friends of Madoff who rounded up extra investors. He has also clawed back money from big investors who took out more from their Madoff accounts than they put in over the years.
In an effort to recoup the remaining $10bn or more, Mr Picard has sued banks including JPMorgan Chase and HSBC, claiming they had serious suspicions about Madoff's investment returns, but continued to send client money his way. "They had to know," Madoff told Henriques. "But the attitude was sort of, 'If you're doing something wrong, we don't want to know.'"
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