Investigators focus on possible Madoff accomplices

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The Independent US

Prosecutors in the US are increasingly sceptical that Bernard Madoff ran history's largest fraud entirely alone, as he claimed when he was arrested two months ago.

The FBI has begun questioning low-level employees as it seeks to build a full picture of Mr Madoff's operations and of which senior staff had the greatest access to the Wall Street grandee's inner circle.

Mr Madoff, 70, remains under house arrest at his Manhattan penthouse this weekend, two months after turning himself in, following a New York court ruling that granted prosecutors another month for their investigation and to pursue plea-bargain talks.

It emerged this week that his wife, Ruth, withdrew $10m (£6.9m) from a brokerage account on 10 December, the day Mr Madoff confessed to his sons that he was running a giant Ponzi scheme. Two weeks earlier, as her husband was desperately soliciting money from new victims to keep his fraud going, she also took out $5.5m.

Ruth Madoff, 67, agreed to a freeze on her assets as part of her husband's bail conditions, and the FBI is examining how deeply involved she might have been in his business affairs. Her name appeared on many transactions and at one point she had an office at the firm. But she is not charged with any wrongdoing, and Mr Madoff told the authorities that his fraud was carried out entirely alone. He had been faking investment returns over many decades and involved thousands of investors, whose notional account balances totalled $50bn.

Mrs Madoff's withdrawals were revealed in a court filing in Massachusetts, where regulators are investigating a local brokerage firm that funnelled hundreds of millions of dollars to Madoff Investment Securities. That brokerage, Cohmad Securities, was one of a network of intermediaries paid by Mr Madoff to solicit clients for him. Its finances were so intertwined with Mr Madoff's that William Galvin, Massachusetts secretary of state, has passed on his findings to the FBI in New York.

"As you know, the tale is being told that it was just Mr Madoff who apparently worked 24 hours a day, shooting out false invoices and statements to people," Mr Galvin said this week. "It would seem as if some of the facts that we've discovered would raise, at least, some questions on that."

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