Madoff From Jail: Banks and Hedge Funds Were 'Complicit'
Convicted felon Bernard Madoff cast blame on some of the banks and hedge funds he dealt with as "complicit" in his multibillion dollar Ponzi scheme, noting they turned a blind eye to his fraudulent activities and that they had to have known his investment returns weren't real, according to a New York Timesinterview with the fallen financier.
In a jailhouse interview, Madoff, who is serving a 150-year sentence, pointed to a failure by banks and hedge funds to investigate when his filings with the Securities and Exchange Commission didn't jibe with information that they could have obtained. The aging and frail Madoff told the Times he was surprised to learn that some bankers were exchanging emails questioning his results but faulted them for not taking action.
Madoff's Ponzi scheme cost institutional investors and mom-and-pop investors $65 billion in paper wealth and $20 billion in cold hard cash. But the Times article noted that Madoff spent little time in the interview addressing the financial wreckage he left behind that wiped out, in many cases, nest eggs of retirees.
A Stack of Suits
Although Madoff says he was willing to aid prosecutors in recovering assets for investors, he refused to offer any "criminal evidence" that would land others in jail. He has repeatedly said he acted alone. But Madoff's accountant, David Friehling, as well as a senior executive, Frank DiPascali, have pleaded guilty and are cooperating with the criminal investigation, while five other employees have been indicted. These other employees have pleaded innocent and await trial.
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Madoff also says he's given information to trustee Irving Picard, who's in charge of recovering the billions in lost assets for the scheme's victims. It's not clear, however, if that information was useful in helping Picard file a stack of civil lawsuits. Among those are suits against JP Morgan Chase (JPM), Madoff's main banker; financier Sonja Kohn, who ran a network of hedge funds that invested with Madoff; and the Wilpon family, which owns the New York Mets.
Although PIcard is seeking $90 billion in damages from these lawsuits, Madoff says that's far more than needed to fulfill valid claims by investors. The jailbird financier puts the figure at $20 billion -- the amount of cash that investors are out of.
Picard has recouped $10 billion so far, and Madoff believes the remainder can come from lawsuits levied against the banks and hedge funds. From Madoff's perspective, according to the Times, Picard should discontinue his legal pursuit against Madoff's longtime investors who managed to pull out more money from their accounts than they deposited.
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Famous White-Collar Crimes
Disgraced former financier Bernie Madoff will spend the rest of his life behind bars for orchestrating the biggest Ponzi scheme in U.S. history.
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Stephen Chernin, Getty Images
Stephen Chernin, Getty Images
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