SEC Charges Madoff For Massive Ponzi Scheme

Posted by Orb Staff on December 12, 2008 No Comments
Categories : Residential Mortgage

The Securities and Exchange Commission (SEC) has charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multibillion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in New York, alleges that Madoff informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was ‘finished,’ that he had ‘absolutely nothing,’ that ‘it's all just one big lie,’ and that it was ‘basically, a giant Ponzi scheme.’

The senior employees understood him to be saying that he had, for years, been paying returns to certain investors out of the principal received from other, different investors, the SEC explains. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

‘Our complaint alleges a stunning fraud that appears to be of epic proportions,’ says Andrew M. Calamari, associate director of enforcement in the SEC's New York Regional Office. According to regulatory filings, the Madoff firm had more than $17 billion in assets under management as of the beginning of 2008. It appears that virtually all assets of the advisory business are missing.

Source: Securities and Exchange Commission

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