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Madoff Charged in $50 Billion-with-a-”B” Fraud, Sued by SEC [UPDATE]

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Bernard Madoff, founder and president of a New York firm that invested funds for wealthy individuals, hedge funds and other institutions, has been charged with operating what he told employees was a long-running $50 billion Ponzi scheme, in what may be one of the largest frauds in history.

Madoff, 70, head of Bernard L. Madoff Investment Securities LLC, was arrested this morning by the FBI.

US Magistrate Judge Douglas Eaton released Madoff on $10 million bond. Madoff faces as much as 20 years in prison and a $5 million fine if convicted.

The New York-based firm was the 23rd largest market maker on Nasdaq in October, handling a daily average of about 50 million shares a day. It specialized in handling orders from online brokers in some of the largest US companies, including General Electric and Citigroup.

Madoff was also sued today by the Securities and Exchange Commission. The complaint, also filed in Manhattan federal court, accused Madoff of a “multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm.”

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The agency said it’s seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

Madoff ran his investment advisory business from a separate floor of his firm’s office, keeping financial statements “under lock and key,” prosecutors said.

While meeting with co-workers at his home yesterday, Madoff conceded that he was “finished,” that his advisory business is “all just one big lie” and “basically, a giant Ponzi scheme,” the government said. The business had been insolvent for years with losses of about $50 billion, he told the employees, according to the criminal and SEC complaints.

Madoff said he had about $200 million to $300 million left and planned to distribute money to select employees, family and friends before surrendering to authorities in about a week, the government said.

UPDATE

Milberg LLP and Seeger Weiss LLP announced today that the two firms have been retained by dozens of individual investors in Madoff Investment Securities. Collectively, these investors have lost hundreds of millions of dollars–and possibly more than a billion–due to the stunning fraud allegedly perpetrated by Bernard Madoff.

“We are moving quickly and decisively to represent the interests of outraged investors–both individual and institutional–who were persuaded to entrust their money with Madoff Investment Securities and its founder, Bernard Madoff,” said Brad Friedman, a partner at Milberg LLP.

“Those taken in by this Ponzi scheme who have turned to us for help include a senior citizens center, corporate executives, banks, hedge funds and a wide variety of others,” according to Stephen Weiss, a partner at Seeger Weiss LLP.

Madoff Charged in $50 Billion-with-a-"B" Fraud, Sued by SEC [UPDATE] by
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Posted by on December 12, 2008. Filed under Legal News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

 

 

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