NEW YORK, Sept 29 — Bernard Madoff claims he ran his multibillion-dollar Ponzi scheme alone, but close family members face lawsuits this week in a widening probe, the government-appointed trustee told CBS television.
Trustee Irving Picard and his chief lawyer David Sheehan told CBS’ 60 Minutes programme on Sunday that Madoff’s relatives and many so-called victims profited massively.
For example, Madoff’s immediate family used the fraudulent investment firm “like a personal piggy bank”, Sheehan said, while major investors earned billions of dollars — possibly in full knowledge that this was a scam.
“We’ve found that there have been quite a few people who have got out more than (what) they put in,” Picard said.
Lawsuits are expected to be filed by the trustee this week against Madoff’s sons Mark and Andrew, brother Peter and niece Shana, CBS reported. The suits are part of a legal onslaught stretching far beyond Madoff, who is serving the first months of a 150-year prison sentence.
Picard is charged with finding where Madoff’s billions vanished so that genuine victims — some left penniless after entrusting everything to the fraudster — can be compensated. Just before his arrest and the collapse of his pyramid scheme in December last year, Madoff sent clients a statement claiming that his fund was worth about US$64.8 billion (RM228 billion).
Picard and Sheehan, who rarely talk directly to the media, estimate that the scheme in reality contained US$36 billion. They say half of this was disbursed before the collapse, while the other US$18 billion disappeared.
So far, Picard has snared just US$1.5 billion, including revenues from such easy targets as luxury residences in Manhattan, Long Island and Florida kept by Madoff and his wife Ruth.
Now, the focus is tightening on Madoff’s inner circle. CBS reported that Picard’s team found that Madoff’s sons and brother took out US$80 million in salaries over the last seven years, while his wife spent millions of dollars from company funds for shopping and other extravagances.
Family members were also investors in Madoff’s fake company, raking in huge returns, CBS reported. The two sons, for example, withdrew more than US$35 million from accounts opened with almost no original investment.
“Whether or not they have a criminal problem, we will pursue them as far as we can pursue them,” Picard warned.
Madoff’s family deny complicity, as do the thousands of people who put money into the fund and received steady returns from what they were told were legitimate investments. It was actually money stolen from fellow investors.
Sheehan said the family was too close to Madoff’s daily work not to have known about the scam. “My belief is, yes, they knew, and the reason I believe that is they were officers of this — of these — companies, and directors in certain instances as well, and also compliance officers in a very highly regulated environment.
“Clearly they would have to have known what was going on given their own personal transactions, the longevity of what was happening, and the responsibilities as officers,” he said.
Also in the cross-hairs are many of those investors who say they lost money.
Some, the officials say, will not only fail to be reimbursed, but may have to pay back profits made during the decades that Madoff’s fraudulent business went undetected.
Picard said about half of Madoff’s clients received more in returns than they invested originally, making them beneficiaries, not victims.
The trustee’s main targets are the heavy hitters who, Sheehan said, “knew exactly what was going on — and participated in it”. One of those being sued is billionaire investor and philanthropist Jeffry Picower, whose statements from Madoff indicated an astonishing 950 per cent return on his investment, amounting to billions of dollars in profits.
Ultimately the blame should be spread wide, Sheehan said: “I think, everyone, you know, was participating in this, and just feeding at this trough of greed.” — The Straits Times
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