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Wednesday, August 12, 2020

Madoff’s Misconduct Said to Date to 1970s as Client List Surged

Date: Friday, December 19, 2008
Author: David Scheer, Bloomberg

U.S. regulators, trying to unravel the breadth of Bernard Madoff’s alleged $50 billion fraud, have found evidence of misconduct stretching back to at least the 1970s, two people familiar with the inquiry said.

Madoff’s investment advisory business, where he allegedly operated the biggest Ponzi scheme in history, is now estimated to have had more than 4,000 customers, the people said, declining to be identified because the inquiry isn’t public. An advisory unit Madoff registered with the Securities and Exchange Commission claimed in a January filing to have no more than 25 clients. People familiar with the probe said Dec. 14 he also ran a secret unregistered business.

The Securities and Exchange Commission, combing through records from New York-based Bernard L. Madoff Investment Securities LLC, hasn’t developed a complete assessment of the earlier misconduct or determined how the alleged Ponzi scheme evolved, one of the people said. They also haven’t concluded how the scheme intertwined, if at all, with sales of unregistered securities targeted in a 1992 SEC lawsuit. Proceeds from those sales were invested with Madoff, who gave documents to an auditor in that case and wasn’t accused of wrongdoing, court records show.

SEC spokesman John Nester declined to comment.

Madoff’s attorney, Ira “Ike” Sorkin of Dickstein Shapiro in New York, wasn’t immediately available to comment. In an interview yesterday, Sorkin said Madoff’s company is “cooperating fully with the government.”

Madoff, 70, was arrested Dec. 11 and charged with a single count of securities fraud. In court documents, prosecutors and the SEC said he admitted his investment advisory business was “all just one big lie.” Madoff hasn’t entered a plea in the case.

SEC Chairman Christopher Cox said Dec. 16 that the agency failed to act on “credible, specific” allegations about Bernard Madoff dating back at least to 1999.

To contact the reporter on this story: David Scheer in New York at dscheer@bloomberg.net.