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Monday, September 16, 2019

Madoff\'s wife withdrew $15bn before husband\'s arrest


Date: Thursday, February 12, 2009
Author: Christine Seib, Times

American prosecutors agreed on Wednesday to a 30-day extension in their investigation of Bernard Madoff, raising the possibility that the disgraced fund manager may escape a jury trial.

The US Attorney's Office in Manhattan had been due to indict Mr Madoff on criminal charges over allegations that he ran a $50 billion Ponzi scheme, but agreed with Ira Sorkin, Mr Madoff's attorney, to move the deadline to March 13.

This fuelled the expectation that Mr Sorkin was negotiating a plea bargain that could avoid an indictment being brought or see Mr Madoff face reduced charges in return for his co-operation.

A new twist in the scandal emerged yesterday when it was revealed that Mr Madoff's wife withdrew $15.5 million from a brokerage related to the main scheme, including a $10 million withdrawal on the day he confessed.

The withdrawals were revealed in a complaint against Cohmad Securities by William Galvin, the Massachusetts Secretary of State.

Mr Galvin's office has been pursuing Cohmad, of which Mr Madoff and his brother, Peter, owned up to 35 per cent. The brokerage, with an office in Boston, directed clients to Mr Madoff's fund.

Anthony Paccione, the head of the New York litigation department of Katten Muchin Rosenman, said that prosecutors faced a tough decision on whether to accept a so-called co-operation plea.

“The Government will be under a lot of pressure, there's going to be a lot of press coverage and it would look pretty bad for prosecutors to have to stand in court and say what a great guy he is,” Mr Paccione said.

Mr Madoff, 70, allegedly confessed to his sons on December 10 to running a huge financial scam in which he used new investors' cash to pay returns to existing investors in his funds.

He was arrested on December 11 and is free on $10 million (£7 million) bail, remaining under house arrest.

Mr Madoff agreed on Monday not to contest fraud charges brought against him by the Securities and Exchange Commission in a civil case. Mr Sorkin declined to comment, as did the US Attorney's Office.

Merkin link

Andrew Cuomo, New York attorney-general, said that Ezra Merkin, the hedge fund founder, is co-operating with an inquiry by his office linked to the alleged Madoff fraud.

Mr Merkin’s lawyer has described him as a victim of the alleged fraud.