Archive for Saturday, December 13, 2008

SEC seeks to secure assets of financier accused of $50B swindle

December 13, 2008

Advertisement

— Federal regulators reached a deal Friday with the Wall Street financier accused of a $50 billion swindle to freeze his company’s assets and appoint a receiver to manage the firm’s financial affairs. The agreement came as some investors feared their life savings were wiped out.

The deal, agreed to separately by Bernard L. Madoff and his company, was approved later in the day by a federal judge, said Alexander Vasilescu, trial chief of the federal Securities and Exchange Commission.

Vasilescu said the receiver would secure the assets, funds and location of Madoff’s businesses to preserve assets and “determine the scope of the misconduct.”

The collapse of Bernard L. Madoff Investment Securities LLC came just hours before his arrest Thursday on a single securities fraud count. Madoff, who allegedly told his employees he was running a “giant Ponzi scheme,” was freed on $10 million bail.

Lawyers for distraught investors worried they had lost all their savings packed a courtroom in the federal building Friday, awaiting a hearing on the disposition of Madoff’s remaining assets. The hearing was canceled after the agreement was reached.

Stephen A. Weiss, who said he had spoken to at least 30 investors, said many of them were devastated.

One investor, Lawrence Velvel, 69, dean of the Massachusetts School of Law, said he and a friend may have lost millions of dollars between them.

“This is a major disaster for a lot of people,” Velvel said in a telephone interview. “You work all your life, you finally manage to save up something, and somebody who’s entrusted with it, it turns out suddenly he’s a crook. Lots of people are getting fully or partially wiped out.”

Velvel said he wants to know where government regulators, as well as accountants and others at Madoff’s company, were when the money was being lost.

According to a criminal complaint filed with the court, Madoff told senior employees of his firm Wednesday that he had blown more than $50 billion with fraudulent financial moves, that he was “finished” and that he had “absolutely nothing.” The FBI said Friday that family members turned Madoff in after he confessed his fraud to them.

The complaint said Madoff handled investments for as many as 25 clients in his private investment business, but lawyers for investors Friday said the number likely runs much higher. Some estimates ran into the hundreds.

Sterling Equities Inc., an investment firm run by New York Mets owner Fred Wilpon, acknowledged that it had investments with Madoff’s firm.

“We are shocked by recent events and, like all investors, will continue to monitor the situation,” it said.

Comments

jmadison 6 years, 6 months ago

This guy's firm had federal SIPC coverage for accounts held by his firm. How much is this failure going to cost the taxpayers?

Commenting has been disabled for this item.