LawFuel.com – Legal Newswire Service – LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, and MARK J. MERSHON, the Assistant Director-in-Charge of the New York Office of the
Federal Bureau of Investigation (“FBI”), announced that BERNARD
L. MADOFF — the founder of Bernard L. Madoff Investment
Securities LLC, a registered investment adviser, and former
Chairman of the NASDAQ Stock Market — was arrested today and
charged with one count of securities fraud. According to the
Complaint filed in Manhattan federal court:
BERNARD L. MADOFF is the founder of Bernard L. Madoff
Investment Securities LLC (the “Firm”), a securities broker
dealer with its principal office in New York City. According to
the Firm’s website, the Firm: (a) “is a leading international
market maker. The firm has been providing quality executions for
broker-dealers, banks and financial institutions since its
inception in 1960”; (b) “[w]ith more than $700 million in firm
capital, Madoff currently ranks among the top 1% of US Securities
firms; and (c) “Clients know that Bernard Madoff has a personal
interest in maintaining an unblemished record of value,
fair-dealing, and high ethical standards that has always been the
firm’s hallmark.”
According to two senior employees of the Firm (the
“Senior Employees”), MADOFF conducts certain investment advisory
business for clients that is separate from the firm’s proprietary
trading and market making activities. According to the Senior
Employees, MADOFF ran his investment adviser business from a
separate floor in the New York offices of Bernard L. Madoff
Investment Securities LLC. According to a Senior Employee,
MADOFF kept the financial statements for the firm under lock and
key, and MADOFF was “cryptic” about the firm’s investment
advisory business.
According to a document filed by MADOFF with the United
States Securities and Exchange Commission (“SEC”) on January 7,
2008, MADOFF’s investment advisory business served between 11 and
25 clients and had a total of approximately $17.1 billion in
assets under management.
On December 10, 2008, MADOFF informed the Senior
Employees, in substance, that his investment advisory business
was a fraud. MADOFF stated that he was “finished,” that he had
“absolutely nothing,” that “it’s all just one big lie,” and that
it was “basically, a giant Ponzi scheme.” MADOFF stated that the
business was insolvent, and that it had been for years. MADOFF
also stated that he estimated the losses from this fraud to be at
least approximately $50 billion. MADOFF further informed the
Senior Employees that, in approximately one week, he planned to
surrender to authorities, but before he did that, he had
approximately $200-300 million left, and he planned to use that
money to make payments to certain selected employees, family, and
friends.
MADOFF, 70, currently resides in New York City.
The securities fraud charge in the Complaint carries a
maximum penalty of 20 years in prison and a maximum fine of
$5,000,000.
MADOFF is expected to be presented before United States
Magistrate Judge DOUGLAS F. EATON this afternoon.
Mr. DASSIN praised the investigative work of the FBI
and thanked the SEC for its assistance.
Assistant United States Attorney MARC LITT is in charge
of the prosecution.
The charges and allegations contained in the Complaint
are merely accusations and the defendant is presumed innocent
unless and until proven guilty.
08-325 ###
