FBN’s Shapiro Shines Light On Lesser Known Players In Madoff Fraud

Dec 17 2010 | 10:09am ET

Adam Shapiro of Fox Business Network has been one of the reporters following the Bernard Madoff saga since the fraudster’s $65 billion Ponzi scheme first came to light in 2008. The case has recently come back into the public eye for reasons both pragmatic—the bankruptcy trustee’s flurry of ‘clawback’ lawsuits—and tragic—the suicide of Madoff’s 46-year-old son Mark.

This week, FINalternatives’ Mary Campbell touched base with Shapiro for his take on the latest twists and turns in an already labyrinthian case. And according to the seasoned reporter, Austrian banker Sonja Kohn isn’t Bernie’s only “criminal soul mate.” Shapiro says Patrick Littaye was just as cozy with the arch fraudster as was Kohn.

I’d like to start by asking about Mark Madoff – is it possible that he knew nothing about his father’s Ponzi scheme?

Is it possible that Mark and/or Andrew, for that matter, because they’re co-directors of BLMIS knew nothing about the scheme? Yeah, it’s very possible they knew nothing. You have two separate investigations taking place, you have Picard’s investigation and you have the criminal investigation. We know very little from the U.S. Attorney ...about their investigation—all we know is what they’ve said in the charges against roughly six people from the firm and one outside the firm who’ve been charged.

What we do know is a huge amount of information thanks to the bankruptcy investigation by Picard (I call them ‘Team Picard’), the bankruptcy court trustee. And what they say in their documents ... is very interesting. When you look at filings against Mark or Andrew Madoff, the language used is ‘They should have known.’ When you look at the filings against someone like Jodi Crupi or Annette Bongiorno, who’ve been charged criminally, what Team Picard does—and they are in no way connected to the U.S. Attorney, it’s totally independent—what Team Picard does in their language in those suits is they specifically explain what was happening and why it’s a criminal activity. Now, they have no power to bring a criminal charge, but the language is much more aggressive against people who worked on the 17th floor, like Annette Bongiorno, Jodi Crupi...versus the sons. So if you go just by what’s been filed on the bankruptcy side, yeah, there’s a big difference between ‘I knew what was happening and I took part in it’ and ‘They should have known.’

What Team Picard always tells you though, is that, look, when you’re the director of a legitimate market-making firm like BMLIS, you need to ask certain questions—because there were all sorts of weird things happening with the funding for BMLIS, and they didn’t ask questions about it.

And what about people who say the Madoffs must have discussed the scheme ‘around the dinner table?’ Do you give that theory any credence?

I don’t. You know, Ruth Madoff has been cleared. They haven’t publicly said she’s been cleared, but she’s been cleared by the U.S. Attorney’s office. They do not believe she knew anything—or let me rephrase that, they can find no evidence that she knew anything. And the best example of that is the hard drive from her computer—when this all broke...we said originally that Ruth Madoff was the bookkeeper of the firm. Well, what did that really mean? As we came to learn, Ruth wrote the check to pay the rent and to pay the light bill. After that, do you know what she did on her computer? They did a forensic breakdown of the computer hard drive—she was shopping [laughs]. There was nothing on that computer hard drive, the woman wasn’t the bookkeeper. The woman came in once a month, she was the wife of the guy who owned the place, she lived a great life, and she wrote checks to pay the bills—that’s not a bookkeeper.

Is this true generally of people on the legitimate side of Madoff’s business? Were those on the 18th and 19th floors ignorant of what went on on the 17th (the floor from which Madoff ran the Ponzi scheme)?

Absolutely. There were close to 300 people at BMLIS and those people were hardworking, legitimate traders and these were people who absolutely had no knowledge of what was going on. Now, there’s one guy in particular—it’s interesting, he’s not been criminally charged— David Kugel. He has been sued by Picard on the civil side and Picard uses that aggressive language saying that Kugel was instrumental in creating a fraudulent trading program to deceive 1,300 customers. And Kugel winds up in the market-making side of the business, he leaves the 17th floor, he goes to the 19th floor. So maybe one or two people knew what was going on on 17, if Kugel knew. My discussion with you [presumes] Picard is 100% accurate; these are allegations by Picard, they’re not fact, they’re allegations.

How many people worked on the 17th floor?

Eighteen or 19 people but only six—Frank DiPascali, Annette Bongiorno, Jodi Crupi, Daniel Bonventre, Jerome O’Hara, George Perez—[face criminal charges]. And then you’ve got Friehling, the auditor, who was outside the firm. Two have pled guilty but haven’t been sentenced yet—DiPascali will be sentenced in May, he’s been cooperating with the U.S. Attorney’s office since the moment Bernie was arrested. His lawyer was negotiating from day one. And it’s interesting—I call it the Al Capone Hail Mary pass¬—they’re doing the tax evasion investigation of Mark (well, now Mark’s estate), Andrew and Peter Madoff, because maybe they don’t have the hard evidence to get them on the fraud side. But it’s kind of like Al Capone, they never had the hard evidence. It doesn’t mean you’re innocent, it just means they don’t have the evidence.

Is it possible you could have worked on the 17th floor and not known what was going on?

Not according to Mr. Picard [laughs]. Probably not. If you worked on the 17th floor, you’re sweating bullets right now...If you worked on the 17th floor, you’ve been civilly charged by Picard.

And speaking of people who’ve been civilly but not criminally charged, I want to ask you about Madoff’s “criminal soul mate,” the Austrian banker Sonja Kohn.

Yes, don’t you love that line? That one bit: ‘Madoff found a criminal soul mate whose greed and dishonest inventiveness equalled his own.’ Sonja Kohn, I’m looking at her case right now, this is a woman who had a secret deal with Bernie going back to 1985...She enters into a private, unknown deal—even the people on 17 apparently don’t know about this deal—where he paid her, Bernie paid Sonja $6.5 million per year to bring money and clients to him... And not only that, she siphoned off over the life of her partnership with him $62 million for herself. And just after Bernie confessed [laughs] Sonja and her husband transferred money to a Swiss bank account, but then told Austrian authorities she did not have a close relationship with Bernie. I’d say she’s in trouble—but she’s not charged criminally.

Could charges still be laid against people like Kohn?

Absolutely. The U.S. Attorney, as long as they can prove the case, they’ll lay charges. I think it’s a good question to ask why a lot of these people have not yet been charged. You know, it’s interesting, Kohn had this secret, private access to Bernie but she’s not the only one. There’s a guy, and it just kills me that he’s never mentioned in stories, but he should be, Patrick Littaye. Patrick Littaye met Bernie in 1985 as well. He was working at Bank Privée, which just settled with Mr. Picard. If I were writing a crime novel— and this now, you and I are talking fiction—if I were going to write a novel that’s pure fiction about this crime, I would have certain players being the henchmen. Sonja Kohn, in my fiction novel, would be one and Patrick Littaye would be the other.

Patrick Littaye also had secret meetings with Bernie Madoff, regularly. He was the partner of Thierry de La Villehuchet, the man who committed suicide. He was the partner, but Thierry was never allowed in on the secret meetings, only Patrick. So what does that tell you? I absolutely believe Thierry de La Villehuchet committed suicide because he was overwhelmed with the fact that he had been defrauded by Mr. Madoff—and perhaps by his business partner. And Mr. Littaye is either in France or Belgium now, he’s not in the United States... But he’s mentioned in one of the Picard suits, in a very lovely, long explanation of his role...and his name should be out there like Sonja Kohn’s.

The State’s Attorney has Frank DiPascali who’s cooperating, so why is it taking so long to press additional charges?

Well, what you’ve got there is just the word of one convict who’s hoping for some leniency, although [DiPascali] could face the full 120 years, but you have to have the evidence instead of just the word of the co-conspirator. And you read through some of these documents—I don’t understand them, do you? We FOIA (Freedom of Information Act) certain documents and emails and trade data and I’m not a trader, my eyes bug out and I have no idea what I’m reading. Can you imagine, the U.S. Attorney’s office trying to go through all of that? Millions upon millions of pages of data.

God bless the Picard team, Baker & Hostetler, but they have huge resources and they are experts in this —that’s what that law firm does. That’s why I give a lot of credence to the Picard investigation. Picard has no axe to grind here, he’s not trying to score a conviction nor is he trying to set the law straight, he’s trying to get as much money as he can get back for the thousands of people this man destroyed...Now, he’s raising a lot of eyebrows because it’s going to hurt a lot of people to give money back. They say, ‘That’s my money.’ And what he’s trying to point out, and what the law currently says, is, ‘That was never your money. You are the victim of a fraud and that’s the tragic consequence.’

On the other hand, the charges against Madoff, his guilty plea, the sentence – it happened very quickly.

Yes it did. And that SOB lies...He continues to this day to say he was the only one involved...And we interviewed this guy Mancini last night, who’s spent time in jail with him, and yes, he’s an ex-con, so be careful with what he says, but...he says Bernie’s in tears and wishes he could return all the money to the victims. But then you go further into that interview I did with the guy who knows Bernie and it’s, ‘Bernie wishes he could return all the money to his victims except the money his family got.’ That is not remorse.

And I have a source, I cannot give you the name, but it’s someone who worked on the 19th floor and was friends with Mark Madoff at the time. He describes Mark as ‘somewhat aloof’ (which is a polite way, I think, of saying ‘arrogant’ but he never used the word ‘arrogant’) and he had an interesting experience with Mark. He wanted to invest with Bernie and Mark would not let him. So he’s always in the back of his mind wondered why would Mark not let him invest with Bernie? And to this day, we’ll never know the answer to that.

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