Thursday, 31 July 2014
Last updated 3 hours ago
Feb 16 2011 | 7:48am ET
Even Bernie Madoff thinks some of the banks and hedge funds he dealt with should have raised more red flags about his operations.
Madoff, speaking publicly for the first time since his arrest in December 2008, told a New York Times reporter that certain (unnamed) banks and hedge funds were “complicit” in his $65 billion Ponzi scheme.
During a two-hour interview in the Butner, N.C. prison where he is serving a 150-year sentence and in an exchange of emails, Madoff used the term “willful blindness” to describe the attitude of certain banks and hedge funds to the discrepancies between his regulatory filings and other information available to them.
“They had to know,” Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’”
Madoff also claimed to have provided information to Irving Picard, the trustee trying to recover assets for fraud victims. He said he met with Picard’s team last summer. He also said he provided information to help in the recovery of assets, but “refused to help provide them with criminal evidence.”
Discussing some of the out-of-court settlements negotiated by banks and funds with private Madoff investors over the past two years, he said some were made “to keep me quiet” about the role played by the institutions and the identities of the owners of some of their private accounts.
There is, of course, the question of whether or not Madoff can be believed (in fact, the reporter in question is writing a book about the case entitled, “The Wizard of Lies: Bernie Madoff and the Death of Trust”). Madoff himself acknowledged that he’d be of little use in court where any defense lawyer could simply brand him a liar.
While acknowledging his guilt, Madoff focused on the big investors and institutions he dealt with, not the thousands of smaller investors.
To date, no bank or hedge fund that did business with Madoff has been accused of knowingly investing in a fraudulent scheme. Picard’s civil lawsuits, however, assert some bank executives were suspicious for years, yet continued to do business with Madoff.
This seemed to bemuse Madoff himself. He said he was surprised by the emails, emerging now in lawsuits, that show bankers were worried about his scheme before it blew up:
“I’m reading more now about how suspicious they were than I ever realized at the time,” he said.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…