Tuesday, 22 July 2014
Last updated 1 hour ago
Dec 23 2008 | 2:24am ET
The investigation into what could be the biggest Ponzi scheme in history, by far, continues. Authorities have subpoenaed the small accounting firm that audited Bernard L. Madoff Investment Securities’ books, seeking documents going back to 2000. But investigators believe that Bernard Madoff’s alleged scam goes back at least 30 years, according to The Wall Street Journal.
David Friehling, the sole working partner at New City, N.Y.-based Friehling & Horowitz, has until Dec. 29 to respond to the subpoena. The firm is also under investigation by the Rockland County District Attorney’s office. Friehling & Horowitz signed off on Madoff Securities’ most recent statement of financial condition, even though the firm has apparently been telling the American Institute of Certified Public Accountants that it hasn’t been conducting audits for the last 15 years.
Investigators have also turned their attention to Frank DiPascali, the Madoff employee believed to be the most involved in the running of the investment advisory business, according to the Journal. Madoff, who was arrested and charged with securities fraud two weeks ago, kept the secretive investment advisory on a separate floor from his proprietary trading and market-making business, with very few people working with him on it.
According to an internal Securities and Exchange Commission memo, DiPascali—who has not been charged with any wrongdoing—“responded evasively” to questions posed by investigators who arrived at Madoff’s offices in Manhattan on Dec. 11, the Journal reports. DiPascali, who Madoff investors say was the point man at the investment advisory, reportedly told the investigators that he didn’t know who was responsible for clearing and settling the investment advisory’s trades.
“Frank DiPascali would like to see investors get back whatever they can,” his lawyer, Marc Mukasey, said. Mukasey is the son of U.S. Attorney General Michael Mukasey, who has recused himself from the case.
The Journal also reports that investigators now believe that, while Madoff’s investment advisory may have had a trading strategy at first, it failed. Over the years, they believe, he made few if any trades at the investment advisory. Investigators say the Ponzi scheme could have begun as early as the 1970s.
As for Madoff himself, his world continues to shrink. On Wednesday, Madoff—who is free on $10 million bond—accepted new bail terms that imposed a 7 p.m. curfew, but still allowed him to travel freely through Connecticut and southern New York during the day. No more. On Friday, possibly in response to fears for Madoff’s safety, U.S. District Court Magistrate Judge Gabriel Gorenstein ordered Madoff confined to his Manhattan apartment 24 hours a day, except for court appearances. Madoff’s wife, Ruth, was ordered to hire full-time securities guards to protect Madoff “from harm or flight.”
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…