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Madoff's family under scrutiny in financial scandal probe

©

Video by George HARRIS

Latest update : 2008-12-29

Authorities are still looking at whether family members helped former Nasdaq boss Bernard Madoff in his alleged pyramid scheme. His two sons, a brother and a niece claim they were not aware of a scam to defraud investors.

AFP- Authorities investigating the Bernard Madoff scandal have yet to charge possible accomplices in his alleged pyramid scheme as they continue to probe the role of family members who worked with him, US media reported.
   
Madoff's two sons, Mark and Andrew, who were arrested earlier this month in connection with their father's suspected fraud, have reiterated that they were not aware of a scam to bilk investors.
   
Other family members, including his brother Peter, and a niece, also say they learned of Madoff's alleged scam only when he was arrested on December 11. His two sons said they decided to hand over their father to the police after learning of his bogus investment scheme.
   
But authorities are still looking at whether family members aided the fraud, the Wall Street Journal reported on Friday.
   
Federal investigators are also examining the role of key company executives, "feeder funds" that transferred money to Madoff's firm and a small accounting firm that handled the firm's bookkeeping.
   
Madoff meanwhile remains the only person charged in the scheme that lost at least 50 billion dollars in investors' money, with major charities and prominent banks affected.
   
A court-appointed trustee, Irving Picard, meanwhile moved promptly last week in naming the investment bank Lazard to manage the sale of the trading unit that was at the center of Madoff's investment business.
   
Efforts to sell the trading unit came amid the tragic revelation of a suspected suicide and a spate of legal action related to the scandal.
   
The extent of the scandal is still emerging but it has already claimed dozens of financial victims and possibly one life, after an apparent suicide of a French investor earlier this week.
   
Thierry de la Villehuchet, 65, was found dead in his Manhattan office early Tuesday with pills around him and his arm slit with a box cutter.
   
As chief executive of Access International, the French aristocrat was managing about two billion euros (2.79 billion dollars) for European clients, of which three quarters had been invested with Madoff, a source close to the fund manager said.
   
Villehuchet left no suicide note but friends suggested he may have been wracked with guilt over encouraging colleagues and acquaintances to invest with Madoff.
   
While authorities waited for the final results of an autopsy in Villehuchet's death, the scandal prompted some financial victims to sue firms that handed their investments over to Madoff's company.
   
New York University in a lawsuit filed this week accused fund manager Ezra Merkin of failing to inform investors or carry out his financial responsibilities when he turned over millions of dollars in university investments to Madoff.
   
A New York state court on Wednesday ordered Merkin to refrain from concealing or destroying any papers related to Madoff.
   
Madoff, 70, the former chairman of the Nasdaq stock market and a mainstay of the American Jewish community, is currently free on bail of 10 million dollars and under home detention with a night-time curfew and an electronic tag.
   
US authorities allege that Madoff delivered consistently strong returns to clients by secretly using the principal investment from new investors for payments to previous investors, in what is known as a "pyramid fraud."
   
Madoff is under investigation for criminal fraud by the Federal Bureau of Investigation as well as federal prosecutors. And he is the subject of a civil probe by the Securities and Exchange Commission, which has been blasted for failing to take action despite earlier warnings about Madoff.
   
Officials with the SEC were unavailable for comment on Friday with the first court hearing in the case not expected until January 6.

Date created : 2008-12-26

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