Home / World Business
Sat, Dec 13, 2008 - Page 10 News List

Ex-NASDAQ chair arrested on fraud charge in New York

BUSTED Bernard Madoff told staff members he was ‘finished,’ that he had ‘absolutely nothing’ and his company was ‘basically, a giant Ponzi scheme’


A former NASDAQ stock market chairman was arrested on a securities fraud charge on Thursday, accused of running a phony investment business that lost at least US$50 billion and that he called “just one big lie,” prosecutors said.

Bernard Madoff was released on US$10 million bail secured by his signature and that of his wife. He declined to comment as he walked out of US District Court in Manhattan.

Madoff, 70, the founder of Bernard Madoff Investment Securities LLC, maintained a separate and secretive investment-advising business that served between 11 and 25 clients and had a total of about US$17.1 billion in assets under management, prosecutors said.

A criminal complaint signed by FBI Agent Theodore Cacioppi said Madoff told at least three senior employees at his Manhattan apartment on Wednesday that the investment adviser business was a fraud and had been insolvent for years, losing at least US$50 billion.

Madoff told the employees he was “finished,” that he had “absolutely nothing,” that “it’s all just one big lie” and it was “basically, a giant Ponzi scheme,” the complaint filed in court said.

The employees understood Madoff’s admission to mean that “he had for years been paying returns to certain investors out of the principal received from other, different, investors,” said the complaint, which did not identify the investors impacted by the scheme.

Cacioppi said two senior Madoff employees told him that Madoff said during the meeting on Wednesday that he planned to surrender to authorities in a week but first wanted to distribute US$200 million to US$300 million he had left to certain selected employees, family and friends.

Cacioppi said he and another FBI agent arrived on Thursday at Madoff’s apartment, where Madoff invited them in and acknowledged knowing why they were there.

“After I stated, ‘We’re here to find out if there’s an innocent explanation,’ Madoff stated, ‘There is no innocent explanation,’” the agent wrote.

“Madoff stated, in substance, that he had personally traded and lost money for institutional clients, and that it was all his fault,” Cacioppi said.

The agent wrote that Madoff said he had “paid investors with money that wasn’t there” and that he was broke and insolvent and had decided that “it could not go on” and that he expected to go to jail.

Defense lawyer Dan Horwitz called Madoff “a person of integrity” and said he intends to fight the charge.

If convicted, Madoff could face up to 20 years in prison.

This story has been viewed 1654 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top