Banks 'had to know' of fraud: Madoff

Wall Street fraudster Bernard Madoff told The New York Times in a prison interview that unidentified banks and hedge funds were somehow "complicit" in his massive Ponzi scheme.

"They had to know," Madoff said in story posted on the newspaper's website late Tuesday.
"But the attitude was sort of 'If you're doing something wrong, we don't want to know.'"
Madoff, who touted himself as one of New York's most successful money managers, was arrested in late 2008 and sentenced in June 2009 to 150 years in prison.
His victims, including charities, major banks, Hollywood moguls and savvy financial players, handed him tens of billions of dollars over more than two decades.
Madoff's right hand man, Frank DiPascali, and his accountant, David Friehling, have since pleaded guilty in an investigation that has yet to fully unravel the crime or compensate the approximately 16,000 direct victims.
Even the amount of money stolen remains elusive: Madoff originally claimed to have been managing ê65 billion, but in October, the court-appointed liquidator said the real bottom line was ê21.2 billion in cash losses.
Times journalist Diana Henriques interviewed Madoff in a visitor room at the federal prison in Butner, North Carolina.
The interview and earlier email correspondence with Madoff were conducted as part of her research for an upcoming book on the scandal. "The Wizard of Lies: Bernie Madoff and the Death of Trust" is scheduled to be published this spring.
The Times said the Madoff interview was the first for publication since his 2008 arrest.
Banks and hedge funds who did business with Madoff had "willful blindness," he said.
He was surprised to learn about emails and other messages bankers exchanged before the collapse of his scheme. Some of those emails are coming to light through lawsuits.
"I'm reading more now about how suspicious they were than I ever realized at the time," Madoff said.
He did not indicate that any specific bank or hedge fund knew about his Ponzi scheme, which ran 16 years. Instead, he said, they failed to conduct proper scrutiny.
US prosecutors have not accused the major banks or hedge funds that did business with Madoff of knowingly investing in his scheme.
Meanwhile, the trustee charged with recouping assets for victims sued British banking giant HSBC and related entities in December, seeking at least ê9 billion.
Trustee Irving Picard accused the firms of enabling Madoff's scheme by creating, marketing and supporting "an international network of a dozen feeder funds based in Europe, the Caribbean and Central America."
HSBC said it was defending itself "vigorously" against the claims filed in US federal bankruptcy court in New York.
Also in December, Picard said he was seeking ê6.4 billion from JPMorgan Chase for supporting the scam and he has filed a suit against Swiss bank UBS seeking ê2 billion in damages for its alleged part in the fraud.
And a lawsuit unsealed this month claims owners of Major League Baseball's New York Mets ignored repeated signs and clear warnings that Madoff was operating a fraud scheme.
 

 

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