Assets belonging to Bernard Madoff’s brother, Peter, have been frozen. According to Bloomberg.com, Peter Madoff served as the chief compliance officer of Bernard L. Madoff Investment Securities LLC.
Madoff pleaded guilty to 11 fraud counts earlier this month. Madoff – once a chairman of the Nasdaq stock exchange – is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.
According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff â€œdeceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.â€
Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.
Peter Madoff served as a trustee for a $470,000 trust held by Andrew Ross Samuels, a New York law student. Samuel’s is suing Peter Madoff for $2 million for breaching his fiduciary duty by investing his inheritance with his brother, Bloomberg said.
“We’re doing this because we think what Peter did was wrong,” Howard Samuels, a Dix Hills, N.Y., lawyer and Andrew Ross Samuels’s father, told The Wall Street Journal . “Either he knew or should have known” that Bernard Madoff was operating a massive fraud, “and either way, he was grossly negligent,” he said.
According to Bloomberg.com, the asset freeze agreed to by New York Supreme Court Justice Stephen Bucaria pertains to all of Peter Madoff’s property. It prevents him from removing, transferring or encumbering any funds or property and requires him to disclose all assets he owns. The freeze will stay in place at least until an April 3 hearing.
Since Bernard Madoff’s guilty plea, focus has shifted to other family members who may have been aware of his fraud. In addition to his brother, Madoff’s two sons and a niece worked for his firm. His wife, Ruth, was also his book keeper for a time.
While none of his relatives have been charged in relation to his scam, authorities did arrest Bernard Madoff’s accountant last week. U.S. Prosecutors have not accused David Friehling of knowing about Madoffâ€™s scheme. However, prosecutors allege that Friehling deceived investors by falsely certifying that he audited the financial statements of Madoffâ€™s business. That allowed Madoff to maintain the illusion that he was legitimately investing his clientsâ€™ money, prosecutors said.
Friehling has been charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports to the Securities and Exchange Commission.