The investigation into Bernard Madoffâ€™s historic Ponzi scheme has revealed serious international implications. Madoffâ€™s so-called investment business had operations in London, which, say United Kingdom prosecutors, played â€œa significant roleâ€ in the multi-billion dollar fraud perpetrated by Madoff, reported Bloomberg.com.
Madoffâ€”once a chairman of the NASDAQ stock exchangeâ€”is the founder and primary owner of Bernard L. Madoff Investment Securities LLC who pleaded guilty to 11 fraud counts earlier this month. Madoffâ€™s firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. 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 also 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 his fund held over $64 millionâ€”leading investors to believe he was operating a serious investment firm, Bloomberg pointed out. In reality, Madoff only had a fraction of that amount.
According to David Jones, spokesman for U.K.â€™s Serious Fraud Office (SFO), in 2008, about $1 billion was transferred between Madoffâ€™s U.S. and U.K. operations, reported Bloomberg. The SFO, said Bloomberg â€œprosecutes complex white-collar crimesâ€ and began its investigation into the case this January. The Telegraph said that officers from the U.K.â€™s Serious Organised Crime Agency (SOCA), which it described as the British â€œFBI,â€ is collaborating with the U.S. Department of Justice (DOJ) to investigate Madoffâ€™s activities; the U.S. Attorneys Office and SOCA are also working with the SFO.
Bloomberg reported that Madoff is accused of moving over $250 million over six years through his New York-based firm to his London operations and back into accounts in the U.S. Bloomberg also reported that just prior to his arrest, the London unit paid $2 million to Ruth Madoff, Bernard Madoffâ€™s wife.
Madoff International was staffed with about 25 traders, managers, and support workers, and was owned almost exclusively by Madoff, serving as his proprietary trading unit, said Irving Picard, reported Bloomberg. Picard was appointed trustee by the Securities Investor Protection Corporation to â€œunwindâ€ Madoffâ€™s businesses in response to a February filing with a London court, said Bloomberg, which added that, according to Picard, the New York and London operations â€œmay well be inextricably intermingled.â€ U.K. liquidators focusing on â€œapparently unwarranted payments to third partiesâ€ have interviewed London staff and instructions that they communicate with Madoff Securities through personal, not company email, Picard said.
Prosecutors say the London accounts were used to have it appear as if Madoff were buying international securities on behalf of his clients as well as to buy property and services for his and his familyâ€™s personal use, said the Telegraph.
Picard has found about $1 billion in Madoff assets, which includes $75 million recently found in an account held in Britainâ€™s territory of Gibraltar, said the Telegraph, which said that the DOJ believes that over $65 billion in monies belonging to â€œthousands and thousandsâ€ of investors was laundered through Madoffâ€™s American accounts over a 30-year period, noting that the full extend of Madoffâ€™s fraud might never be known.