SOME MADOFF INVESTORS "MAY HAVE KNOWN"

FROM ATTORNEYATLAW.COM

reprinted as fair use

Some Madoff Investors and Associates May Have Known of Fraud, Prosecutors Say

Authorities working to unravel the $65 billion Ponzi scheme run by former investment advisor Bernard Madoff now say a few high-profile clients and friends may have known of the fraud and assisted in the scheme.

According to a Wall Street Journal report, federal prosecutors are now looking past Madoff and probing at least eight investors and associates, including some well-known names. New York City philanthropists Jeffry Picower and Stanley Chais, who have already been named in a suit by the trustee liquidating Madoff’s assets seeking return of their profits, and Carl Shaprio, a clothing designer and friend of Madoff, are among those under criminal investigation for their alleged roles in the investment fraud, the Journal said.

According to the report, investigators have found evidence that Picower and Chais had told Madoff how much they wanted their investments to yield and that their account balances would reflect that amount. Shapiro reportedly knew that his profits earned on Madoff investments were fraudulent.

Madoff, the 71-year-old former NASDAQ chairman, pleaded guilty in March to running the largest investment fraud in U.S. history. For nearly 20 years, Madoff said he failed to invest client funds and instead bankrolled the money to pay for a lavish lifestyle while paying early investors to his scheme with funds contributed by later investors.

He is to be sentenced in June 2009 and could receive to up to 150 years in prison.

While Madoff has claimed all along that he acted alone and that his wife, two adult sons, brother, and others close to him had no knowledge of or involvement in his fraud, federal prosecutors have been skeptical. The sheer magnitude and depth of the fraud, for example, makes it unlikely to be a one-man job, the feds said.

Madoff’s longtime accountant was charged with lying about having conducted independent audits of the investment firm’s books and “claw back” actions have been filed seeking return of millions that were taken out of Madoff’s empire before the fraud was discovered.

The people behind several “feeder funds” which delivered clients and money to Madoff also have been charged or sued for their alleged roles in carrying out the Ponzi scheme.