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Sources: Madoff Indictments Imminent
Ruby Washington, The New York Times / Redux
Two people close to the Bernie Madoff investigation tell Lucinda Franks prosecutors will issue more indictments after Labor Day, and new evidence is pointing toward family members.
Xtra Insight: Lucinda Franks on Madoff's Other Girlfriends
Federal prosecutors, who have worked for nearly six months to figure out who helped Bernie Madoff pull off history’s biggest Ponzi scheme, are poised to make multiple indictments in the weeks after Labor Day, according to two people familiar with the investigation.
Moreover, an FBI source tells The Daily Beast that investigators have compiled additional evidence against members of Bernie Madoff's family, specifically his brother Peter Madoff, and his sons Andrew and Mark Madoff. “There is enough hard evidence [against the family members] that the U.S. Attorney’s office could provide to a grand jury,” says the FBI source. “Whether they will is anybody’s guess. They’re in a mess over there. They really don’t know what they’re doing.”
“We have finally been able to put most of the pieces of the puzzle together… we just need a little more and we need to decide the most expeditious way to present them.”
Others argue that the U.S. Attorney is moving slowly and meticulously in order to make as many winnable cases as possible. Some of the first indictments, one of the sources said, will be operatives in the feeder funds that participated in the Ponzi scheme. Another person of interest, according to the sources, is Annette Bongiorno, whom prosecutors have been told directed employees on the notorious 17th floor, home of the spurious investment advisory division, to falsify statements and create bogus data rather than execute real trades for clients.
One of the sources said that among 20 million documents authorities discovered in a Queens warehouse, a story first reported by The Daily Beast, was a harsh note Bongiorno wrote ordering an employee to falsify client statements and not to argue about it. It has already been reported that Bongiorno told her two assistants to check the stocks, average out the prices for the previous month, and then send clients phony statements.
Should an indictment come, federal authorities would seem sure to offer Annette Bongiorno a chance to cooperate in return for a reduced sentence. Judge Richard Sullivan’s surprising decision last week to ignore the Feds' agreement with former Madoff deputy Frank DiPascali, and instead send him to jail, will surely weigh on any cooperating witness.
DiPascali, who ran the sham advisory business from the 17th-floor offices, has already proven very valuable to the investigation, one of the sources said. Specifically, he has said that he can provide evidence against big investors who illegally got phony loss statements so they could use them for tax breaks and the feeder-fund directors who either knew or should have known they were furthering a Ponzi scheme by taking outrageously large commissions for every customer they landed.
"We have finally been able to put most of the pieces of the puzzle together," says the FBI source. "We have them, we have corroborating details, we just need a little more and we need to decide the most expeditious way to present them. Like the order of the indictments, for one." The source said the Feds wanted to get the most money they could to turn over to the trustee for the victims.
It is unclear how much information DiPascali will give about the involvement of members of the Madoff family. The evidence against Madoff's sons centers around how they ran the supposedly legal brokerage operation of Bernard Madoff Securities.
John Talks Joe
Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
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Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
Madoff's Other Girlfriends
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
Ruth's $45 Million Stash
Allan Dodds Frank is a business investigative correspondent who specializes in white collar crime. He also is President of the Overseas Press Club of America, one of the many journalism organizations that protests the arrests of journalists abroad and repression of freedom of speech.
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
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Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
No doubt they knew and it sounds like evidence is there to prove that they did. The guy, his family and the whole ugly sordid episode gets grimier as it unfolds like a filthy rag. Yet, that he got a conscience and confessed, it still surprises me.
Btw, how did this creepy person get so many ladies? Goodness, they must have been getting excellent gifts.
On the contrary, they were paying him...LOL
artois,
Right. Could it get any more revolting than that? Guess we just wait and see, eh?
This is just the beginning, ladies and gentlemen! Perp walks to come at Goldman, JP Morgan, BoA, etc. etc. Stay Tuned! George Patton
Agreed. There's no way this could have gone on for as long as it did and NO one suspected or was involved.
This should be no big surprise, these disclosures prove what anyone with common sense new from the beginning,,, that no single person, no matter how brilliant, could have possibly pulled off a scheme to defraud of this scale, without involving an extensive network of co-conspirators having complete perpetuating knowledge that allowed it to go undetected for so long.
From your lips to God's tin ears...
Yes, several key moments in my own life I have witnessed things that have caused me ponder, wondering if perhaps for some unrevealed reason it was being allowed to go on and then out of the blue the stars align and there are consequences. God and consequences, the creator made us with our imperfections, and has chosen to deny us knowledge of the true begining or end of the universe, but I suspect, in this case,we are going to find out everything we need to know about Bernies World.
I want a spoon.
michaelslevinson dot commie
I didn't read anything here that makes me think the sons knew about the illegal activities. There is a lot of conjecture about how the family "must have know". I am not convinced that is the case at all. I think he may have protected his sons and he managed to keep his love affairs and pro massages a secret from his wife, why is everyone so coninvced that he told her about his huge scam? I doubt if the sons will be charged and I am quite sure Ruth won't be but the people who are robbed of their life savings will follow her like avenging furies all of her life.
There is a doctrine in the law called "willful blindness". Many people are in prison today serving long sentences because of what they "should have known". Don't delude yourself. Ruth and the boys are easy indictment fodder. The only sound theory I heard thus far is that they haven't been charged because Bernie can be subpoenaed and undermine prosecutors by testifying that they knew nothing about it.
I wonder how many investors ,knew down deep. I think the feds shouldmake everyone give back every dime they took out in profits. and than redistribute accordingly whats left
I always know when the byline is Lucinda Franks' that I am about to read something no other reporter following the Madoff story has been able to uncover. Kudos on more fine investigative work and I for one can't wait to see them all indicted. It will certainly be worth the wait if the cases the prosecutors bring in are all winnable.
Prosecutors win these types of cases not because they're good at what they do (they usually have no idea of what they're talking about) but because judges (former prosecutors) give them so much lattitude.irrespective of the prejudice to defendants. Have no delusions, this is a witchunt (with great pains taken not to look like one) with prosecutors only thinking about the political capital this prosecution will garner for them. But the truth is that sometimes the witches are guilty....
What a perfectly ridiculous generalization about judges and prosecutors. This case will be tried in a federal courtroom and whether the judge was a prosecutor or a legal aid lawyer before going on the bench, the defendants will get fair trials. Yes, there are exceptiongs (see The Benchwarmers) but the SDNY has the most outstanding group of judges and prosecutors in the entire country. Your suggestion about "political capital for the US Attorney is equally absurd - I doubt you can even name the US Attorney who is presiding over this investigation.
My point is that all cases are "winnable" because prosecutors are allowed to cheat by judges...so the waiting they're subjecting the public to is just a ploy to maintain the tension.
Can't understand why its all taking so long. Two indictments in seven months with the entire force and power of the US Gov't behind this high profile investigation? What about Shana Madoff? She was the friggin compliance officer.
So when do the investigations into the SEC begin?
Great breaking story, Lucinda. Thanks for your continued and future writing on this scandal. The House of Cards are indeed about to all fall.
How about the fact that the entire family was using the business Amex for personal expenses? Can't there be an IRS//Tax implication for all of them? Isn't it undeclared income?
Personally, I am so sick of a certain group of people amongst us that continue to lie, cheat and steal while hiding behind, and being camouflaged by, their cloaks of professionalism.
Bernie is just one example of the horrors inflicted upon unassuming, innocent Americans in the recent past.
Some examples include: Enron, Adelphia, sub-prime mortgages, short-selling, derivatives, hedge funds, ballooning APR's, overdraft fees, $5.00 / gallon gasoline, and on and on.
When is somebody going to stand up and just tell everybody to stop cheating and stealing from one another for personal gain? Someone must coin a new word for the fleecing of society to further one's material desires.
Seems as though the people who perpetrate this anti-social behavior often have outsized ego's and dreams of lifestyles beyond that which we see paraded on televison. $18,000. umbrella stands, $100 million dollar art collections, multiple mansions, etc. Capitalism is a great system, but it is vulnerable in that there is plenty of room for people to take advantage, and skew things to primarily their own personal benefit.
We hear now of the super computers at the big brokerage houses that can make hundreds of trades per second thereby assuring (penny by penny) a hefty profit for them at the end of the day. Again, everyday Americans do not stand a chance of succeeding with the rules now set by big business, banking, investment, etc.
I wonder why after billions of dollars worth of taxpayer bailouts, and even more billions of bonuses awarded, all the while in the same news broadcast we hear of Americans being thrown out of their homes by Marshalls, that more people aren't connecting the dots and seeing how manipulated we all are by big American Business and how we now exist to serve them, rather than the other way around.
Life is becoming very difficult for many of our fellow citizens and these greedy, dishonest entities are wreaking havoc with society and future henerations of Americans who deserve to enjoy the benefits of a set of rules our forefathers created to make our Nation as mighty as it once was.
It is bad enough to know that outside forces are trying to destroy our way of life, but when you have people like Bernie Madoff, Dick Fuld, Ken Lay and all of the others working against us, it then becomes very sad and could be considered modern day cannibalism.
It is just a matter of time, more heads than we possibly could imagine, related to this case, will be dropping in the bucket with a thump.
I say Stop Extracting Cash, that is not yours. And voila, I just spelled out SEC.
Ms. Franks continues to supply us with the information about
which we have questions. I, for one, am glad that they are being
"meticulous," because somebody -- probably a number of somebodies -- had to know that all was not kosher. Thanks
again to Ms. Franks and to The Daily Beast.
It is obvious what was missing was proper risk analysis, and if the details were so difficult to trace back, then it is obvious the audit was possibly bogus.
And of course that is what happened, Madoff's accountant allegedly was rubber stamping financial documents as if said assets had been validated as still existing.
That is the real story.
People didn't ask how and why, possibly because they feltthey weren't knowledgeable enough in financial matters, which is why they were going to a so called expert to start with.
I am curious as to what legal actions will take place against feeder funds/ walter noel, et al. Will these people go to jail?
How do you make the gigantic leap from obvious lies told by Bernie in an elevator to his son's having knowledge of the fraud? Clearly we know now that Bernie would tell the clients anything that he thought they wanted to hear. It would make total sense to tell a client that his sons would take over the business if he were to retire. That is not evidence. Sorry. Moreover, his claim that he ran the trades through his brokerage business was also a lie as there were no trades at all. Once again, this is not evidence.
The fact that this elevator exchange is sited as proof that the sons knew about the Ponzi scheme is the kind of reporting that helps prosecutors win cases that might not be solid to begin with.
There is a huge difference between tales and lies and hard evidence.
Thank you.
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