Madoff: Banks and Hedge Funds Knew of Fraud

For 26 months since Bernard Madoff's multi-billion dollar Ponzi scheme unraveled -- one of history's great financial villains -- has claimed he acted alone, reports CBS News correspondent Jim Axelrod.

Now he's telling the New York Times certain banks and hedge funds were "complicit" in his fraud, calling it "willful blindness" in an interview published Feb. 16. "They had to know. But the attitude was sort of, 'if you're doing something wrong, we don't want to know,'" Madoff said in the interview.

"American law treats willful blindness the same as actual knowledge -- you can't shut your eyes and avoid having knowledge attributed to you that you would have known had you opened your eyes" said Columbia Law School professor John Coffee.

George Neirenberg who lost his life's savings with Madoff, the interview strengthens his suspicion about the complicity of banks.

"It stirs up a certain level of anger for me," said Neirenberg."If they had some sort of awareness and had reported it - a lot of people would have been spared undue hardship in their lives."

Madoff didn't name specific banks or funds, but he says he met in prison with Irving Picard, a court-appointed lawyer trying to recover money for some of Madoff's victims and provided him with "useful" information.

"He is a very self-serving witness," said Coffee.

And may be the least credible man in America. While Picard has filed a $6.4 billion suit against JP Morgan Chase alleging bankers there had concerns about Madoff but did nothing -- Even Picard's camp says Madoff's story isn't true. They put out a statement today: "at no time did any meeting between the two take place and there has been no direct communication between them at any time."

"He is at the inner circle of financial hell and he wants other people around him to share the guilt and culpability -- he's a man who has to rationalize the suicide of his child," said Coffee.

In the interview, Madoff said he never asked to be allowed attend his son's funeral because it would've caused a "media circus". He also said no family members knew about his massive fraud.

  • Jim Axelrod

    Jim Axelrod is the anchor of the Saturday edition of the "CBS Evening News" and a national correspondent for CBS News, reporting for the "CBS Evening News with Scott Pelley" and other CBS News broadcasts.

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