Madoff Free On Bond, But Not From Scrutiny

Alleged Fraud Mastermind Monitored By Feds; Obama Says Scandal Proves "Reform Is Needed"

(CBS/AP)  Bernard Madoff spent his first day under electronic monitoring Thursday as President-elect Barack Obama said the scandal brought on by the disgraced investor "has reminded us yet again of how badly reform is needed."

The effects of the $50 billion fraud has spread around the globe, and a Michigan-based foundation created to grant money to get healthy food into urban areas is among the latest to say it is going out of business because of the scandal.

Obama mentioned the Madoff saga as he named three veteran regulators to help clean up financial debacles that he said occurred because government overseers "dropped the ball." The Securities and Exchange Commission has come under fire for failing to detect Madoff's alleged deception despite repeated warnings, especially from a Massachusetts investor who has been sounding the alarm for the past decade.

He told a colleague in the late 1990s when he first noticed something was amiss, "This has to be a Ponzi scheme," according to a report in The Wall Street Journal.

Madoff had his bail conditions modified Wednesday. He must be at the Upper East Side residence from 7 p.m to 9 a.m. and wear an ankle-bracelet to monitor his movements. His wife was ordered to surrender her passport.

Cameras awaited Madoff as he walked out of the courthouse Wednesday toward his black SUV. Minutes later, a smirking Madoff was swarmed by more cameras as he entered his apartment building, with the scrum at one point turning into a shoving match between Madoff and a journalist.

Madoff's chaotic return to his $7 million apartment came on a day when the fallout over the scandal spread through the nation's capital, with the Securities and Exchange Commission taking heat and Congress jumping into the fray.

The chairman of the House capital markets subcommittee, Rep. Paul Kanjorski, D-Pa., announced an inquiry that will begin early next month into what may be the biggest Ponzi scheme ever and how the government failed to detect it. The SEC is also looking into the relationship between Madoff's niece and a former SEC attorney who reviewed Madoff's business.

In all likelihood, the alleged scammer is only the first of his ilk to come to light, says Richard Parker, an economist and professor at Harvard's Kennedy School of Government.

"I think these are like cockroaches or termites," he suggested to co-anchor Harry Smith on The Early Show Thursday. "There are always more that you don't see. ... There's always, in every economy, somebody who's embezzling.

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Follow the Madoff Money Trail
A look at the people and institutions that have lost millions in the alleged Bernie Madoff Ponzi scheme.

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Madoff, who has already surrendered his passport, made his appearance in the courthouse to shore up conditions of his bail package. The judge had required him to find two additional co-signers to vouch for Madoff, but he was apparently unable to find anyone as the cloud of scandal swirls around him.

Judge Gabriel W. Gorenstein responded by approving a modification to the bail package. As a result, Madoff had to sign over his Upper East Side apartment and his homes in Palm Beach and the Hamptons.

In Washington, SEC Chairman Christopher Cox again found himself on the defensive after days of withering criticism that his agency did not do enough to root out the fraud.

"We have thus far no evidence of any wrongdoing by any SEC personnel," Cox told reporters at SEC headquarters. "We need to go about this in a thorough, professional way."

SEC Inspector General David Kotz is looking into the agency's failure to uncover the alleged fraud in Madoff's operation. One area Kotz said he will examine is the relationship between a former SEC attorney, Eric Swanson, and Madoff's niece, Shana, who are now married.

As an SEC attorney, Swanson was part of a team that examined Madoff's securities brokerage operation in 1999 and 2004. Neither review resulted in any action against Madoff. In a statement about Swanson's role, the SEC compliance office cited its strict rules prohibiting employees from participating in cases involving firms where they have a personal interest.

A spokesman for Swanson said that he and Shana Madoff met at a breakfast in October 2003, started dating in April 2006 and married last year.

Another potential conflict also emerged in Washington on Wednesday.

U.S. Attorney General Michael Mukasey removed himself from the probe because his son, Marc Mukasey, is representing Frank DiPascali, a top financial officer at Madoff's investment firm. The Justice Department refused to say when Mukasey became aware of the conflict but confirmed he was removing himself from all aspects of the case.

DiPascali was the Madoff employee who had the most day-to-day contact with the firm's investors. Several described him as the man they reached by phone when they had questions about the firm's investment strategy, or wanted to add or subtract money from their accounts.

The events unfolded the day after Cox delivered a stunning rebuke to his own career staff, blaming them for a decade-long failure to investigate Madoff.

Credible and specific allegations regarding Madoff's financial wrongdoing going back to at least 1999 were repeatedly brought to the attention of SEC staff, Cox said. He said he was gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate the allegations or at any point to seek formal authority from the politically appointed commission to pursue them.

Cox's critics said that targeting the staff was Cox's attempt to salvage his own reputation.

"He put in place the people he is now shifting the blame to," said Ross Albert, a former SEC senior special counsel and federal prosecutor and now a private attorney in Atlanta.

Senate Majority Leader Harry Reid, D-Nev., suggested Cox bears some of the responsibility for what went wrong.

"I served in Congress with Christopher Cox, but I don't think he's going to make the All-Star team," said Reid.

[snoop99991]

The whole financial industry is nothing more than a scheme for a bunch of greedy SOBs in pin stripe suits to rip off as much money as possible with help from ..
I wish this was China, Bernie wold be taken out and executed. But no, in America he can stay in his penthouse.. Whan a F N country...........!

[hairyonetooo]

Most of the stock market, Wall St., SEC, Nyse, Nasda1 is all fraud and a giant ponzi scheme.

Its just like a lottery. I''d rather go to a casino with my life savings rather than invest in the stock market.

[hairyonetooo]

There''s no way he could have done all he did without cover and help from the SEC. Follow the money and see which fat cats in the GOP and Wall st got part of the 50 Billion.

[birdyard1]

that scum ball should be confined to my place while waiting trail , that would teach him , I''ll bet he is being waited on head and foot by a bounch of hoes

[ahrats]

What a country you rob a bank its 25 years and you don''t get to stay at home you get an 8x10 cell. You steal 50 billion you get to stay at you 7 million dollar apartment, oh and he can still go anywhere after 7 am till 9 pm. What a joke this scandle is why he''s not in a 8x10 cell I dont know, i''ll bet he skips the country. What he can afford a fake passport?

[pizzanick]

Madoff should be judged by a jury of his investors - the jewish mafia? the russian mafia? the italian mafia? I wanna see how fast he gets concrete shoes and count the holes in his head. This guy stole $50B and he''s living in his penthouse in Manhattan. Some guy steals $50 from the quickie mart and becomes Tyrone''s girlfriend on Rykers Island. If people don''t take arms over this and overthrow the crooks in Washington and Wall Street then this democracy is doomed!

[puritan9]

Before investigating anyone, we need to know who has multimillions in offshore bank accounts like in the Bahamas and Swiss banks. That is where the loot is stored. It would be stupid to think that these rich families - traitors to humanity - would have their money in the Savings and Loan at Bedford Falls!

[rhs648]

Free on bond?

I bet some of the victims could use the bail money-

What a joke- I''''ve seen people that steal pampers and baby food that don''''t get out on bond...


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Posted by jsilver2th

Somehow this guy found $10,000,000 dollaras to post bond. Actually, I believe that you don''t have to put up the whole amount if you have collateral and use a bails bondsman. In fact, it might be as little as 10% but I''m sure other posters can correct me if I am wrong.

[whitemale08]

The whole ''hedge fund'' industry (if you can call it an industry) is a legal PONZI scheme.

That''s why Maggot-Madoff so readily admitted that his hedge fund was a ''PONZI'' scheme.

The question is: will the rest of these hedge fund managers and ''buy-out-firms'' admit that they are running a ''PONZI'' scheme?

The only reason why Maggot-Madoff got caught was because he didn''t have a clause to ''halt'' withdrawals like other hedge-funds have made their clients signed.

[madoffwithit]

Madoff is a financial terrorist and should be sent to Gitmo.

http://www.madoffwithit.com

[jsilver2th]

Free on bond?

I bet some of the victims could use the bail money-

What a joke- I''ve seen people that steal pampers and baby food that don''t get out on bond...

[boatdocster]

Do a little research on Google before you spout off trying to tie everything dreadful to George Bush and Republicans.

Posted by sunnygirl9 at 06:42 PM : Dec 18, 2008

You are right - Madoff walking after ripping off people for 50 Billion is about the only dreadful in the last 8 years not caused by Bush. Most everything else falls squarely in the Chimp''s court.

[cariboubarbi]

If you rob a liqour store you can count on going to jail and staying there for a while.

This guy stole billions and he''s free.

[donevis-2009]

"Mad-dog, isn''''''''t even in the country, let alone at his mansion. They guy in the picture is a paid look-alike, who will serve whatever house-arrest sentence the courts levy. Mad-dog is at one of his villas in Spain, sipping expensive wine, fondling young girls and wiring money to Swiss accounts for all the SEC officials he''''s paid off." Posted by BRdeckard at 05:34 PM : Dec 18, 2008

Boy, did you make my day. Thanks a gob!
And it''''s just crazy enough to be true....
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Posted by LloydBest1 at 06:36 PM : Dec 18, 2008

WOW!! I hate to appear as with the tinfoil hat crowd but they pic of Madoff in the back of the limo does appear to be quite a bit older than the guy shown in the Media Mob. Lloyd I''m standing right beside you on that comment!!

[culturechang]

He got by pretty easy free on bond after a $50 billion dollar rip off. I know some massage parlor operators who ran a brothel using consenting adults and they remain in federal custody without bond since May 07.

Just goes to show you that the moralists who write and enforce all these laws believe stealing is ok....but *** is a sin....even though the Ten Commandants doesn''t really stipulate it that way. Stealing is a sin. *** is not necessarily a sin, but it sure gets the headlines.

[donevis-2009]

It appears, by the aggressive reporters, the media crews may have had orders to dog Madoff with everything they had. Our media is owned by some of the people that got screwed out of big bucks and are super isspedoff. This just may be their way of sending over tiny and knucks. It%u2019s been along time since we have seen this kind of physical involvement from today%u2019s media crews.

The way I see it this is poetic justice!! Years ago the Media would have been over a story as big as what had been reported to the FEC 10 years ago. They would have been demanding documents and transparency in these matters. Could it be that the Media owners and Madoff were all in bed with other? This would explain why there wasn%u2019t any public attention paid if the stories were cut from the AP. How could we have demanded answers with the information not being reported to us to know there was something amiss? Well if this is true and these owners see the error of their ways by protecting themselves and their money makers, maybe will start getting some real news again. Uhh how many years did O.J. get?

[sunnygirl9-2009]

Bernard Madoff is a registered DEMOCRAT who has contributed large sums of money over the years to DEMOCRATIC candidates. Do a little research on Google before you spout off trying to tie everything dreadful to George Bush and Republicans. That is just as silly as blaming Barack Obama and Democrats for Bernard Madoff''s crimes. Comments like this degrade any intelligent discussion.

[lloydbest1]

"Mad-dog, isn''''t even in the country, let alone at his mansion. They guy in the picture is a paid look-alike, who will serve whatever house-arrest sentence the courts levy. Mad-dog is at one of his villas in Spain, sipping expensive wine, fondling young girls and wiring money to Swiss accounts for all the SEC officials he''s paid off." Posted by BRdeckard at 05:34 PM : Dec 18, 2008

Boy, did you make my day. Thanks a gob!
And it''s just crazy enough to be true....

[donevis-2009]

It appears, by the aggressive reporters, the media crews may have had orders to dog this guy with everything they had. Our media is owned by some of the people that got screwed out of big bucks and are super isspedoff. This just may be their way of sending over tiny and knucks. It%u2019s been along time since we have seen this kind of physical involvement from today%u2019s media crews.

[jizzumjim]

what''s so bad about ripping off the rich and famous.