Austria Takes Over Bank Crushed By Madoff

Bank Medici's $3B Loss Blamed On Swindler; SEC Checking Claims That Complaints About Madoff Were Ignored

(CBS)  Written by CBS News investigative producer Laura Strickler.

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An Austrian bank suffering more than $3 billion in losses from the collapse of Bernard L. Madoff’s investment scheme was taken over by the Austrian government today, according to a statement on the Web site of Austria’s financial regulator Finanzmarktaufsicht.

Bank Medici’s CEO Peter Scheithauer also resigned.

Messages at Bank Medici’s offices in Vienna were not immediately returned.

In Washington, lawmakers on Capitol Hill are preparing for the first Congressional hearing on Madoff’s $50 billion Ponzi scheme on Monday.

One of the key witnesses will be the Securities and Exchange Commission’s (SEC) top internal cop, David Kotz, the agency’s Inspector General.

CBS News has learned Kotz’s investigation will include an examination of possible conflicts of interest with the SEC’s New York office. The agency has been sharply criticized for ignoring complaints about Madoff’s investments.

Kotz’s first investigative report will be out in a few months and may be closely followed by a series of reports. If Kotz’s investigators find serious problems with the way the SEC’s New York office responded to complaints about Madoff, the IG’s office will consider recommending changes to the SEC’s current Madoff investigation.

On Wednesday, Madoff’s lawyers turned over a complete list of Madoff assets to the SEC’s New York office.

More victims of the Ponzi scheme continue to emerge. The latest are in Montana, more than 2,000 miles from Madoff’s Upper East Side penthouse.

“We have a 94 and a 95-year-old widow, these are not sophisticated investors - they relied on an investment advisor who invested their money in a Ponzi scheme,” Lynne Egan, Montana’s Deputy Securities Commissioner, told CBS News.

Egan said she received a call on Monday from an investment adviser in Bozeman who told her 33 of his clients lost over $18 million. Egan claims the adviser, who she will not name, lost millions personally in addition to his clients’ funds and is “shell-shocked.”

The adviser told Egan he was alerted to the Madoff collapse by a phone call from one of his clients who had seen the news on television. Egan said the adviser placed millions in the Madoff feeder fund Tremont Capital and another unidentified feeder fund since 2002. Egan added that her office will conduct a parallel investigation into Madoff to see what can be done in the future to prevent this kind of fraud.

Meanwhile, the hunt for Madoff money overseas continues. The Cayman Islands Monetary Authority posted a statement indicating, “An initial check of the Companies Registry shows no Madoff-related entity incorporated in the Cayman Islands.”

But there are registered Cayman entities matching the names of feeder funds that are now being sued by their investors, such as: Ascot Fund Limited, Ariel Fund Limited and Maxam Absolute Return Fund.

However, CBS News has learned the main Madoff-related vehicles for Fairfield Greenwich Group, a major Madoff feeder fund, are registered in the British Virgin Islands.

[benfrenchnyc]

Test.

[incog-nito]

BTW, why are so many "American" companies registered in some tiny island-country? Answer: to avoid paying U.S. taxes. Of course, that doesn''t stop Corporate America from complaining they pay too much tax. The American people truly are suckers.

[jsilver2th]

Boy and I thought I was a lousy investor-

How could this guy con the Bank of Medici?

What about the complaints to SEC?

I wonder if we will ever see the trail of the money and see where this really leads?

Another warm memory of the Bush years

[xmissile]

Madoff should do the world a favor and just end it.

[hsinco-2009]

Why does this guy still have a luxery apartment? Or luxury anything?

He needs to be kept in a rubber room so he doesn''t have the ability to off himself as we need his knowledge of where stuff is for restitution.

Then if he wants to off himself, who are we to stop him?

[cbsblogger]

Madoff obviously had a huge amount of internal and external clout, and it was more than sufficient to keep the SEC at bay, be assured of that. There is no way that the warnings that the SEC received from a few people would have progressed into an active investigation into the Madoff organization. His rich and powerful friends on Wall Street and in Congress would have made sure of that. Even if the SEC had wanted to investigate it wouldn%u2019t have happened.

[scotch41-2009]

Posted by legacyABQ at 09:54 PM : Jan 02, 2009
~~~~~~~~~~~~~~~~~~~~~~~~~
GET OFF OF THE RACE KICK!!! If you have a legitimate claim, fine....but please!!! Just because you are black doesn''t make you entitled to everything on this planet....I am sooo tired of hearing the race card played when you people have nothing more to offer!!!!!!!!

[goosfraba2]

legacyABQ at 09:54 PM : Jan 02, 2009

Spot on, "legacyABQ."

endrepubs at 05:13 PM : Jan 02, 2009

Good one.

[xlib]

Maybe Austtria can take over our Social Security system since it''s the biggest ponzi scheme going. Oh yea, it''s legal cause the feds run in. AND, they''ll run health care, auto industry (can''t wait to see the cars queen nance and her cour jester harry design for us phlebs). Yep, let the government run everything.

[whitemale08]

But not to anyone who matters.


Posted by julesarcher1 at 05:27 PM : Jan 02, 2009

You mean Republicans, Hugo Chavez is loved and embraced by millions if not billions around the world.

Just stop the hatin'', it makes you look bad.