Double Trouble for Madoffs?

(CBS)  When former financier Bernard Madoff was arrested last month and accused of swindling clients out of $50 billion, he insisted his family members were in the dark, even though some of them held key positions in his investment firm. But now, a CBS News investigation by Chief Investigative Correspondent Armen Keteyian has uncovered evidence that raises questions about what Madoff's family knew - and when they knew it.

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In Palm Beach, Fla., there are two lavish homes within 10 minutes of each other. The first, worth an estimated $9.3 million, belongs to Bernard Madoff. The other, said to be worth $4.6 million, is the Florida residence of Peter Madoff, Bernard's brother and long-time business partner.

The paper trail on these two residences calls into question what family members may have known.

CBS News has learned that Madoff and his brother, along with their wives, took steps two years ago -- around the time that federal regulators started probing Madoff's business activities -- that could help prevent their Florida homes from being taken away from them, something possible under Florida state law.

"Florida has very unique laws and has been described by some as a debtor's haven," said John Pankauski, a Florida estate attorney. "People who may want to protect their property will seek the protection of Florida laws."

Florida's "homestead" laws, which are unlike what any other state has, in part allow homeowners facing legal judgments (or other financial issues) to protect their primary residence fully - keeping it out of the hands of potential creditors. One of the key steps in qualifying for the home-protection is seeking "homestead exemption," which provides homeowners with a tax break.

On May 10, 2001, Peter Madoff bought the home at 200 Algoma Road in Palm Beach, Fla., along with his wife Marion. Both were listed as owners at the time.

Five years later, on Nov. 8, 2006, Peter transferred the title to Marion making her the sole legal owner of the home.

(CBS)

A month later, on Dec. 28, 2006, Marion applied for, and soon after received, homestead exemption.

According to federal documents, during this time the Securities and Exchange Commission was in the middle of what turned out to be a two year investigation into Madoff's company, Bernard L. Madoff Investment Securities LLC, for "fraudulent activities." The investigation began on Jan. 6, 2006.

"Why are you transferring assets to your spouse? What caused that transfer? If you are transferring assets for estate planning purposes why wasn't it done before?" said Pankauski.

An expert told CBS News that Peter Madoff would have almost certainly been aware of the SEC investigation at that time because he was the company's chief compliance officer.

"The chief compliance officer is really the point person the SEC is going to deal with," said Robert Heim, former assistant regional director of the SEC's New York Office.

(Lucien Capehart)

Meanwhile, property records show Bernard Madoff's Palm Beach mansion at 410 N. Lake Way has been in his wife's name since it was purchased in March of 1994.

But, information obtained exclusively by CBS News reveals that it wasn't until Dec. 10, 2006, that Ruth Madoff applied for homestead exemption. This was within weeks of when her sister-in-law Marion applied for the same exemption.

"That raises a red flag," Pankauski told CBS News. "When you have two spouses of two executives who are being investigated by the SEC going down to Florida saying 'hey, I want homestead status.' It draws into question why it was done. It's highly suspicious."

(CBS)

Ruth Madoff's initial application for homestead in 2006, however, was denied by the Palm Beach Property Appraiser's Office because she was not able to prove at the time that her Florida home was in fact her primary residence.

CBS News has learned that on Sept. 18, 2008, about two months before Bernard Madoff's arrest, Ruth reapplied for homestead exemption. Her request was granted just two weeks ago on January 12, 2009.

Keteyian asked: "If it was discovered that during the course of a SEC investigation the Madoffs were moving assets, what would that tell you?"

"It shows that the people that are being investigated, in this case, the Madoffs, have a certain consciousness of guilt," Heim said.

Peter Madoff's role in the scam, if any, remains unclear. But timing of the homestead exemption requests raises questions as to who knew what and when.

CBS News contacted the attorneys for both Madoff brothers. They had no comment.

[mabrams11]

and PS this has nothing to do with God

[mabrams11]

if this was me or anyone that I know, the spouse would automatically lose everything too

[amirsamani]

SO MANY PEOPLE ARE UPSET ABOUT WHAT MADOFF HAS DONE WITH OTHER PEOPLES MONEY, BUT THEY SEEM TO FORGET IT IS THAT SAME MONEY THAT ALLOWWED THOSE GREEDY INVESTORS TO PROFIT IN THE FIRST PLACE. ALL OF THAT MONEY CAME FROM MILLIONARES TO BEGIN WITH AND MADOFF TOOK IT FROM ONE PERSON TO PAY ANOTHER, SO THAT MEANS THAT HE DOESNT HAVE 50 BILLION DOLLARS IN HIS POSSITION. ALL THOSE WHO HAVE PUT THEIR MONEY IN STOCKS OR WHATEVER MAY HAVE MADE OR LOST MONEY. THIS SCAM IS NO DIFFERENT. ALL INVOLVED WITH THIS SCAM ARE VICTIMS OF GREED. THIS MAN WAS BRILLIANT.

[virulent3]

If anyone wants to give someone elses'' money to a cause, without their permission or knowledge, how is it done? The Madoff scheme. For decades phoney investors gave what would turn out to be the S.I.P.C.s'' American taxpayers dollars in 2009. Except it isn''t going to happen at all. On US currency notes is printed: This note is legal tender. ANYONE who messes with the US Treasury Dept. WILL rue the day they made THAT mistake! The entire episode was crooked from the beginning! Everyone knows this now.If ardent supporters of the state of Israel want to give their money, fine. Why all the skulldugery and ripoff-itus? Why not openly request more US foreign aid? Or borrow more money in an honest, transparent way? M.J.M.

[ahrats]

When the smoke clears I believe the Madoffs will all be charged with the 50 billion fraud and the wives will be living in their million dollar homes but have no income since their crooked husbands will be in jail or dead. Son and daughters of the Madoff clan better be watching their back people who lost the 50 billion dollars will be looking for their pound of flesh.

[toolmangler-2009]

Does anybody remember "Billy Sol Estes"? These two seem like family, (crooks all)

[madoffvictim]

This is just another example of the illogical and harmful actions that we are seeing by the judicial and legal systems.
we have formed a group of former Madoff investors in an effort to share information and offer support.
we are working toward a unified plan for restitution and recovery.
if you''re interested in joining the group, please email [e-mail]

[madoffvictim]

This is just another example of the illogical and harmful actions that we are seeing by the judicial and legal systems.
we have formed a group of former Madoff investors in an effort to share information and offer support.
we are working toward a unified plan for restitution and recovery.
if you''re interested in joining the group, please email [e-mail]

[madoffvictim]

This is just another example of the illogical and harmful actions that we are seeing by the judicial and legal systems.
we have formed a group of former Madoff investors in an effort to share information and offer support.
we are working toward a unified plan for restitution and recovery.
if you''re interested in joining the group, please email [e-mail]

[docadams3]

Charge the State of Florida as an accomplice, especially every decision-making official in office at the time. The whole place is corrupt.