Double Trouble for Madoffs?

CBS News Investigates: Brother Of Bernard Made Florida Real Estate Moves That Raise Questions About How Much Family Knew

(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.

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.

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."

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.

[mk446699]

We all want them in jail. But I want every cent they and their relatives have - seized and distributed to the victims. All ceo''s who have milked their positions by stacking their boards with people also in on the scams of unbelievable payments to the crooks should have to give it all back and then go to jail. I want them all homeless and suffering wondering where their next meal will come from. If I were their judge, they would not have a home left nor a car nor anything else. It should all be sold to repay victims. IT WAS NEVER THEIR MONEY.

[mk446699]

America will start recovering economically when all the finanacial crooks are prosecuted, jailed, and ALL their assets seized and distributed to the victims. Look how long it took to bring Ken Lay to answer for his sins. Lay''s assets were not seized and should have been. Maybe Madoff is hoping he will be able to keep it all. Is he right? Look, crooks are around every corner. Look at the credit card companies, look at Wall Street, look at those who stand around and let it all happen. I think the crooks should start to tremble. The people will suffer a lot more than now and someone will have to start answering for this *** eventually.

[sebastian27-2009]

It appears that the financial laws in this country are consciously made by the legislators to protect dead-beats and crooks. I have a difficult time understanding how all of these people sleep at night knowing what misery they have caused. I suppose that they take to heart the P.T.Barnum motto, "There is a sucker born every minute."And they figure they might as well take advantage of them before someone else does. It will be interesting to see how much the law protects them. Madoff already has the judge in his pocket. He should be in jail.

[tincup356]

When are they going to be locked-up? Hopefully soon. Why is it taking the government (authorities) such a long time to put them where they belong?

Will Bernie and his cronies plead insanity? Will they say they did not know what they were doing? Will the Goverment go along with that plea? Or is the Government trying to clean up their own mess before they do anything to Bernie?

As for the investors (gamblers really because playing the stockmarket is a gamble) who got caught in Bernie''''s scam, they deserve what they got. They were greedy just like Bernie. When they gave their money to Bernie they should have realized that the returns he said they would get were too good to be true.

Put this guy and his cronies in prison and throw away the key. Please!

Posted by Realist91 at 04:23 PM : Jan 31, 2009.............havent you heard all the current jail cells are full of marijuana law violators.....they are so much more dangerous than a man stealing 50 billion dollars and wrecking many lives...Bummer if only they had not been so busy with the war on drugs,,,they could have been chasing corporate fraud......NOW they might just have to admit their war on drugs was a joke...legalize marijuana and create millions of jobs and billions in revenue,,,we need new industry Obama,,,and here is your chance to give America ...A GREEN ONE TOO.

[met9]

The Mad0ff family is no different from the rest of the wall street crooks. These are the same people who recieved $350 Billion of our tax dollars and turned around and paid themselves $18+ Billion in bonuses for 2008. Bernie is sitting at home in NY because he has been buying congress for years. I think that alot of people are very nervous about what he can say and he is using that leverage to his advantage.

[realist91]

When are they going to be locked-up? Hopefully soon. Why is it taking the government (authorities) such a long time to put them where they belong?

Will Bernie and his cronies plead insanity? Will they say they did not know what they were doing? Will the Goverment go along with that plea? Or is the Government trying to clean up their own mess before they do anything to Bernie?

As for the investors (gamblers really because playing the stockmarket is a gamble) who got caught in Bernie''s scam, they deserve what they got. They were greedy just like Bernie. When they gave their money to Bernie they should have realized that the returns he said they would get were too good to be true.

Put this guy and his cronies in prison and throw away the key. Please!

[realist91]

When are they going to be locked-up? Hopefully soon. Why is it taking the government (authorities) such a long time to put them where they belong?

Will Bernie and his cronies plead insanity? Will they say they did not know what they were doing? Will the Goverment go along with that plea? Or is the Government trying to clean up their own mess before they do anything to Bernie?

As for the investors (gamblers really because playing the stockmarket is a gamble) who got caught in Bernie''s scam, they deserve what they got. They were greedy just like Bernie. When they gave their money to Bernie they should have realized that the returns he said they would get were too good to be true.

Put this guy and his cronies in prison and throw away the key. Please!

[realist91]

When are they going to be locked-up? Hopefully soon. Why is it taking the government (authorities) such a long time to put them where they belong?

Will Bernie and his cronies plead insanity? Will they say they did not know what they were doing? Will the Goverment go along with that plea? Or is the Government trying to clean up their own mess before they do anything to Bernie?

As for the investors (gamblers really because playing the stockmarket is a gamble) who got caught in Bernie''s scam, they deserve what they got. They were greedy just like Bernie. When they gave their money to Bernie they should have realized that the returns he said they would get were too good to be true.

Put this guy and his cronies in prison and throw away the key. Please!

[realist91]

When are they going to be locked-up? Hopefully soon. Why is it taking the government (authorities) such a long time to put them where they belong?

Will Bernie and his cronies plead insanity? Will they say they did not know what they were doing? Will the Goverment go along with that plea? Or is the Government trying to clean up their own mess before they do anything to Bernie?

As for the investors (gamblers really because playing the stockmarket is a gamble) who got caught in Bernie''s scam, they deserve what they got. They were greedy just like Bernie. When they gave their money to Bernie they should have realized that the returns he said they would get were too good to be true.

Put this guy and his cronies in prison and throw away the key. Please!

[truth_police]

This article totally FAILS to make clear exactly what the point is here. In Bankruptcy proceedings it is UNLAWFUL to attempt to transfer assets for the purpose of defrauding creditors (attempting to put money out of their reach). Such evasive debtor actions or ''attempts'' are called "Fraudulent Transfers" and such transactions are deemed a "nullity" ... even when they occur BEFORE the debtor filed for Bankruptcy. The question is whether there is an EQUIVALENT operating rule of law here in this ''non-bankruptcy'' situation. I think there is, but this article totally failed to squarely address this crucial point or resolve this pivotal question. One suspects, from the tone of the article, that there is such a rule in this kind of situation which may apply in this case to nullify these fraudulent Madoff transfers. CBS News MISSED THE STORY. We are left as clueless as we were before the article appeared. As useless, content-barren CBS report.