Madoff Explains How He Concealed Fraud

(CBS)  In a wide-ranging jailhouse interview with SEC Inspector General David Kotz, convicted swindler Bernard Madoff explained how he managed to conceal his multi-billion-dollar fraud operation.

"It never entered the SEC's mind that it was a Ponzi scheme," Madoff said, because of "the reputation I had."

"They thought the likelihood of Madoff being a big criminal was probably not something that was realistic," said Paul Atkins, a former SEC Commissioner.

At the height of his career, Madoff was regarded as a financial genius, he even served as chairman of NASDAQ, reports CBS News correspondent Randall Pinkston.

In 2003, Madoff was sure he would be caught and was surprised when investigators did not check his accounts to see if he had actually traded stocks - which he had not.

It is accounting 101, Madoff told the inspector general, to look at DTC - Depositor Trust Commission - to discover a Ponzi scheme.

"With one phone call they could have brought the whole thing down," Atkins said.

"I worried every time," Madoff said in the interview. "I wish they caught me six years ago, eight years ago."

Atkins said part of the lesson is for investors to be more skeptical.

"They need to ask questions and in the Madoff case, there were not just red flags for the SEC, there were red flags for investors," Atkins said.

Boston accountant Harry Markopolos did ask questions, but his warnings to the SEC - that Madoff was running a Ponzi scheme - were ignored.

Madoff described Markopolos as "a joke in the industry."

By last December, the joke was on Madoff when he admitted that his operation was fraudulent and had cost his clients billions of dollars.

Attorney Barry Lax says that Madoff's statement is one more reason the SEC should be held accountable.

"We're representing many victims against the SEC," Lax said. "We believe the sec was simply negligent in its investigations and examinations of Madoff's business."

In a related matter, on Tuesday, David Friehling, Madoff's accountant, is expected to enter a guilty plea on fraud charges. Prosecutors say Friehling never performed an audit of Madoff's company.

[gosstom]

We're representing many victims against the SEC," Lax said. "We believe the sec was simply negligent in its investigations and examinations of Madoff's business."
Criminally negligent, Stupid. Quick, check this clowns law degree. See if it came from a Philippine Law School.

[intheusa]

Just to think the investigators for the SEC can't catch billion dollar fraud. There is no way that would be able to catch fraud in the millions.

From Washington to Wall Street so much money un accounted for, and they want to penalize me for a $90 error on my tax return !! :)

[ibsteve2u]

"It never entered the SEC's mind that it was a Ponzi scheme," Madoff said, because of "the reputation I had."

lollll...that, in a nutshell, is why America is going to that hot place in a handbasket.

Ability and honesty took a back seat to force of personality some time ago; you could pinpoint when by determining when the phrase "networking" entered business jargon as the definition of how to succeed.

All good con artists network well...it is a job prerequisite.

[Virgil-1]

His kind soon become American heros.For instance,Jesse James.

[erb0087]

"Madoff Explains How He Concealed Fraud"

Not very well, if he's explaining it in a jailhouse interview.

[Sheik2009]

Many good, and many debatable points made here regarding this article. The "Big Picture" remains, however, that most of the financial regulations put in place right after the Great Depression were repealed in December 2000, while everyone was discussing "hanging chads" during the presidential election debacle. Interesting timing for the repeal. I have to ask the simple question (since no "promised" regulations of the financial industry have materialised with the new administration): why not reinstitute the same regulations that were repealed in December 2000? If they served us fairly well for over 60 years, and would have minimzed or prevented the financial meltdown last year that now leave us with a shattered economy, why not reinstitute them again for starters?
We need these regulations NOW. History has shown us that human greed will always float to the top without controls.

[Larry358]

I thought his daughter had a "romantic" relationship with an SEC regulator.

[canislupus16]

or was it his niece? whatever

[Sky017]

Madoff is just the tip of the iceberg. Google and watch: "The Money Masters"

[jacobmarley3]

One poster boy down, millions more to go. "Just over a year after economic calamity brought promises of reform from Washington, has Wall Street really changed? Former International Monetary Fund chief economist Simon Johnson and US Rep. Marcy Kaptur (D-OH) report on the state of the economy."
http://www.pbs.org/moyers/journal/10092009/watch.html

I hope you are sitting for the answer.

[curse914]

Bravo Jacob; deregulated capitalism aka laissez faire aka Mussolini Fascism is about to show us once again why Mussolini's "people" hung, stabbed, burned and drug his body through the streets. If you think it can not happen again here in the "Land of the Free", you are sadly mistaken.

[payasyougo]

"Madoff Explains How He Concealed Fraud"
----

He modeled it after Social Security.

[curse914]

The New Deal gave the mob just enough to keep this nation from going full on socialist from the bottom up. FDR did not "betray" his class, he saved them from a coup that would have been most violent in its cleansing.