Madoff faces new charges; Congress starts probeJanuary 6th, 2009 - 11:12 am ICT by IANS
Washington, Jan 6 (DPA) Bernard Madoff, the high-flying Wall Street investor who is awaiting trial in a $50-billion investment Ponzi scheme, faces a new set of charges alleging that he tried to hide valuables including jewellery.New York prosecutors brought the new charges Monday to a judge in Manhattan federal court, where they said Madoff had mailed off $1 million worth of valuables in violation of an asset freeze, Bloomberg financial news service reported.
The items included watches and cuff links, which he sent to relatives.
Madoff, 70, was placed under house arrest in December for allegedly running a $50-billion Ponzi scheme - a pyramid-selling racket where people paid into fictitious investments. Instead, their money was used to pay handsome dividends to earlier investors.
The US Congress Monday opened a probe into the scheme with a view to tightening US laws governing financial markets. The US and much of the rest of the world are in the midst of the worst financial crisis in generations.
Lax regulation of US investment banks and high-flying, risky investment instruments are blamed for the crisis that brought lending to a near halt in the second half of 2008. US stocks in 2008 had their worst drop since the Great Depression.
Members of the US House committee on financial services were astounded that Madoff’s investors enjoyed steady returns of 10 percent a year no matter how the markets were performing, without regulators ever investigating.
They wondered why no one at the Securities and Exchange Commission, which regulates the industry, ever questioned the use of a mom-and-pop auditing firm, which employed three accountants out of a suburban strip mall, to monitor such a large operation.
“There was an auditor the size of a mouse examining a fund the size of an elephant,” said committee Chairman Paul Kanjorski.
The Wall Street Journal reported Monday that the Madoff firm had been looked at closely by auditors eight times during 16 years, and yet no one seemed to notice anything wrong.
“Our securities regulators have not only missed opportunities to protect investors against massive losses from the most complex financial instruments like derivatives, but they have also missed the chance to protect them against the simplest of scams,” Kanjorski said.
“Clearly, our regulatory system has failed miserably, and we must rebuild it.”
The collapse of the Madoff scheme sent ripples through Europe, where Swiss investors and at least one bank, UBS, stand to to lose $6 billion. The Vienna-based Bank Medici AG was set to come under state control after exposure to up to $3.6 billion in Madoff-related losses.
The scandal is blamed for at least one death - the suicide of Rene-Thierry Magon de la Villehuchet, 65, a French financier who lived in New York and operated the $1.4-billion hedge fund Access International Advisors.
Numerous private fortunes as well as charitable endowments have been lost in the scandal.