12/11/08 madoff criminal complaint

8/14/2019 12/11/08 Madoff Criminal Complaint

1/5

Approved: 735MAC LITTAssistant United states AttorneyBefore: HONORALE DOUGLA F. EATONUnited States Magistrate JudgeSouthern District of New York

UNITED STATES OF AMERICA COMPLAINT- v. - Violation of15 D. C. SS 781 (b),78ff; 17 C. R.240. 10b-BERNAR L. MAOFF,

Defendant. COUN OF OFFENSE:NEW YORK 'SOUTRN DISTRICT OF NEW YORK, ss.

THEODORE CACIOPPI, being duly sworn, deposes and saysthat he is a Special Agent with the Federal Bureau ofInves.tigation, and charges as follows '

COUN ONE(Securities Fraud)1. From at least in or about December 2008 through thepresent, in the Southern District of New York and elsewhere,BERNAR L. MAOFF , the defendant, unlawfully, 'wilfully and

knowingly, by the use of the means and instrumentalities ofinterstate commerce and of themails. directly and indirectly.connection with the purchase and sale of securities, would anddid use and employ manipulative and deceptive devices andcontrivances in violation of Title 17, Code of FederalRegulations, Section 240. 10b-5, by (a) employing devices,schemes, and artifices to defraud; ' (b) making untrue statementsof material facts and omitting to state material facts necessarin order to make the statements made, in the light of thecircumstances under which they were made, not misleading, and (c)engaging in acts, practices, and courses of business whichoperated and would operate as a fraud and deceit upon persons, towit, MAOFF deceived investors by operating a securities businessin which he traded and lost investor money, and then paid certain


2/5

investors purported returns on investment wi th the principalreceived from other, different investors, which resulted inlosses of approximately billions of dollars.(Title 15, United States Code, Sections 78j (b) & 78ff;Title 17, Code of Federal Regulations , Section 240. 10b-5;and Title 18, united states Code, Section 2.

are The bases for my knowledge and the foregoing chargesin part, as follows:2. I have been a Special Agent with the FederalBureau of ' Investigation ("FBI" . for approximately six and one-half years, and I have been. personally involved in theinvestigation of this matter. The information contained in thisComplaint is based upon my personal knowledge, as well asinformtion obtained from other sources , including: a) statementsmade or reported by various witnesses with knowledge of relevantfacts; and b) my review of publicly available informationrelating to BERNAR L. MAOFF, the defendant. Because thisComplaint is being submitted for the limited purose ofestablishing probable cause, it does not include every fact thatI have learned during the course of the investigation. Where thecontents of documents and the actions, statements andconversations of others are reported herein, they are reported insubstanc and in part, except where otherwise indicated.3. I have reviewed the publicly available web site ofa securities broker dealer named Bernard L. Madoff InvestmentSecurities LLC, from which I have learned the following; (a)BERNAR L. MAOFF, the defendant, is the founder of BernardMadoff Investment Securities LLC; (b) Bernard L. MadoffInvestment Securities LLC is a securities broker dealer with itsprincipal offic in New York, New York; (c) Bernard L. MadoffInvestment Securities LLC "is a leading international marketmaker. The firm has been providing quality executions forbroker-dealers, bans and financial institutions since 'itsinception in 1960; (d) " (w) ith more tha $700 million in firmcapital, Madoff currently rans .among the top 1% of US Securitiesfirms; (e) BERAR L. MAOFF, the defendant, is a former Chairmof the board of directors of the NASDAQ stock market; and (f)"Clients know that Bernard Madoff has a personal interest , inmaintaining an unlemished record of value, fair-dealing, andhigh ethical standards that has always been the firm s hallmark.

4 . I have interviewed two senior employees of BernadL. Madoff Investment Securities LLC ("Senior Employee No. , and.Senior Employee No. , collectively the "Senior Employees"


3/5

The Senior Employees informed me, in substance, of the following:a. The Senior Employees are employed by BerndL. Madoff Investment Securities LLC, in a proprietary trading,and market making capacity. According to the Senior Employees,BERN L. MAOFF, the defendant, conducts certain investmentadvisory business for clients that is separate from the firm'proprietary trading and market making acti vi ties. According tothe Senior Employees, MAFF ran his investment adviser businessfrom a separate floor in the New York offices of BernardMadoff Investment Securities LLC. According to Senior EmployeeNo. MAOFF kept the financial statements for the firm underlock and key, and stated that MAOFF was crytic" abut thefirm' s investment advisory business.b. In or about the first week of December,BERNAR L. MAOFF, the defendant, told Senior Employee No. 2 thatthere had been requests from clients for approximately $7 billionin redemptions , that he was struggling to obtain the liquiditynecessary to meet those obligations, but that he thought that hewould be able to do so. According to the Senior Employees, theyhad previously understood ' that the investment advisory businesshad assets under management on the order of between approximately$8-15 billion. According to a Form ADV filed by MAOFF on behalfof Bernard L. Madoff Investment Securities LLC with the SEC on orabout January 7, 2008, MAFFrs investment advisory businessserved between 11 and 25 clients and had a total of approximately$17. 1 billion in assets under management.

c. On or about December 9, 2008, MAFF informedSenior Employee No. 1 that he wanted to pay bonuses to employeesof the firm in December, which was earlier than employee bonusesare usually paid. Accordingly to the Senior Employees, bonusestraditionally have been paid in February of each year. on orabout December 10, 2008, the Senior Employees visited MAOFP atthe offices of Bernard L. Madoff Investment Securities LLC todiscuss the situation further, particularly because it MAOFF hadappeared to the Senior Employees to have been under great stressin the prior weeks. At that time, MAOFF informed the SeniorEmployees that he had recently made profits through businessoperations, and that now was a good time to distribute it. Whenthe Senior Employees challenged his explantion, ' MAOFF said thathe did not want' to talk to them at the office , and arranged amee ing at MAOFF' s apartment in Maattan. According to SeniorEmployee No. 2, MAOFF stated, in substance, that he "wasn t surehe would be able to hold it together" if they continued todiscuss. the issue at the office.


4/5

d. At MAFF' s Manattan apartment, MAOFFinformed the Senior Employees, in substance, that his investmentadvisory business was a fraud. MAFF stated that he wasfinished, " that he had "absolutely nothing, " that "it' s all justone big lie, " and that it was "basically, a glant Ponzi scheme.The Senior Employees understood MAFF to be saying, insubstance, that he had for years been paying returns to certaininvestors out of the principal received from other, different,investors. MAOFF stated that the business was insolvent , andthat it had been for years. MAFF also stated that he estimatedthe losses from this fraud to be at least approximately $50billion. One of the Senior Employees has a personal account atBernard L. Madoff Investment Securities LLC in which severalndllion had been invested under the management of MAFF.e. At MAFF' s Manattan apartment, MAOFFfurther informed the Senior Employees that, in approximately oneweek, he planed to surrender to authorities, but before he didthat, he had approximately $200- 300 million left, and he plannedto use that money to make payments to certain selected employees,family, and friends.f. At MAOFF' s Manttan apartment, MAOFFfurther informed the Senior Employees that he had also recentlyinformed a third senior employee ("Senior Employee No. ), ofthe facts that MAOFF had just told the Senior Employees.

5 . On December 11 , 2008, I spoke to BERNAR L. MAFF,the defendant. After identifying myself, MAOFF invited me, andthe FBI agent who accompanied me, into his apartment.acknowledged knowing why we were there. After I stated, "here to find out if there' s an innocent explanation. " MAOFFstated, There is no innocent explanation. " MAFF stated, insubstance, that he had personally traded and lost money forinstitutional clients, and that. it was all his fault. MAOFFfurther stated, in substance, that he "paid investors with moneythat wasn' t there. " MAOFF also said that he was ftbroke" and"insolvent" and that he had decided that "it could not go on,ard that he expected to go to jail. MAFF also stated thathad recently admitted what he had done to Senior Employee Nos. 1,2, and 3.


5/5

12/11/08 madoff criminal complaint

Documents