April 20, 2024

Longtime Madoff Employee to Plead Guilty

NEW YORK (Reuters) – One of Bernard Madoff’s longest-serving employees is expected to plead guilty to criminal charges in the multibillion-dollar Ponzi scheme, U.S. prosecutors said, the latest among a dozen former employees to face charges.

Irwin Lipkin, a former controller of Bernard L. Madoff Investment Securities LLC, will appear in Manhattan federal court on Thursday, prosecutors said in a letter to the judge.

He will plead guilty to charges of conspiracy to commit securities fraud and falsifying documents, prosecutors told U.S. District Judge Laura Taylor Swain in the letter, which was dated Tuesday, September 11.

The letter said Lipkin, 74, created “false financial records t hat were provided to BLMIS investors,” false filings with the U.S. Securities and Exchange Commission and false statements required under a federal law that sets standards for pension plans.

Lipkin’s lawyer, David Richman, was not immediately available to comment. The charges carry a maximum possible prison term of 10 years.

Lipkin’s son, Eric Lipkin, another former Madoff employee, pleaded guilty in 2011 to criminal charges of bank fraud and charges that he reported people were Madoff employees so they could receive retirement benefits.

Irwin Lipkin joined Madoff’s firm in 1964, according to court records. Court papers showed that he continued to draw a salary from the firm even after he stopped working there in 1999.

Madoff, 74, was charged in December 2008 with a decades-long fraud that the government originally estimated at as much as $64.5 billion. He pleaded guilty in March 2009 and is serving a 150-year prison sentence.

The trustee leading the search for money to return to Madoff’s victims says Madoff defrauded customers of about $20 billion. The trustee, Irving Picard, so far has won $9.1 billion in recoveries and settlement agreements.

On June 29, Madoff’s brother Peter pleaded guilty to criminal charges. He had been chief compliance officer at his brother’s firm. He has agreed to accept a 10-year prison term.

Of the dozen people charged in the case, apart from Bernard Madoff, five have pleaded not guilty and are awaiting trial.

The case is U.S. v. O’Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-00228

(Reporting By Grant McCool; Editing by Martha Graybow and Dan Grebler)

Article source: http://www.nytimes.com/reuters/2012/09/12/business/12reuters-madoff-controller-plea.html?partner=rss&emc=rss

DealBook: Regulators Charge Futures Brokerage Firm With Fraud

4:05 p.m. | Updated

The Commodity Futures Trading Commission on Tuesday charged a futures firm and its chief executive with fraud and making false statements after nearly $200 million in customer funds went missing.

The regulator is seeking a restraining order against the Peregrine Financial Group, also called P.F.G., to prevent the destruction of any information that may be needed in the course of the investigation. The C.F.T.C. is also asking a federal court to appoint a receiver for the firm and freeze its assets. A day earlier, the chairman and chief executive, Russell Wasendorf Sr., tried to commit suicide outside of the firm’s offices in Cedar Falls, Iowa.

The Federal Bureau of Investigation is investigating the matter, according to a spokeswoman for the Omaha office, Sandy Breault. Ms Breault indicated that the Chicago office of the agency may also get involved.

News of the missing money surfaced Monday, when the firm’s primary regulator, the National Futures Association, determined that an account that was supposed to have $225 million of customer money actually held just $5 million. A further review of records showed that the firm had been falsifying its records as far back as 2010, the regulator said in its complaint. In February 2010, an account that purported to have some $218 million in reality contained just $10 million.

“P.F.G. and Wasendorf have used customer funds for purposes other than those intended by its customers, and consequently, have misappropriated these funds,” the complaint states. “The whereabouts of the funds is currently unknown.”

How the money came to be siphoned off from customer accounts remains a mystery, particularly in the wake of increased scrutiny on the futures industry after the collapse of MF Global.

After the fiasco at MF Global, which left customers missing more than $1 billion, regulators vowed to ensure the safety of customer money. Both the N.F.A. and the C.F.T.C. conducted reviews of futures firms to reassure investors. The regulators granted them all clean bills of health.

P.F.G. is a well-known firm in the tight-knit community of futures brokerage firm. Mr. Wasendorf was considered by many to be a pioneer of the industry, having been registered with the C.F.T.C. since 1992. He fully owned P.F.G., and his son, Russell Wasendorf Jr., served as president of the company.

On Monday, the N.F.A., which is an industry self-regulator, moved to halt operations at the firm immediately after discovering the shortfall. In a report filed late Monday, the National Futures Association said that bank statements from US Bank, where customer money was held, could have been fabricated.


This post has been revised to reflect the following correction:

Correction: July 10, 2012

Based on documents provided by the Commodity Futures Trading Commission, an earlier version of this article listed the incorrect headquarters of Peregrine Financial Group. The firm is based in Cedar Falls, Iowa, not Cedar Rapids.

Article source: http://dealbook.nytimes.com/2012/07/10/regulators-charge-futures-brokerage-with-fraud/?partner=rss&emc=rss