Madoff probe focuses on tax havens
Madoff probe focuses on tax havens
James Doran in New York
The Observer, Sunday 28 December 2008
The hunt for funds allegedly cheated out of investors by Bernard Madoff, who faces fraud charges in New York, has turned to offshore tax havens where investigators believe he may have salted away hundreds of millions of dollars.
Stephen Harbeck, chief executive of America's Securities Investor Protection Corporation (Sipc) and official receiver of Madoff's now defunct brokerage business, said the hunt for funds was likely to spread all over the world. "We will trace funds wherever the trail goes," he said on the steps of the US Bankruptcy Court for the Southern District of New York.
Sources close to the investigation said forensic accountants examining Madoff's books believed he had regularly sent large sums of money to offshore accounts in the Caribbean and Europe. "There are accounts at New York Mellon Bank that we have been looking at that appear to have sent and received money from offshore locations," a senior source said. Tracking down the money investors entrusted to Madoff is likely to be one of the longest and most complicated financial investigations on record.
Harbeck said investigators were dealing with a "highly complex hybrid fraud", adding each individual investment account operated by Madoff could be its own self-contained fraud. "But it is still too early to say with any certainty what was going on inside Madoff's business."
The scandal took a chilling turn last week when Rene-Thierry Magon de la Villehuchet, the co-founder of a firm that lost millions investing with Madoff, was found dead in his New York apartment. Access International Advisors - Magon de La Villehuchet's firm - is understood to have lost $1.5bn in the Madoff affair.
On the same day a New York judge ruled that Madoff's investors would receive no more than $100,000 in cash compensation, no matter how much they lost. The ruling was included in a series of court orders made on 23 December by US bankruptcy judge Burton Lifland.
For the biggest losers in the Madoff scandal, the compensation is a drop in the ocean. Fairfield Greenwich, the investment firm run by Madoff chum Walter Noel, lost $7.5bn in the fraud while womenswear magnate and Madoff mentor Carl Shapiro lost $545m of his personal fortune. Claims for compensation will be restricted to those investors who can prove they sent money to Madoff in the 12 months prior to his arrest on 11 December.
Judge Lifland invited Madoff investors to attend a meeting at the US Bankruptcy Court on 18 February.
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