Madoff Said to Meet With SEC About Agency Oversight
Madoff Said to Meet With SEC About Agency Oversight By David Scheer and David Glovin

June 18 (Bloomberg) -- Bernard Madoff, awaiting sentencing for running a $65 billion Ponzi scheme, met a U.S. Securities and Exchange Commission official probing the agency’s failure to detect the fraud, a person familiar with the matter said.

Madoff, 71, met SEC Inspector General David Kotz, the person said, declining to be identified because the inquiry isn’t public. CNN previously reported the three-hour meeting, held yesterday, citing unidentified people with knowledge of the situation.

Agency spokesman John Heine and Madoff’s attorney, Ira Sorkin, declined to comment. “Everything will come out in our filing” to the court before sentencing, Sorkin said.

Lawmakers, preparing to restructure U.S. financial regulation, have pressed Kotz to scrutinize the SEC’s handling of Madoff’s firm before the New York money manager’s arrest in December. Kotz’s office had questioned 44 witnesses as of March 31 and planned “numerous, additional” interviews, according to a report to Congress released this month. It is also reviewing more than 1 million e-mails.

Madoff faces as many as 150 years in prison when he is sentenced June 29 after pleading guilty in March to a massive fraud, in which he paid off old investors with money raised from new clients. Lawmakers have questioned why the SEC failed to uncover the decades-long scheme, especially after another money manager repeatedly warned investigators that Madoff’s reported profits weren’t possible.

Employee’s Voice

Separately, prosecutors filed an additional 30 letters from victims of Madoff’s fraud with the judge who will sentence him. Among them was one from New Jersey State Senator Loretta Weinberg, who said she lost her savings in an investment with a feeder fund that invested with Madoff.

“He has caused sleepless nights for us as we try to figure out how to make ends meet,” she wrote. “I am a victim, having had my life savings stolen from me by a man I never heard of.”

Another letter is from Ken Hutchinson, who says he worked for the firm for 18 years and wants to speak at Madoff’s sentencing.

“We lost our jobs, our health coverage and, most importantly, our trust in a company that we worked tirelessly to build,” Hutchinson wrote. “We have not had a voice.”

To contact the reporter on this story: David Scheer in New York at dscheer@bloomberg.net, and David Glovin in U.S. District Court in New York at dglovin@bloomberg.net.

Last Updated: June 18, 2009 17:59 EDT
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