Madoff’s Wife Withdrew $15.5 Million from Cohmad , State Claims : withdrawal on eve of Bernie's arrest

/Home/Madoff Enablers and Madoff Naysayers/The Enablers who Helped Fund Bernie Madoff/Robert Jaffe VP- Cohmad Securities Corp

Madoff’s Wife Withdrew $15.5 Million, State Claims

By Christopher Condon

Feb. 11 (Bloomberg) -- Bernard Madoff’s wife withdrew $15.5 million from a brokerage account at a firm co-owned by her husband late last year, including $10 million on the eve of his arrest, Massachusetts securities regulators said.

Ruth Madoff removed $5.5 million on Nov. 25 and the rest on Dec. 10. from New York-based Cohmad Securities Corp., according to a complaint filed today by Secretary of the Commonwealth William Galvin. Bernard Madoff was arrested Dec. 11 for allegedly operating a $50 billion Ponzi scheme.

Galvin, the state’s top securities regulator, said evidence of the withdrawals supports his claim that Cohmad and Bernard L. Madoff Investment Securities LLC are “so intertwined that they could be viewed as a common enterprise.” He is seeking to revoke Cohmad’s state securities registration for failing to fully cooperate with his investigation about its relationship with Madoff.

“We cannot tolerate licensed securities dealers who refuse to assist in the detection and prosecution of fraud,” Galvin said in a statement today.

Ira Sorkin, an attorney for both Bernard and Ruth Madoff didn’t immediately return a call for comment on Galvin’s complaint. Ruth Madoff hasn’t been charged in the case.

Bernard Madoff, 70, was arrested in New York after allegedly confessing that he and his firm used new money to pay old investors in a Ponzi scheme. He faces as much as 20 years in prison if convicted of securities fraud.

U.S. prosecutors today obtained a 30-day extension of a deadline to indict Madoff. The government was required either to return a grand jury indictment or present evidence to a judge by today showing why Madoff was arrested. Instead, Sorkin said in an interview he agreed to reschedule the hearing for March 13.

Jewelry Transfer

A complete list of assets held by Madoff and his wife was provided in December in a confidential tally to the U.S. Securities and Exchange Commission. John Heine, a spokesman for the SEC, said today that he couldn’t immediately comment on whether the money was on the list of assets.

Government prosecutors tried to have Madoff jailed in January for violating a court-ordered asset freeze by attempting to dispose of $1 million in valuables.

Madoff mailed $1 million in watches and jewelry, including Tiffany and Cartier watches and a diamond necklace, to relatives in December. A federal court judge in Manhattan allowed Madoff to remain under house arrest in his Upper East Side apartment. The ruling was upheld last month.

In 2006, Ruth Madoff took steps to protect a property in Florida from seizure under the state’s homestead laws, CBS News reported on Jan. 30. A 2006 homestead application was denied by the Palm Beach Property Appraiser’s office, CBS said. She reapplied last September and was granted an exemption on Jan. 12, CBS said.

Cohmad

Cohmad, based in New York, was founded by Madoff and Maurice Cohn, chairman and chief executive officer of the company, using portions of each man’s name to form the firm’s title. The statement identified Madoff’s brother, Peter Madoff as another owner and Cohn’s brother, Milton Cohn, as a director.

Cohmad is named in Galvin’s complaint as a “feeder fund” to Madoff’s investment firm. Cohmad earned more than $67 million over eight years sending investors’ money to Madoff, the complaint said. Galvin called the two firms “deeply intertwined.”

Documents showing Ruth Madoff’s withdrawals from a Cohmad account were attached as exhibits to the complaint.

Cohmad and its principals either failed to respond to subpoenas or failed to provide complete answers to state investigators’ questions, Galvin said in his statement.

His securities division wants to account for all Massachusetts investors that put money in Madoff’s firm through Cohmad.

$67 Million

Madoff Investments made monthly payments to Cohmad over eight years “that appear to add up to $67 million,” the complaint said. The payments made up more than 84 percent of Cohmad’s total income, the complaint said.

The figure doesn’t include commission payments to Robert Jaffe, a co-owner of and vice president of Cohmad and head of its Boston office.

Jaffe is the son-in-law of Carl Shapiro, 95, a Boston philanthropist who allegedly lost $430 million in personal funds and assets from his family’s foundation that was invested with Madoff. Massachusetts officials said last month that Jaffe, 64, is considered a witness and isn’t under criminal investigation.

Jaffe appeared at the securities division office in Boston on Feb. 4 and “declined to answer any questions regarding his business, Cohmad’s business or his connection to Madoff Investments,” invoking his Fifth Amendment rights, the statement by Galvin’s office said.

Jaffe’s attorney, Stanley S. Arkin of Arkin Kaplan LLP in New York, wasn’t immediately available to comment.

To contact the reporter on this story: Christopher Condon in Boston at Ccondon4@bloomberg.net.

Last Updated: February 11, 2009 13:12 EST