Wall Street broker offers no comment in alleged $50-billion US fraud
Last Updated: Friday, December 12, 2008 | 7:08 PM ET
The Associated Press
A Wall Street power broker for nearly 50 years who built an influential investment firm has offered no comment in response to allegations of a massive fraud that will cost investors at least $50 billion US.
Bernard Madoff, 70, charged with securities fraud, declined to speak to reporters after a judge in U.S. District Court in Manhattan ordered him released Thursday night on $10 million US bail.
Andrew Calamari, associate director of enforcement in the Securities and Exchange Commission's New York office, said the SEC has filed a civil securities fraud charge as well, alleging "a stunning fraud that appears to be of epic proportions."
The SEC said it was seeking emergency relief for investors, including an asset freeze and the appointment of a receiver.
If the allegations are true, it may be the largest fraud ever blamed on a single individual.
Defence lawyer Dan Horwitz called Madoff "a person of integrity" and said he intends to fight the charge. If convicted, Madoff could face 20 years in prison and a fine of $5 million.
The case is based on what Madoff told two FBI agents and three senior employees of his firm, Bernard L. Madoff Investment Securities LLC.
It would be a steep fall for Madoff, a former Nasdaq stock market chairman who founded his business in 1960 with $5,000 earned as a lifeguard on Long Island beaches, shortly after leaving law school.
His firm was a market maker, handling trades in some of the largest securities on various stock exchanges, matching buyers and sellers. Investigators say Madoff's crime originated in a separate and secretive investment advisory business.
The criminal complaint signed by FBI agent Theodore Cacioppi said Madoff told at least three senior employees at his Manhattan apartment on Wednesday that the advisory business was a fraud and had been insolvent for years, losing at least $50 billion.
Madoff told the employees he was "finished," that he had "absolutely nothing," that "it's all just one big lie" and it was "basically a giant Ponzi scheme," according to the complaint filed in court.
The employees understood Madoff's admission to mean that "he had for years been paying returns to certain investors out of the principal received from other, different, investors," said the complaint, which did not identify investors impacted by the scheme.
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