Some portions of the report were blacked out. Earlier this week, Schapiro said she wanted to safeguard any ongoing law enforcement action, and protect the names of junior staffers who did not play a central role in the examinations or investigations.
Kotz found that former SEC Assistant Director Eric Swanson's romantic relationship with Madoff's niece, Shana Madoff, had influenced the SEC's conduct.
After Madoff was arrested, the SEC's director of examinations' Richards recused herself from all matters concerning Bernard Madoff because Swanson had been in her chain of command.
From SEC Official Whose Unit Got Madoff Tip Had Family Money by Scam - BL, 2009 September 04, by David Scheer The e-mailed tip to the Office of Internet Enforcement was among at least six warnings the SEC failed to fully investigate during 16 years, Inspector General H. David Kotz said in a report released today. Investments by two members of the official’s family were disclosed as a footnote in the 457-page report, which doesn’t identify him or disclose any losses. ..... The Internet unit official told Kotz’s staff that he wasn’t aware of the tip until after Madoff’s fraud collapsed in December, and that it should have been forwarded for further investigation, according to the report. An attorney working in the office testified she couldn’t remember whether she referred it. Kotz concluded that it never was passed along. SEC spokesman John Nester declined to comment. John Reed Stark, who has led the SEC’s Internet program since 1995, couldn’t immediately be reached after normal business hours. ..... Kotz also found that examiners failed to follow up on signs of fraud found during a routine examination of Renaissance Technologies LLC. An SEC compliance examiner informed his supervisor about internal e-mails at Renaissance, which indirectly invested in Madoff’s fund through a swap agreement with another firm, saying Madoff’s business may be a fraud, Kotz wrote. While the agency started an investigation of Madoff, it didn’t return to Renaissance to examine its information. ..... Family members of a U.S. Securities and Exchange Commission enforcement official, whose unit got an anonymous tip in 2005 suggesting Bernard Madoff may be running a Ponzi scheme, entrusted $2 million to the scam, the agency’s internal watchdog said.
From Madoff’s Fraud Signaled in SEC Renaissance Review - BL, 2009 September 04, by Joshua Gallu An SEC compliance examiner informed his supervisor about the internal e-mails at Renaissance, which indirectly invested in Madoff’s fund through a swap agreement with another firm, saying Madoff’s business may be a fraud, Inspector General H. David Kotz wrote in a 477-page report released today. While the agency started an investigation of Madoff, it didn’t return to Renaissance to examine its information. Renaissance e-mails said Madoff’s secrecy, auditor and fee structure were significant red flags, the report said. Nathaniel Simons, portfolio manager for a Renaissance fund, said he didn’t understand how Madoff made money or why he used a fee structure that gave such a large percentage of profits to feeder funds. “As we don’t know why he does what he does, we have no idea if there are conflicts in his business that could come to some regulator’s attention,” Simons said in an e-mail dated Nov. 13, 2003, according to the report. “Throw in that his brother-in-law is his auditor and his son is also high up in the organization and you have the risk of some nasty allegations.” ..... Madoff’s fund base was “far short” of what he needed, Paul Broder, the risk manager at East Setauket, New York-based Renaissance, said in an e-mail on Nov. 21, 2003, according to the report. “None of it seems to add up.” ..... The U.S. Securities and Exchange Commission failed to follow up on signs of Bernard Madoff’s Ponzi scheme found during a routine examination of Renaissance Technologies LLC that revealed concerns he may be running a fraud, the agency’s internal watchdog said.
If any person believes the top brass at the SEC were unaware of any potential problems with Madoff I have some land in Florida and a bridge in Brooklyn for sale.
Madoff was "untouchable."
If any of the people in L/E, or oversight, dared suggest Madoff, J Ezra Merkin (with four feeder funds), and all the foundations and "charities" colluding with Madoff were engaged in money laundering and tax evasion ----they would have lost their jobs.
All these suckers had to do was request Madoff's order slips-----to know THERE WERE NO TRADES BEING MADE.
The trustee ID'ing Madoff's assets unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth...... and assets and businesses in 11 places overseas.
No question-----tax evasion and money laundering was the name of the game for the wealthiest Madoffians-----businessmen who were funneling income to Madoff to avoid US taxes.........acting like "philanthropists."
Madoff's buddy---J Ezra Merkin--making zillions feeding funds to Madoff---co-owns an Israeli bank. This is critical b/c Israel is the only place in the world when an individual can debark, go to a bank with a suitcase full of cash---and nobody asks where they got it or if taxes were paid on it.
REFERENCE---NY POST, 8/4/09
ISRAEL-US 'CROOKS' -- AP
JERUSALEM -- Vigilant Israeli police said that they had broken up an Israeli-American crime ring specializing in tax fraud and money laundering. A joint probe with US authorities led to the arrest in Israel of seven suspects. The ring members defrauded the IRS of tens of millions of dollars and deposited the money in Israeli bank accounts, according to a police statement. http://www.nypost.com/seven/08042009/news/worldnews/israel_us_crooks_182868.htm
The tax-exempt dimension to Madoff's fraud is very fishy. Madoff was connected to numerous so-called tax-exempt " charities, and family foundations." The IRS has pinpointed tax-exempt "foundations and charities" as the locus classicus for tax evasion money laundering, and IRS fraud.
The landscape is littered with these "foundations and charities." Investigators need to determine why wealthy Brooklyn, NY residents registered some 800 tax-exempts in Lakewood, NJ.