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Attention Shifting to Ruth Madoff

Apr 7, 2009 | Parker Waichman LLP

Attention in the ongoing Bernard Madoff investment scam is shifting to Ruth Madoff, wife of the financial criminal behind the historic Ponzi scheme.  

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Most recently, Ruth Madoff declared her $9.4 million Palm Beach, Florida mansion her primary residence in an effort to protect the property from seizure, but ultimately, the property, which was vacant—as well as a luxury yacht—was among some assets seized by U.S. Marshalls.  Many of Madoff’s investors lost their entire savings to his fraud and although about $1 billion worth of assets has been located, this represents a mere fraction of what investors have lost.

Ruth also withdrew more than $15 million from an account at Cohmad Securities, an investment introduction business part-owned by Bernard Madoff which recruited investors for Madoff’s main fund, just days before her husband’s arrest, said the NY Times in an earlier article.  Ruth also mailed $1 million in jewelry to relatives after Bernard’s fraud became public, the Times said

CBS News is now reporting that some of those in the Madoff’s circle are saying that Ruth might have been more involved in her husband’s monumental Ponzi scheme that she has admitted.  According to CBS News contributor Lucinda Franks, “Ruth Madoff has more than one face….  One of my sources knew a woman who was bemoaning the fact that she couldn't get into Bernie's funds….  Ruth told her, 'Call him.  You can get into the fund.' So she called Bernie, and said, 'Ruth told me I should mention her name.' And Bernie said, 'You're in. How much do you want to invest?’”

According to Franks, "I don't think Ruth's worries are about money right now. Her husband salted away money all over the world in her name, and this is what investigators are trying to get back now," said CBS News.

Madoff faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff.  According to a prior Los Angeles Times report, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.  Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.

Earlier last month, Madoff’s attorneys claimed a Manhattan penthouse, $45 million in municipal bonds, and another $17 million held in a Wachovia account belonged to Ruth Madoff, and had no connection to the fraud. Advocates for Madoff’s investors have decried this move, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

Ruth Madoff has not yet been charged with a crime.

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