Madoff's Wife Made A Big Withdrawal The Day Before His ArrestFeb 12, 2009 | Parker Waichman LLP
Bernard Madoff's wife has been accused of withdrawing $15.5 million from a brokerage account at her husband’s firm just before her arrest in a complaint filed by the state of Massachusetts. According to The Wall Street Journal, the complaint is the first time Ruth Madoff's name has appeared in a complaint connected to her husband's alleged fraud. The allegations raise serious questions about how much she knew about her husband's dealings.
Bernard Madoff was arrested on one count of securities fraud on December 11. Madoff - once a chairman of the Nasdaq stock exchange - was the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm was primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.
According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.”
No one else in Bernard Madoff's family has been criminally charged in connection with the case, despite the fact that several of his relatives - including his sons, brother and a niece - were employed by his firm.
According to The Wall Street Journal, court papers filed by Massachusetts Secretary of State William Galvin assert that Ruth Madoff removed $5.5 million on November 25, and another $10 million on December 10, the day before her husband’s arrest. The papers were filed as part of Galvin's case against Cohmad Securities. Cohmad is an investment introduction business part-owned by Bernard Madoff which recruited investors for Madoff's main fund, the Journal said. Galvin is trying to prove that Cohmad was so intertwined with Madoff's firm that it constituted a "common enterprise." According to the Journal, Galvin is seeking to revoke Cohmad’s state securities registration because it allegedly withheld information about the Madoff case.
In other Madoff news, a federal judge in Manhattan has granted a U.S. prosecutor's request to extend an indictment deadline in the criminal case against him for 30 days. According to Bloomberg.com, the prosecutor said in court papers that the government and Madoff's lawyer are in “discussions” about a “possible disposition” of the case. Basically, the lawyers are discussing a possible plea deal.
As we reported earlier this week, Madoff’s lawyers have already agreed to a partial judgment in the civil lawsuit the Securities and Exchange Commission (SEC) filed against him on December 11. According to the SEC, the partial judgment would impose a permanent injunction and continue relief previously obtained by the agency in a preliminary injunction order on December 18. Madoff agreed to the partial judgment without admitting or denying allegations in the SEC lawsuit. The SEC said in its press release that the amount of penalties and disgorgement imposed on Madoff will be decided at a later time.