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SEC widens Madoff probe

Posted on: Monday, 5 January 2009, 22:18 CST

Investigators said Monday they have widened their probe into U.S. regulators' failure to spot alleged fraud by fallen financier Bernard Madoff.

Securities and Exchange Commission Inspector General H. David Kotz said he would investigate whether the regulatory failure was isolated, The Washington Post reported. Kotz told the House Financial Services Committee he will try to determine which SEC officials failed to detect Madoff's alleged improprieties and whether the SEC is capable of responding appropriately and effectively to complaints and detect fraud.

Madoff, 70, is accused of defrauding investors out of up to $50 billion. A government-appointed receiver has taken over his firm.

The SEC was notified several times about Madoff's practices and conducted at least one inquiry, but never identified the alleged fraud.

Federal prosecutors Monday told a judge in New York Madoff should be behind bars, not ensconced in home detention in a Manhattan penthouse, because he tried to hide$1 million in assets from investigators. The judge did not rule immediately on the request, The New York Times reported.

Prosecutors must submit a filing supporting their request by the end of the day Tuesday, and Madoff's attorneys have until the end of the day Wednesday to respond, the Times said.

Assistant U.S. Attorney Marc O. Litt said in late December Madoff had mailed valuables to members of his family and friends in violation of his bail agreement, which barred him from disposing of any assets.

One of his attorneys, Ira Lee Sorkin, said at the bail hearing that Madoff should not be jailed because he had not intended to violate the agreement.

Madoff has been confined to his luxury Manhattan apartment and is guarded by private security guards paid for by his wife.

Source: United Press International

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