Madoff SEC Jailhouse Interview: ‘Amazing to me’ he Wasn’t Caught

October 31, 2009

(ChattahBox)— The Inspector General of the Securities & Exchange Commission, released records of a jailhouse interview he conducted of convicted Ponzi schemer Bernie Madoff, on June 17, while Madoff was incarcerated in Manhattan. The transcripts of the interview conducted by Inspector General David Kotz, reveals Madoff’s contempt for SEC investigators, as he operated a massive illegal Ponzi scheme right under their noses for 16 years. He even called one SEC staffer an “idiot.”

Along with a summary of the interview, Kotz released a statement saying he found no evidence to support Madoff’s claim that he had a “close relationship” with SEC Chairman Mary Schapiro, then head of the Financial Industry Regulatory Authority.

The review conducted by Kotz of the SEC’s failure to detect Madoff’s Ponzi scheme for nearly two decades, concluded that there was a complete regulatory breakdown.

An inspection of Madoff’s operation in 2003-04, “was put on the back burner” even though regulators had unresolved questions, Kotz found.

Madoff said in the interview that the SEC examiners “never asked” for even basic records of his operations.

According to the Wall Street Journal:

“Madoff noted that there are two schools of thought on how to deal with exams:

“1. Make the examiners crazy, make things difficult for the examiners (in connection with this, Madoff noted that every firm keeps books and records differently, and that having an examination is “like getting a tax audit, it’s a pain in the ass.”).”

“2. Cooperate with the examiners, make it easy (which Madoff stated is what “we always did.”).”

Maddof also indicated that his repeated positive SEC reviews, helped him advance his scheme to cheat more people out of their life savings. “He stated that some clients would ask him when was the last time he’d had an exam, and he’d give them the date.”


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