“I am suggesting that if you flew the entire SEC staff to Boston and sat them in Fenway Park for an afternoon, that they would not be able to find first base.”
– Harry Markopolos
Madoff ran the biggest Ponzi scheme in history, but he never got caught. In the end he had to turn himself in. Markopolos is one of the SEC staffers who tried in vain to alert the agency to Madoff’s schemes.
In May of 2000, he submitted an 8-page report to the Boston Regional Office of the Securities Exchange Commission (SEC) listing red flags and mathematical proof of a major fraud but got no reply. He re-submitted his evidence to the Boston and other SEC offices in 2001, 2005, 2007 and 2008, to no avail. By this time, Markopolos was realizing that Madoff had been operating with protection from the inside.
In late 2008, when the stock market crumbled and investors rushed in to redeem their investments, Madoff ran out of cash, turned himself in to authorities, and pleaded guilty in federal court last March 12th.
No one there knew Markopolos had an assisting team in the field. But Markopolos has proof that the SEC was culpable, too, and says publicly that he has tremendous anger at the agency and sadness for the victims. He says that there were SEC lawyers who were “in bed with Madoff ” and helped destroy lives.
“Madoff paid people to look the other way,” says Markopolos and reminds us that there is a federal report scheduled to come out by the end of the year. He emphasizes that unless there is a cover-up, “the SEC will cease to exist”…
Markopolos’s Wikipedia page makes reference to the SEC investigation into staff relationships with Madoff and his frim, but I’ll be shocked if anything comes from it.
- Boston Globe profile of Markopolos
- YouTube – 60 Minutes interviews Markopolos
- Business Insider – Harry Markopolos: CDS Fraud Will Make Madoff Look “Small-Time”
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