New Madoff Indictment Raises Further Fraud Allegations

On Behalf of | Oct 6, 2012 | White Collar Crime

This week saw a new wrinkle in the storied Madoff prosecution. According to a new indictment, the Madoff Ponzi scheme actually began in the early 1970s instead of 1992 as alleged in earlier court documents.

The Ponzi scheme first came to light in 2008 when Madoff admitted that the scheme defrauded investors of billions of dollars. Madoff himself pleaded guilty to the fraud and is currently serving a 150 year prison sentence. Although Madoff always insisted that he worked alone, five of his employees now face fraud charges as well.

In the government’s revised indictment, prosecutors level new bank and tax fraud charges against those five individuals, alleging that they helped Madoff for decades.

News sources quote an FBI official, Mary Galligan, as saying: “Each of the defendants in his or her way allegedly played a key role in designing, building or maintaining the house of cards.”

Although Ponzi schemes have become infamous in the last several years, many alleged plots begin as legitimate and lawful investment plans. If profits fail to materialize as expected, fund managers may find themselves tempted to pay earlier investors with money from later ones. This can give rise to massive fraud charges if the practice continues to spiral out of control.

Due the large amounts of money involved, federal authorities often prosecute Ponzi scheme allegations aggressively. This new phase of the Madoff prosecution demonstrates how seriously authorities take these accusations.

Source: CBS News, “NY indictment: Madoff fraud stretched to the 1970s,” Oct. 2, 2012

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