Madoff stunned by SEC’s failings
NEW YORK - Nobody was more surprised that the Securities and Exchange Commission did not discover Bernard Madoff’s enormous Ponzi scheme years ago than Madoff himself.
After all, it would have been pretty simple, he said in a transcript of a jailhouse interview that is part of a trove of official exhibits released yesterday by the SEC’s inspector general, H. David Kotz.
In the interview, Madoff said that the young investigators who pestered him over incidentals like e-mail messages should have just checked basics like his account with Wall Street’s central clearinghouse and his dealings with the firms that were supposedly handling his trades.
“If you’re looking at a Ponzi scheme, it’s the first thing you do,’’ he said.
With those simple steps, he added, they could have discovered years earlier that he was running the largest Ponzi scheme in history.
The new exhibits consist of 6,157 pages of interviews, letters, e-mail messages, telephone records, and other background material gathered during Kotz’s 10-month investigation of how the SEC handled, and mishandled, numerous tips and warnings it received about Madoff over the years.
Madoff said that, on two occasions, he was certain it was only a matter of days or even hours before he was caught. The first time, in 2004, he assumed the investigators would check his clearinghouse account. He said he was “astonished’’ that they did not, and theorized that they might have decided against doing so because of his stature in the industry.
In Madoff’s second close call in 2006, investigators actually asked for his clearinghouse account number on a Friday afternoon, but then never followed up. He recalled thinking at the time: “After all this, I got away lucky.’’
The newly public documents do not add fresh charges, but they do provide a vivid sense of the tensions, confusion, and petty squabbles that derailed a half-dozen failed inquiries.
