- The Washington Times - Tuesday, February 10, 2009

The Securities and Exchange Commission on Monday announced an agreement with disgraced money manager Bernard Madoff that could eventually force him to pay a civil fine and return money raised from investors.

The partial judgment, which renders permanent a preliminary injunction that froze Mr. Madoff’s assets after his arrest in December, must be approved by the judge overseeing the case in federal court in Manhattan.

The civil proceeding is separate from the criminal case against the prominent Wall Street figure, who is accused of bilking $50 billion from investors in what may be the largest Ponzi scheme in history. Mr. Madoff was arrested Dec. 11 after reportedly confessing to his sons that he had stolen from investors for years.

Federal prosecutors have asked a judge to revoke the bail of Mr. Madoff, who has been confined to his Manhattan penthouse under house arrest. Mr. Madoff, who has not been indicted, is widely expected to enter into a criminal deal with prosecutors in which he would plead guilty in exchange for some form of leniency.

The SEC said Mr. Madoff agreed to the partial judgment without admitting or denying the allegations in its civil complaint filed Dec. 11. However, the agreement said Mr. Madoff cannot contest the “facts” of the complaint for the purposes of determining his obligation to pay civil fines and restitution, which will be specified later.

The SEC said the basic facts of the complaint are that Mr. Madoff committed a $50 billion fraud and told his sons his investment business was a sham. Mr. Madoff told them he had “absolutely nothing,” that “it’s all just one big lie,” and was “basically, a giant Ponzi scheme,” according to the complaint.

Mr. Madoff’s defense attorney, Ira Sorkin, didn’t immediately return a telephone call seeking comment Monday.

The fallout from the Madoff affair has been massive and has rocked a Wall Street already churning from the financial crisis. Thousands of victims who lost money investing with Mr. Madoff have been identified - including celebrities - as well as big hedge funds, international banks and charities in the U.S., Europe and Asia.

The scandal also has brought disgrace to the SEC, which repeatedly ignored credible allegations about Mr. Madoff’s operations brought to it over the course of a decade. Congress and the agency’s inspector general are investigating what caused the regulatory failure over Mr. Madoff and why SEC inspections of his business failed to detect the improprieties.

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