- The Washington Times - Thursday, January 1, 2009

NEW YORK | A list of Bernard Madoff’s assets ordered filed with the Securities and Exchange Commission won’t be made public, according to the regulator, which sued the money manager, claiming he directed a $50 billion fraud.

A federal judge required that Mr. Madoff provide the SEC an accounting of all investments, loans, lines of credit, business interests, brokerage accounts and other holdings, and Mr. Madoff’s attorney, Ira Sorkin, said he would comply.

But the court hasn’t authorized public disclosure of the list, SEC enforcement official Andrew Calamari said Wednesday.

“Madoff may very well have given money to other persons or other entities,” said Fred Longer, a lawyer suing hedge fund operator Tremont Group Holdings Inc. over Madoff-related losses. He said the list will be useful primarily to investors suing Mr. Madoff directly. “Those are the rabbit trails. They’ll need to trace all of them to find the cash, and it will take a lot of forensic efforts.”

Mr. Madoff, 70, was charged last month with directing a purported Ponzi scheme through his New York investment firm. Mr. Sorkin has said Mr. Madoff’s company is cooperating with the government. His client met with prosecutors earlier this month, according to people familiar with the case.

Shortly before he was arrested, an FBI complaint said, Mr. Madoff told employees that he had $200 million to $300 million left. Mr. Sorkin declined to comment on the amount of Mr. Madoff’s remaining assets.

Mr. Madoff’s firm collapsed after he was arrested Dec. 11. A lawyer for his sons said he told them that he directed the Ponzi scheme, in which old investors are paid off with money from new ones. The firm is liquidating under the Securities Investor Protection Corp. (SIPC), whose funds cover securities and cash claims of as much as $500,000 per customer, including as much as $100,000 in cash.

The Dec. 18 court order that Mr. Madoff disclose his assets required the list be given directly to the regulator, Mr. Calamari said. It “does not authorize public release of materials related to the SEC’s ongoing investigation,” the official said. The effort “seeks to preserve and recover money for investors and hold wrongdoers accountable.”

A catalog of Mr. Madoff’s assets may be attractive to angry investors — including hedge funds, universities and charities — as they sue to recoup lost money. Mr. Madoff’s investment advisory business may have had more than 4,000 customers, people familiar with the investigation said last month.

Losses disclosed by some clients may have been inflated by purported gains in their accounts with Mr. Madoff. Yeshiva University, which had previously valued its holdings with Mr. Madoff at $110 million, yesterday said its net investment was about $14.5 million before inflation by “fictitious” profits.

On Wednesday, Mr. Longer filed a lawsuit in Manhattan federal court against Tremont Group Holdings Inc., a hedge fund firm owned by Massachusetts Mutual Life Insurance Co. The complaint seeks the recovery of losses suffered through the hedge fund firm’s investments with Mr. Madoff.

The lawyer represents Group Defined Pension Plan & Trust, an investor based in Jersey City, N.J. Also sued was Tremont’s auditor, Ernst & Young LLP. Mr. Longer says the accounting firm missed warnings about the purported scheme. The complaint seeks class-action, or group, status.

Congress is set to hold hearings next week on the Madoff scandal. Witnesses scheduled to appear before the House Financial Services Committee on Monday include David Kotz, the SEC’s inspector general; Stephen Harbeck, president of the SIPC; and Harry Markopolos, a former investment-firm employee who flagged suspicions about the fraud.

Mr. Madoff’s firm was the 23rd-largest market maker on Nasdaq in October, handling an average of about 50 million shares a day, according to exchange data. It took orders from online brokers for some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.

Mr. Madoff, who hasn’t formally responded to the securities fraud charge, may have to appear in Manhattan federal court by Jan. 12 unless he is indicted before then.

On Tuesday, the trustee now in charge of Bernard L. Madoff Investment Securities LLC obtained court approval to use $28.1 million out of its accounts as it unwinds the firm.

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