But watch out for money laundering charges in Britain, Walt.
A source close to the Madoff defense team agreed that Madoff’s main concern was to preserve as much assets as possible for his wife and children and to keep them from legal entanglements. “The US attorney’s office is still trying to resolve what is tainted or clean money, what real property in the US is appropriate for the Madofffs to keep,” the source said.
That may prove difficult. Sources say new information has surfaced that suggests several members of Madoff’s inner circle transferred assets to their wives, transactions thought to be laundered through an English bank.
Ruth Madoff, who was considered “innocent at first,” according to this source, is believed to have received at least $70 million from her husband and is now therefore an object of the investigation. That is one reason why she recently decided to retain her own lawyer, leaving Ira Sorkin, who has represented both of the Madoffs since December, when the Ponzi scheme was revealed.
Investigators are focusing their attention on three groups of possible co-conspirators. “There should be at least 20 indictments, between the three groups, if the feds are doing their jobs,” said one highly placed lawyer involved in the case. “Some will be conspiracy, the ones who were deep into it with Madoff, and others will be civil cases sent to the SEC for prosecution.”
(Lawyers and prosecutors who spoke to The Daily Beast for this article declined to go on the record, citing their legal involvement in the case.)
In the first group are employees of Madoff’s firm who concocted false trades and sent out phony statements to thousands of unsuspecting clients.
The second group is comprised of principals in feeder funds such as Cohmad Securities Corp. and Fairfield Greenwich Group, which funneled investor dollars to Madoff and received large fees for steering this business. If they were aware of Madoff’s fraud, they could face criminal charges; if they were not, they could be hit with civil charges for a lack of due diligence.
“It’s a question of state of mind,” said a lawyer for a Madoff employee. “If the feeder fund principals like Walter Noel of Fairfield Greenwich or Robert Jaffee of Cohmad didn’t ask Madoff any questions, if they simply turned the money over to a Madoff account without doing the work they were supposed to do to make sure their clients were well-protected, they would be guilty of fiduciary violations, which is a civil matter. But if they knew about the Ponzi scheme, if they had the intention to deceive, that is a felony.”
One attorney close to the defense team of Walter Noel, who is reported to have offshore bank accounts, says the belief is that Noel could be indicted in England on money laundering charges.
UPDATE: The Wall Street Journal reports on the status of investigations of Madoff’s in-house conspirators, including Ruth and brother Peter. Nothing earth shattering there, yet.