Pressure mounts on Madoff middlemen. Er, Walt? That would mean you, too.
The documents and Jaffe’s silence in the face of a barrage of questions by Massachusetts Secretary of State William Galvin illustrate the intensifying focus on middlemen and so-called “feeder-funds” that funneled investor money to Madoff.
“Galvin is taking a novel and aggressive approach to scrutinize the middlemen more closely and find out what they knew and when,” said Jay Gould, who heads law firm Pillsbury Winthrop Shaw and Pittman LLP’s hedge-fund practice.
“Ultimately he is looking if any of these middlemen committed criminal fraud,” added Gould, who once worked for the U.S. Securities and Exchange Commission. “Even being stupid could end up getting you a very severe penalty.”
When Galvin’s team asked Jaffe about commissions and other issues on February 4, Jaffe invoked the Fifth Amendment.
Jaffe has said he is as much a victim as anyone, telling the Palm Beach Post in December that while he earned 1-to-2 percent of an investor’s first profits in Madoff’s fund, he knew nothing about his “dark side.”
That sounds familiar.