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Another victim? Peter Madoff pleads guilty

Many people in New York and New Jersey felt the impact when the Bernie Madoff Ponzi scheme, one of the largest ever documented, came tumbling down. $20 billion was lost by individual investors, much of it in greater New York, and Bernard Madoff, now in his seventies, is serving 150 years for his fraud.

Among those affected was Peter Madoff, Bernard Madoff's brother, who pled guilty to criminal charges recently. Peter Madoff worked in the family investment business and was so confident in his brother's ability that he not only invested millions himself, but persuaded his wife, daughter, granddaughter and sister to also put money into Madoff's fund.

Peter Madoff pleaded guilty to conspiracy and to falsifying records. He agreed to a 10-year prison term and to surrender all his assets. Prosecutors said that he was criminally incompetent and had filed false compliance records for more than 10 years, deliberately deceiving the SEC. An assistant U.S. attorney involved in the case noted that he had even signed multiple compliance reports all at once, using different pens and ink colors in an effort to make it seem as if they were filed at different times.

Madoff admitted that he had tried to hide assets from the IRS, transferring assets among family members. He also arranged for his wife to take a non-existent job at the firm that provided cover for the payments she received. The assets to be forfeited include several homes, a Ferrari, and more than $10 million in cash and stocks. However, his wife will still have nearly three quarters of a million after all seizures are completed.

The government alleged that Madoff was involved in the conspiracy since 1996, even though he had been the compliance officer for nearly forty years. After August 2006, the firm registered with the SEC as an investment advisor, a status that required annual SEC filing, and Peter Madoff's false statements apparently increased. In particular, he wrongly created the impression that the firm served a few highly sophisticated clients, when in reality there were at least 4,000 accounts.

Since the fraud was revealed and Bernard Madoff convicted, a court-appointed trustee has distributed more than $1.1 billion to victims of the fraudulent enterprise, and has reached agreements to recover another $9.1 billion.

Source: Wall Street Journal, "Peter Madoff pleads guilty to fraud," June 29,2012.

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