Madoff review targets SEC e-mails

Bloomberg News / June 2, 2009
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WASHINGTON - The Securities and Exchange Commission's inspector general has reviewed e-mails from employees in an investigation of the agency's failure to detect Bernard Madoff's $65 billion Ponzi scheme.

The Office of Inspector General, led by H. David Kotz, ordered the SEC to turn over communications from at least 27 employees who "had involvement" with examinations and inspections of Madoff's investment and securities firm, Kotz reported to Congress. His office has "substantially reviewed" more than 1.3 million e-mails.

Then-SEC chairman Christopher Cox ordered the review in December after saying the agency had failed to catch Madoff for at least a decade amid "credible and specific allegations" he was defrauding investors.

Kotz, who said his investigation should be completed in August, wrote that he ordered e-mail providers to preserve the personal accounts of "several individuals." He hired a consulting firm with expertise in forensic accounting to review reports produced by the Office of Compliance Inspections and Examinations. The examinations office inspected Madoff's firm seven times in 11 years, the report said.

As of March 31, Kotz said, his office had interviewed 44 witnesses and planned "numerous, additional" interviews in April and May. His report did not say what information was disclosed in the interviews or e-mail reviews.

Madoff, 71, pleaded guilty in March to a massive fraud in which he paid off old investors with money raised from new clients. He will be sentenced this month and may face up to 150 years in prison.