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BERNARD MADOFF ARRESTED FOR FEDERAL SECURITIES LAWS VIOLATIONS
by Sarah Zanoff
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(December 22, 2008 - Monday) - According to the New York Times, Bernard Madoff was arrested December 12, 2008 and was charged with federal securities laws violations. Mr. Madoff had been running a multibillion-dollar pyramid scheme through Bernard L. Madoff Investment Securities which could possibly be the largest scam in Wall Street’s history. According to the criminal complaint filed, the estimated losses total $50 billion. The Madoff funds were attractive to investors because of the promise of high returns and small fees. For example, the Fairfield Sentry fund claimed to have paid 11 percent interest each of the 15 years it operated. (A Firm Built On Madoff Ties Faces Tough Questions, Alex Berenson and Eric Konigsberg, NewYorkTimes.com, Dec. 21, 2008) ttp://topics.nytimes.com/top/reference/timestopics/people/m/bernard_l_madoff/index.html?inline=nyt-per
Not only are individual investors affected by this scandal, but it has caused non-profit organizations and philanthropic foundations to be wiped out. For example, the Picower Foundation (worth $1 billion) that provides funding to the New York Public Library amongst other causes has ceased its grants immediately. Also, the Norman F. Levy Foundation that supports numerous charities worldwide is in danger of shutting down. (Charities burned by Bernard Madoff and Ponzi scheme may have to close, Bill Hutchinson, NYdailynews.com, Dec. 21, 2008) http://www.nydailynews.com/money/2008/12/21/2008-12-21_charities_burned_by_bernard_madoff_and_p.html
Smaller accounting firms such as Friehling & Horowitz and Sosnick Bell are being scrutinized in regards to the Madoff scandal. It has been deemed questionable how a small accounting firm (think three employees in a store-front window space) can manage an operation as large as Bernard L. Madoff Investment Securities. Ethics investigations have began against Friehling & Horowitz. These accounting firms could also be targeted by investors attempting to recover their funds. (In Madoff’s Wake, Scrutiny of Accounting Firms, Michael J. de la Merced, NewYorkTimes.com, Dec. 21, 2008) http://www.nytimes.com/2008/12/22/business/22accounting.html?ref=business
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