Madoff middleman fails to show for testimony

By Svea Herbst-Bayliss

BOSTON (Reuters) - A key business associate and friend of Bernard Madoff, the accused mastermind of the biggest Ponzi scheme in U.S. history, failed to show up to testify before Massachusetts regulators on Tuesday.

Robert Jaffe, 64, who steered billions of investment dollars to Madoff, was subpoenaed in December to testify about Madoff's business, but failed to appear at a 10 a.m. appointment, the regulator's spokesman said.

Jaffe's spokesman, Josh Hochberg, said Jaffe is currently under a physician's care and could not attend the meeting.

Brian McNiff, a spokesman for Massachusetts Secretary of State William Galvin, said the "Securities Division is preparing to enforce the subpoena and take all necessary actions to protect Massachusetts investors."

Madoff, a former Nasdaq chairman, was accused in December of running a $50 billion Ponzi scheme that triggered massive losses for investors worldwide, forced charities to shut down and led to at least one suicide.

Galvin became one of the first U.S. state regulators to probe the fraud when he ordered Madoff to turn over all records relating to money he managed for state residents.

In December, Galvin subpoenaed Cohmad Securities, a firm that marketed Madoff's investment products and which employed Jaffe for nearly two decades. Cohmad was co-owned by Madoff and was set up primarily to attract clients for him.

Jaffe owns homes in Palm Beach and a wealthy Boston suburb and is the son-in-law of one of Madoff's biggest investors, Carl Shapiro. Jaffe brought in much of Madoff's business, according to people who know his investors.

Jaffe went to high school and college in the Boston area and started his career as a stockbroker. Through his connections, he helped link millionaires from Boston to Palm Beach to Madoff.

Through his spokesman, Jaffe has said he "had absolutely no knowledge of the fraud, and like so many others is a victim of these tragic events."

In Florida, Jaffe and Madoff were often seen together at the Palm Beach Country Club, according to people who know them.

(Editing by Jason Szep and Jeffrey Benkoe)