February 5, 2009 / 11:21 PM / 10 years ago

UPDATE 1-Madoff whistleblower gives fraud tips to SEC

WASHINGTON, Feb 5 (Reuters) - Harry Markopolos, who tried to blow the whistle on Bernard Madoff’s alleged $50 billion fraud, gave the Securities and Exchange Commission’s inspector general two fraud tips, SEC Inspector General David Kotz said on Thursday.

Kotz said Markopolos provided his team with two pieces of information, where potential improper conduct occurred, both unrelated to Madoff.

Kotz, who is investigating whether the SEC properly handled the Madoff case, said his team met with Markopolos for seven hours Thursday.

“We had a very productive meeting,” Kotz said. “We got a lot of information. It was helpful for our investigation,” he said.

Kotz said he gave Markopolos’ tips to SEC Chairman Mary Schapiro.

For years Markopolos tried to warn regulators that Madoff’s investment business was a fraud. However regulators did not uncover Madoff’s scandal until Madoff confessed to the fraud to his sons, according to authorities.

Testifying before Congress on Wednesday, Markopolos said he was forwarding information to the SEC about a Ponzi scheme of around $1 billion. Kotz would not say whether the tip he received was the Ponzi scheme that Markopolos alleged. (Reporting by Rachelle Younglai; editing by Jeffrey Benkoe)

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