March 13, 2009 / 8:56 AM / 10 years ago

Mass. regulator: Need to find Madoff accomplices

BOSTON (Reuters) - Prosecutors in the Bernard Madoff case now need to redouble their efforts to identify top associates who assisted in the decades-long fraud, Massachusetts’ top securities regulator said on Thursday.

“The big question is where is the money and who else is involved,” William Galvin, Massachusetts’ secretary of state, said in a telephone interview. “Nothing that happened today answered those questions.”

Madoff, 70, pleaded guilty Thursday and was ordered to go to jail to await a sentence that could send him to prison for the rest of his life.

Although Madoff admitted full responsibility for the fraud, Galvin insisted it was impossible for one man to have run the swindle without help.

“It is just ridiculous to suggest that anyone could have managed a scheme of this size, and with an international component at that, alone,” Galvin said. “Suggesting that he hired people who did not understand that they were making phony statements is inconsistent with the level of sophistication of some of his closest associates,” the regulator added.

Since Madoff’s arrest in December, Galvin’s team has plowed through piles of documents to try to understand how a handful of middlemen helped deliver wealthy investors from Boston and Palm Beach, Florida, to Madoff’s investment firm.

Galvin has been probing Cohmad Securities, a firm co-owned by Madoff, as well as other middlemen at firms, including Fairfield Greenwich and Tremont Group Holdings.

But Galvin called these executives “secondary players” and stressed that prosecutors and regulators with more powers than his office need to find Madoff’s main helpers.

“Now the big issue here is about the principal players who were directly involved with Bernard Madoff Investments and Cohmad Securities and other entities,” Galvin said.

Galvin’s office can file civil complaints, but not criminal charges.

At the same time, Galvin said clients, many of whom lost their life savings, deserve a fuller accounting of who did what with their money.

“While I understand that people do not want to compromise ongoing investigations, I think it is important for investors to be given some indication of where this is going,” he said.

The scandal hit especially hard in Massachusetts, where wealthy philanthropists who donated millions to hospitals, universities and other schools were among Madoff’s victims.

In his own investigation, Galvin found that Madoff’s wife easily pulled out millions of dollars from an account at Cohmad Securities the day before her husband was arrested.

While his probe continues, Galvin said he has “probably reached a brick wall” because Cohmad has refused to cooperate.

Robert Jaffe, a key Cohmad executive, appeared at Galvin’s office to testify, but refused to answer any questions.

“We did our best to bring forth this material, and we raised a lot of questions that we have been willing to share,” Galvin said.

Reporting by Svea Herbst-Bayliss; editing by Jeffrey Benkoe

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