Madoff lawsuit attacks KPMG UK

Bernard Madoff

An investor in Bernard Madoff’s mega Ponzi scheme have now named KPMG UK in
a lawsuit in which they claim the firm failed to spot the fraud while auditing
Madoff’s London operations.

The action is being brought on behalf of investor Jay Wexler, an investor of
“hundreds of thousands” dollars in Rye Select Broad Market Prime Fund, one of
many feeder funds into the Madoff Ponzi scheme.

In a statement the law firm bringing the action, Cotchett, Pitre and
McCarthy, said: “The London office of Bernie Madoff played a key role in his
Ponzi scheme.

“Madoff used his London office as the vehicle to make it appear that
securities were being traded — using smoke and mirrors which, the complaint
alleges, should have been discovered by KPMG UK, the auditor for Madoff’s London
based operation, Madoff Securities International Ltd.

“Instead, KMPG UK never raised any red flags that investors’ money was used
by Madoff as his personal piggy bank.”

quotes KPMG this morning as having no comment.

The law suit also includes testimony from Madoff during March this year in
which he said: “In more recent years, I used yet another method to conceal my
fraud. I wired money between the United States and the United Kingdom to make it
appear as though there were actual securities transactions executed on behalf of
my investment advisory clients.

“Specifically, I had money transferred from the US bank account of my
investment advisory business to the London bank account of Madoff Securities
International Ltd., a United Kingdom corporation that was an affiliate of my
business in New York.”

The law suit also attacks KPMG LLP as well as JP Morgan, The Bank of New York
Mellon and a number of individuals.

More to follow.

Update. 16:00, 21 Oct.

KPMG issued a statement saying it would defend its role in the audit of
Madoff’s London operations “vigorously”. The firm said the allegations made in
the lawsuit were “wholly without merit” and that, “We are not aware of any
suggestion that the financial statements of MSIL contain errors.”


defends Madoff audit

Read more:

could have been caught 17 years ago

Related reading