PracticeAuditBasic checks could have uncovered Madoff’s scheme

Basic checks could have uncovered Madoff's scheme

Former Madoff financial officer helps prosecutors piece together Ponzi scheme

Sloppy fact checking by auditors and regulators allowed convicted fraudster
Bernard Madoff to orchestrate his billion dollar Ponzi scheme undetected, a
former financial adviser has revealed.

Frank DiPascali, described by the US Securities and Exchanges Commission as
Madoff’s lieutenant, is helping prosecutors piece together exactly how the
jailed swindler kept his scheme under wraps for years, the Financial Times
reports.

DiPascali described how, while working for madoff, he would mislead US
investors, by claiming trades were backed by European banks, and deceive
European investors by claiming the trades were backed by US banks.

James Cox, Duke University law professor, said regulators failed to delve
deep enough into Madoff’s claims.

`They never took any steps to drill down and see whether it was a Ponzi
scheme,’ he said.

`The SEC inspection unit really needs to be retooled.’

Read the full story:
Blunders
sustained Madoff fraud

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