Peninsula attorney: Madoff's confessions not news

February 16, 2011 7:12:27 PM PST
Bernie Madoff told a New York Times reporter that unidentified banks and hedge funds were complicit in his fraud.

Bernie Madoff has been living inside a North Carolina 12-foot square cell with a roommate since July 2009. In a visitor room there Tuesday, he told a New York Times reporter that unidentified banks and hedge funds were complicit in his fraud and had to know about his massive Ponzi scheme and that their attitude was "if you're doing something wrong, we don't want to know."

"The fact that the banks never looked at the billions of dollars that were flowing through wire transfers was astonishing to us," Peninsula attorney Joe Cotchett said.

Cotchett was the first person to interview Madoff in prison in October of 2009. Madoff agreed to talk in exchange for Cotchett dropping his civil case against Madoff's wife. He still has cases pending against other Madoff family members and two banks, JP Morgan Chase and Bank of New York.

Cotchett says Madoff explained how money was circulated through the banks to "create the illusion of trading activity," and his suit says the banks "either knew, or were willfully blind to the fraud." Nothing in the New York Times story is news to Cotchett.

"All the SEC had to do was call his two banks and say can we come see the trading activity. You can't [sue the sec] unfortunately. I guess you could, but don't hold your breath on that one," he said.

Cliff Bernie is struggling to keep his San Mateo decorative fabrics business alive since the recession hit. It hasn't helped that he lost what profits he thought he had in the investment his father made with Madoff decades ago. He thinks Madoff has a credibility problem, but if others are guilty, they should pay.

"There are still so many people still waiting for money they lost. The stories are just horrific in some cases, my brother is still waiting for money," he said.

It is believed Madoff's victims lost a combined $50 billion.

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