Bernie Madoff: SEC Investigator Fingered Bernie In '04; SEC Chief Lori Richards "Resigns"
Intriguing sequence of events involving the SEC's investigation of Bernie:
June 17 - SEC Inspector General H. David Kotz meets with Bernie at the Metropolitan Corrections Center in Manhattan for three hours. The purpose of the meeting was not publicly disclosed.
July 2 - Zachary Goldfarb at the Washington Post reports that Genevievette Walker-Lightfoot, a former SEC lawyer, told her boss in March 2004 that information provided by Bernie during an investigation didn't add up. Walker-Lightfoot's concerns were set aside in favor of another SEC investigation considered more pressing.
Walker-Lightfoot worked in the Office of Compliance Inspections and Examinations. Her boss, Mark Donohue, was a branch chief who reported to Eric Swanson. Swanson, of course, married Bernie's niece, Shana Madoff, in September 2007.
July 8 - Bloomberg, Reuters and the Washington Post report that Lori Richards, Director of the Office of Compliance Inspections and Examinations, has resigned from the SEC to "take on new challenges". Richards has been heavily criticized because her office failed to uncover Bernie's Ponzi scheme during three investigations of BMIS conducted since 1999.
Richards was Eric Swanson's boss during his ten-year stint at the SEC. She attended the Swanson/Madoff wedding and subsequently recused herself from the Madoff investigation.
The first version of the WaPo story on the Richards resignation included the following:
"Richards was one of the most entrenched top officials at the SEC. OCIE, as her office is called, is the second-largest division after the Division of Enforcement with roughly 740 people on staff in Washington and across the country. To its critics, the office came to represent a stovepiped approach to regulation that didn't foster collaboration among the SEC's divisions.
Several former SEC chairmen have considered dismantling the office but opted to proceed with the status quo in the face of opposition from Richards, a 20-year veteran of the agency. The OCIE staff was fiercely loyal to her and the person who appointed her, former SEC chairman Arthur Levitt."
Zachary Goldfarb, the WaPo reporter, subsequently deleted the two paragraphs from the article which was expanded to include a description of some of Richards' accomplishments during her 20-year career with the SEC along with a quote from SEC Chairman Mary Schapiro.
On the surface, it looks like Mary Schapiro leveraged the story about Walker-Lightfoot's concerns about Bernie to depose Richards.
Richards' last day is August 7th, fueling speculation that Schapiro wanted her out before SEC Inspector General H. David Kotz releases his report on the Madoff investigation in August.
According to Goldfarb, Schapiro has only received a limited briefing on the investigation so it is unlikely that she was the source of the Walker-Lightfoot leak to Goldfarb.
Goldfarb said the leaked information came from "sources familiar with the investigation" and that he inspected related SEC documents. The more likely candidate is someone from within the inspector general's office. Perhaps Kotz wanted give Richards an opportunity to resign gracefully before his report became public.
Based on theWaPo account, Walker-Lightfoot nailed the problem with Bernie in early 2004. She told her boss that she had nine followup questions for Bernie but they were never asked. If she had been permitted to pursue her inquiries, Walker-Lightfoot may very well have uncovered the fraud.
Walker-Lightfoot left the SEC in 2006 after filing a complaint about working in a hostile environment at the SEC. The case was reportedly settled in her favor.
After she was taken off the Madoff investigaton by Donohue, Walker-Lightfoot's work papers were passed to her colleague, Jacqueline Wood, who shipped them to the SEC's office in Manhattan. What happened to the papers, if anything, after that was not disclosed in the article.
Walker-Lightfoot went on to become an attorney at the Federal Reserve Board
Wood went on to become an attorney at Proskauer Rose.
Their boss, Mark Donohue, is still with the SEC.
What Eric Swanson knew about Walker-Lightfoot's concerns is the $64,000 question. In previous posts, here and here, I questioned the conventional wisdom that Swanson was a staid Midwesterner dedicated to his job at the SEC. I also questioned the story put out by his publicist that Swanson only began his affair with Shana Madoff in April 2006.
The even bigger question is what SEC IG Kotz and Bernie talked about. Was Kotz trying to convince Bernie to tell all about the SEC in exchange for something?
Coincidentally or not, the Feds leaked word that Ruth Madoff was not going to be charged in the case on July 1.
Inquiring minds are eagerly awaiting the next installment in the Madoff saga!
Nice catch on the changes for the WaPost article Mrs. P. I have the habit of copying articles into word files with the web page link in case the articles "disappear" or are edited.
You have a keen eye as usual.
The corruption is systemic at all levels of our society. The massive campaign bribes, contributions have completely undermined our political institutions, corporations staff the regulator positions, lobbyists write the laws and give them to our representatives to pass... their rules, their game.... our bill for the damage.
July 9, 2009 5:13 PM | Reply | Permalink
You know I think it is funny...
Goldman Sachs snaps its fingers and the FBI grab this Russian, US citizen, the US Attorneys have a complaint in Federal court within hours...
Yet, the FBI and US Attorneys could not catch a Bernie Madoff if he walked into their office and turned himself in...
7 months later they STILL can't seem to find anyone to charge either...
What is the difference? Bernie stole $billions from a bunch of private citizens, not such a big deal...
The Russian guy allegedly stole code from a US corporations and Wall St. investment bank... very big deal?
Who does the FBI and US Attorneys work for?
Us the public or Goldman Sachs???
July 9, 2009 5:21 PM | Reply | Permalink
Thanks, PI. I stuck with this particular story because it was easy enough for one person to follow and I suspected corruption at the SEC and on Wall Street was involved. Still do.
What was amazing was how the Madoff p.r. reps were able to change public perception of the family. The Swansons hired Eric Starkman and by the end of December, he had a favorable story about Swanson in the NYT and one about Shana in the WSJ.
July 9, 2009 5:49 PM | Reply | Permalink
Hi Mrs. P!
Did you ever stumble across the tragic story of SEC Attorney Eric N. Miller?
Miller was Assistant Chief Litigation Counsel at the SEC from 1999 to May 2005. He graduated from Amherst and Harvard Law. He was the son of a former civil rights attorney. He was married and had two kids.
Miller resigned from the SEC in May 2005 'for unknown reasons.'
The tragic part is that Miller was murdered by two transients at a Virginia motel with whom he had been regularly smoking crack. The transients disposed of his body by starting a car fire in Southeast DC.
I've lately been wondering why Miller might have departed the SEC and started smoking crack.
http://www.washingtonpost.com/wp-dyn/content/article/2005/09/08/AR2005090801950.html
July 9, 2009 6:07 PM | Reply | Permalink
Hi C92!
Great to hear from you.
No, I never heard of Eric Miller until I read the article. Miller's family must have been devastated. It sounds like Miller was pretty far gone when died.
Hard to tell why some people get hooked on drugs. I don't know how you would tie his drug problem to the SEC with out knowing more about his work there.
After I put up this post, I learned that Genevievette Walker-Lightfoot is an African American like Miller. Walker-Lightfoot is the SEC lawyer who picked out problems with Bernie's information.
Before she left the SEC in 2006, she filed a complaint about working in an hostile environment and she won the case.
I think many people would automatically think her complaint had to do with race or gener but that might not be the case here.
I'm wondering if the hostile environment wasn't a result of Walker-Lightfoot's unwillingnes to play ball.
The questions she raised about Bernie's business were excellent. I can't imagine she was happy to have the case taken awasy from her.
I'm going to do a separate post on the Walker-Lightfoot case. It may be a key to explaining how things work at the SEC which, as you know, I think has substantial problems.
July 10, 2009 12:57 AM | Reply | Permalink
Was her complaint filed with an internal office at the SEC, or the Office of Special Counsel (Scott Bloch) or some other body? I have a hard time believing she'd get any satisfaction from filing anything with OSC.
July 10, 2009 11:11 PM | Reply | Permalink
I don't know. I tried to find out more about the case but no luck so far.
I thought about the Miller case some more and I'd like to know when Miller became a serious crackhead. He was with the SEC for five years and for at least part of the time, he had a very serious drug problem.
It had to have affected his performance on the job. I noticed the SEC cases that come up when you google his name are no-brainer, low dollar, routine fraud cases. Maybe Miller was incapable of handling anything more complex.
I noticed, too, that Miller worked at several law firms before he joined the SEC, none of which were named in the article. You have to wonder if Miller's drug use impacted his ability to hang on to a job.
What I am driving at is whether the SEC was a last resort for Miller. If so, how did he get even get hired with his lousy track record? When did the SEC become aware of Miller's problems?
July 11, 2009 2:11 AM | Reply | Permalink
Mrs. P.
WTF? Anything here?
Of course, with most people, it only takes one hit to cause this kind of result no matter their station or place.
July 9, 2009 11:11 PM | Reply | Permalink
???
July 10, 2009 12:58 AM | Reply | Permalink
Oops!
I meant to reply to the Eric Miller information from Citoyen92.
Sorry about that, I see that you answered my question, best you could, in your reply to C92.
Keep up the good work. I worked for the SEC years ago and I enjoy your reporting very much.
Thanks
July 10, 2009 1:37 PM | Reply | Permalink
To those asking what happened to the auditor at Stanford, he was found dead, perhaps Stanford et al. including their lawyers Proskauer and Thomas Sjoblom should be investigated for murder as well.
SPECIAL REPORTS
Another Stanford Group associate died without much notice in January
By Wayne Madsen Online Journal Contributing Writer Mar 5, 2009, 00:19(WMR) — On February 27, WMR reported on the death in January of this year of Charlesworth Shelley Hewlett, the accountant who audited the books of Stanford International Bank from a small office between fish and chips shops in north London. Hewlett was 73 and his lawyers said only that he died “peacefully.” WMR has learned from a state government source in the United States that Hewlett’s death was “unusual,” however, little more is known about the circumstances of Hewlett’s death
—
Thomas Sjoblom of Proskauer Rose is pointed to in both the SEC and FBI filings as the man behind the scenes, directing employees to lie to the SEC re the financial condition of the companies. Why was Proskauer and Sjoblom not directly named by the FBI and SEC to give the victims full disclosure of how the scheme was worked with the SEC former enforcement dude Sjoblom. Holt has sued Proskauer and Sjoblom but why has the receiver not seized their assets and firm, how can the firm continue to operate with liability insurance unless their carrier is unaware and Proskauer failed to notify them of their integral part and massive pending liabilities??? The FBI and SEC investigators should formally charge Proskauer and the victims should demand Proskauer to fully disclose their role in ripping off their money.
---
MADOFF + STANFORD + DREIER + SATYAM + FISERV + ALBERT HU + The 1031 Tax Group LLC - Edward H. Okun = PROSKAUER ROSE & FOLEY & LARDNER
Foley & Lardner partner Patricia J. (Trish) Lane represented FISERV, sue Foley, read on.
Investors who have been burned in these scams should start to seek redress from the lawyers who were involved with these scams. I personally have been trying to notify regulators and authorities of a ONE TRILLION DOLLAR scam that is putting states like New York and Florida at huge risk, as well as, companies like Intel, Lockheed, SGI and IBM. The states and companies involved in the fraud fail to acknowledge the risk exposing shareholders and citizens to impending liabilities. Investigators, courts and federal agents ignoring the crimes and evidence, including a car-bombing attempt on my life. I know how Harry Markopolos felt trying to expose Madoff in a world without regulation.
Did I hear Proskauer Rose is involved in Madoff (involved many clients too) and acted as Allen Stanford's attorney. Investors who lost money in these scams should start looking at the law firm Proskauer's assets for recovery. First, Proskauer partner Gregg Mashberg claims Madoff is a financial 9/11 for their clients, if they directed you to Madoff sue them. Then, Proskauer partner Thomas Sjoblom former enforcement dude for SEC and Allen Stanford attorney, declares PARTY IS OVER to Stanford employees and advises them to PRAY, this two days before SEC hearings. Then at hearings, he lies with Holt to SEC saying she only prepared with him but fails to mention Miami meeting at airport hanger. Then Sjoblom resigns after SEC begins investigation and sends note to SEC disaffirming all statements made by him and Proskauer, his butt on fire. If you were burned in Stanford sue Proskauer.
Proskauer Rose and Foley & Lardner are also in a TRILLION dollar FEDERAL LAWSUIT legally related to a WHISTLEBLOWER CASE also in FEDERAL COURT. Marc S. Dreier, brought in through Raymond A. Joao of Meltzer Lippe after putting 90+ patents of mine in his own name, is also a defendant in the Federal Case.
The Trillion Dollar suit according to Judge Shira Scheindlin is one of PATENT THEFT, MURDER & A CAR BOMBING. For graphics on the car bombing visit www.iviewit.tv.
The Federal Court cases
United States Court of Appeals for the Second Circuit Docket 08-4873-cv - Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al. - TRILLION DOLLAR LAWSUIT
Cases @ US District Court - Southern District NY
(07cv09599) Anderson v The State of New York, et al. - WHISTLEBLOWER LAWSUIT
(07cv11196) Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al.
(07cv11612) Esposito v The State of New York, et al.,
(08cv00526) Capogrosso v New York State Commission on Judicial Conduct, et al.,
(08cv02391) McKeown v The State of New York, et al.,
(08cv02852) Galison v The State of New York, et al.,
(08cv03305) Carvel v The State of New York, et al., and,
(08cv4053) Gizella Weisshaus v The State of New York, et al.
(08cv4438) Suzanne McCormick v The State of New York, et al.
( ) John L. Petrec-Tolino v. The State of New York
July 10, 2009 9:08 AM | Reply | Permalink