The Securities and Exchange Commission said that Bernard Madoff has consented to a proposed partial judgment imposing a permanent injunction on him.
Madoff has reportedly admitted losing approximately $50 billion in a gigantic Ponzi scheme. However, he consented to the partial judgment without admitting or denying the allegations of the original complaint filed by the SEC on Dec. 11. If Judge Louis Stanton’s court enters the partial judgment, the permanent injunction will continue to restrain Madoff from violating certain antifraud provisions of the federal securities laws. The proposed partial judgment would also continue against Madoff the relief imposed in a December order freezing his assets.
However, the proposed partial judgment would leave the issues of the amount of disgorgement, prejudgment interest and civil penalty to be imposed against Madoff to be decided at a later time. For purposes of determining Madoff’s obligation to pay disgorgement, prejudgment interest and/or a civil penalty, the proposed partial judgment deems the facts of the complaint are established and cannot be contested by Madoff.
The SEC alleges that last December, shortly before the filing of the complaint, Madoff informed two “senior employees,” who have since been identified as his sons Mark and Andrew, that his investment advisory business was a fraud. Madoff told them that he was “finished,” that he had “absolutely nothing,” that, “It’s all just one big lie,” and that it was “basically a giant Ponzi scheme.” His sons understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from the fraud were at least $50 billion.
A list of Madoff clients was made public last week, and included at least 21 accounts under the names of his auditors, David Friehling and Jerome Horowitz, and their firm Friehling & Horowitz. They were also listed as the addressees on a number of other accounts.
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