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Bernard Lawrence Madoff (IPA: /ˈmeɪdɑf/) (born April 29, 1938) is a businessman and former chairman of the NASDAQ stock market. He started the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 and was its chairman until December 11, 2008, when he was arrested and charged with securities fraud.
Bernard L. Madoff Investment Securities, which is in the process of liquidation, was one of the top market maker businesses on Wall Street (the sixth-largest in 2008), often functioning as a "third-market" provider that bypassed "specialist" firms and directly executed orders over-the-counter from retail brokers. The firm also encompassed an investment management and advisory division that is now the focus of the fraud investigation.
On December 11, 2008, at 8.30 a.m. Federal Bureau of Investigation agents arrested Madoff on a tip-off from his sons, Andrew and Mark, and charged him with one count of securities fraud. On the day prior to his arrest, Madoff told his senior executives at the firm that the management and advisory segment of the business was "basically, a giant Ponzi scheme." Five days after his arrest, Madoff's assets and those of the firm were frozen and a receiver was appointed to handle the case. Madoff's alleged fraud may be valued at a loss of up to a US$50 billion in cash and securities.  Banks from outside the U.S. have announced that they have potentially lost billions in U.S. dollars as a result. The FBI complaint states that Madoff told his sons he believed the losses from his scheme could exceed that $50 billion sum. To date, it is the largest investor fraud ever attributed to a single individual.
Madoff was a prominent businessman and philanthropist. The freeze of his and his firm's assets significantly affected businesses around the world and a number of charities, some of which, including the Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT Foundation, have been forced to close as a consequence of the fraud.
Investors have questioned Madoff's statement that he alone is responsible for the large-scale operation, and investigators are looking to determine if there were others involved in the scheme.
Madoff was born in the New York City borough of Queens to a Jewish family, and graduated from Far Rockaway High School, where he was a member of the swim team. He is married to his high school sweetheart Ruth Madoff, and has two sons, Mark and Andrew. He graduated from Hofstra University (then Hofstra College) in 1960 with a degree in political science. A source told The Wall Street Journal that Madoff wished he had attended Stanford University or the Wharton School of Business.
Although he lived in a ranch house in Roslyn, New York through the 1970s, Madoff has owned an ocean-front residence in Montauk since 1981. His primary residence, valued at more than US$5 million, is on Manhattan's Upper East Side. Madoff is listed as chairman of his Upper East Side building's co-op board. He also owns a home in France and a US$9.3 million mansion in Palm Beach, Florida on the Intercoastal Waterway just north of Flagler Memorial Bridge. He is a member of the Palm Beach Country Club and owns a 55-foot (17 m) fishing boat named Bull.
Madoff started his firm in 1960 with an initial investment of US$5,000 (US$35,000 in today's dollars) that he said was earned from working as a lifeguard and installing sprinklers. At first, the firm made markets (quoted bid and ask prices) via the National Quotation Bureau's Pink Sheets. In order to compete with firms that were members of the New York Stock Exchange trading on the stock exchange's floor, the firm began to use information technology to disseminate its quotes and set itself apart from competitors. After a trial run, the technology the firm helped develop became the NASDAQ. These technologies allowed the advent of online trades and brokers, such as Ameritrade and Charles Schwab. At one point, Madoff Securities was the largest "market maker" at the NASDAQ, both buying and selling.
He was active in the National Association of Securities Dealers (NASD), a self-regulatory organization for the U.S. securities industry. His firm was one of the five most active firms in the development of the NASDAQ, and he served as its chairman of the board of directors, and on its board of governors.
He brought several relations into his business. His younger brother, Peter, was a senior managing director and chief compliance officer. Both of Madoff’s sons, Mark and Andrew, joined the team after finishing their education and worked in the trading section of the business. Charles Weiner, Madoff’s nephew, also joined the firm, and Peter Madoff’s daughter, Shana, took a job with the company as a compliance attorney. Employees of the company were invited to Madoff's Montauk house for a weekend each year. Andrew Madoff invested his own money in his father's fund, but Mark had not done so for about eight years.
While according to sources involved in the government inquiry into Madoff, the fraud in the investment management and advisory division may have gone back to the 1970s, by the 1980s, the apparently legitimate market maker division of Madoff's firm traded up to five percent of the total trades made on the New York Stock Exchange. Madoff's firm was "the first prominent practitioner" of "paying for order flow", in other words paying a broker to execute a customer's order through Madoff, which has been called a "legal kickback". Using this method, the firm became the largest dealer in NYSE-listed stocks in the U.S., trading about 15% of transaction volume in these stocks.
Madoff viewed the payments as a normal business practice: "If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow is an issue that attracted a lot of attention but is grossly overrated." Academics have questioned the ethics of these payments. Madoff has argued that these payments did not alter the price that the customer received.
By the 2000 Internet boom, Madoff Securities held approximately US$300 million in assets and was considered to be one of the top traders of securities in the nation. The operation was conducted out of floors 17 to 19 of the Lipstick Building, with 18 and 19 used for administration and stock-trading. The investment management division, which employees referred to as the "hedge fund," was on the 17th floor, occupied by no more than 24 employees. Since funds controlling billions as Madoff did would usually require hundreds of employees for the administrative work involved, employees from other floors say that they always assumed Madoff had an office in another location in addition to the Manhattan headquarters. Madoff did keep a London office with 28 employees which was entirely separate from Madoff Securities and only handled investments for his family; mostly traders and investment analysts who handled about £80 million.
 Methods of operation, accusations, and case
 Investment strategy
Through the years, Madoff claimed his investment strategy consisted of purchasing blue-chip stocks and taking options contracts on them, although he may not have invested much at all. Sources from the investigation assert that it appears Madoff chose a trading strategy that failed, at which point he began the Ponzi scheme. In 1992, Madoff told The Wall Street Journal about his stock strategies: in the 1970s, he had placed invested funds in "convertible arbitrage positions in large-cap stocks, with promised investment returns of 18% to 20%." Madoff said that beginning in 1982, he began using futures contracts on the stock index, and he said he was in index puts (a form of options contract) during the 1987 stock market crash.
Barron's Magazine reported in 2001 that a Madoff hedge fund document (a so-called "Offering Memorandum") described Madoff's strategy as follows: "Typically, a position will consist of the ownership of 30–35 S&P 100 stocks, most correlated to that index, the sale of out-of-the-money calls on the index and the purchase of out-of-the-money puts on the index. The sale of the calls is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the calls. The puts, funded in large part by the sale of the calls, limit the portfolio's downside."
This split-strike or collar trade involves three steps: 1) buying a stock at price X — say 100, 2) selling a call option with a strike price Y — say 120 — which is above X, and 3) purchasing a put option with a strike price Z — say 80 — which is below X. If the price of the stock is 125, which is above Y at expiration, the stock will be called away and the investor receives Y (120) for the stock. If the price is 70, which is below Z at expiration, the put can be exercised and Z (80) received in cash. This effectively caps the maximum gain (until the options expire) at the Y minus X (120 − 100 = 20), and the maximum loss at the X minus Z (100 − 80 = 20). The options transactions can generate positive or negative cash-flow depending on the cost of purchasing the put (say 3%), the premium received to write the call (say 4%) and dividends from the stock holdings (say 5%). To create an effective collar for a long-term stock holding, the option contracts should be rolled into contracts farther out prior to expiration.
Madoff's strategy as described in Barron's is not a perfect hedge since options are purchased/sold on an index which contains a much larger basket of stocks than the 30–35 purchased to hold. A few analysts performing due diligence on Madoff did raise alarms because they were unable to replicate the fund's past returns using historic price data for US stocks and options on the indexes. There is no credible evidence that Madoff actually made all the required trades dictated by this strategy. Barron's raised the possibility that Madoff's returns were not due to this strategy, but rather from front running the firm's brokerage clients.
Rival fund managers were unable to replicate the same returns, using the strategies from Madoff's quarterly reports.
 Sales methods
The New York Post reported that before his arrest Madoff, himself Jewish and on the boards of directors of several prominent Jewish institutions, "worked the so-called 'Jewish circuit' of well-heeled Jews he met at country clubs on Long Island and in Palm Beach." The New York Times reported that Madoff courted many prominent Jewish executives and organizations among those investing in his funds — Jeffrey Katzenberg, Eliot Spitzer, Yeshiva University, the Elie Wiesel Foundation, and charities set up by the publisher Mortimer Zuckerman and Hollywood film director Steven Spielberg. Among one of the most prominent Jewish promoters was J. Ezra Merkin, whose fund Ascot Partners steered US$1.8 billion towards Madoff's firm. A scheme like this that targets members of a particular religious or ethnic community is a type of affinity fraud.
Fairfield Greenwich Group, based in Greenwich, Connecticut, had a Fairfield Sentry fund which was one of several dozen so-called feeder funds that gave foreign investors portals to Madoff. Fairfield, in turn, set up further feeder funds such as Lion Fairfield Capital Management in Singapore and Stellar US Absolute Return, all ultimately conduits to Madoff, having directed a total of US$7 billion.
The Wall Street Journal reported that "Several investors say Mr. Madoff's main go-between in Palm Beach was Robert Jaffe. Mr. Jaffe is the son-in-law of Carl Shapiro, the founder and former chairman of apparel company Kay Windsor Inc. and an early investor and close friend of Madoff. Jaffe, a philanthropist in Palm Beach, Florida, attracted many investors from the Palm Beach Country Club."
Madoff also promoted in Europe and South America, mostly indirectly through Fairfield fund founder Walter Noel's son-in-law Andrés Piedrahita's connections. Another Noel son-in-law's territory included Asia, most recently targeting China, though by that time, Madoff was advertising to anyone with money (contrary to his initial strategy, when he handpicked investors). The Madoff sales force were well-dressed, multilingual sales representatives in the financial capitals of Europe.
Madoff was a "master marketer", and his fund was also considered exclusive, as he was initially giving the appearance of being very selective of which investors to take on, giving the appearance of a "velvet rope." Some Madoff investors were wary of removing their money from his fund, in case they couldn't get it back in later. One New York real estate investor said she "literally begged" Madoff to take her money, and he refused.
Madoff had a very successful track record year after year, with returns that were "unusually consistent." As well, his returns around 10% were a key factor in the perpetuation of Madoff's fraud for decades; other Ponzi schemes that paid out higher returns of 20% or higher typically collapsed much more quickly. A hedge fund run by Madoff, which described its strategy as focused on shares in the Standard & Poor's 100-stock index, averaged a 10.5% annual return over the past 17 years. Through November 2008, amid a general market collapse, the fund reported that it was up 5.6% year-to-date, while the year-to-date total return on the S&P 500-stock index had been negative 38%. One investor who declined to be named said “The returns were just amazing and we trusted this guy for decades — if you wanted to take money out, you always got your check in a few days. That’s why we were all so stunned.”
A Swiss bank that invested explained that because of Madoff's huge volume as a broker-dealer, the bank felt he had a "perceived edge" on the market and was able to time his trades well.
 Previous SEC investigations
In 1992, the SEC investigated one of Madoff's feeder funds, Avellino & Bienes, which invested solely with Madoff. Avellino & Bienes was accused of selling unregistered securities, and in its report the SEC mentioned the fund's "curiously steady" promised yearly returns to investors of 13.5% to 20%; however, the SEC did not look any more deeply into the matter. Avellino shut down in 1993, with investors receiving their money back. At the time, Madoff said that he didn't realize the feeder fund was operating illegally and that his own investment returns tracked the previous 10 years of the S&P 500. Avellino & Bienes, previously an accounting firm, had turned to full-time investments in 1984 in a partnership with Madoff. At the time of the investigation, the SEC did not publicly name Madoff because he was not accused of wrongdoing. Michael Bienes later became a philanthropist donating at least US$30 million in Florida and the United Kingdom, with a news report explaining that he "got lucky on the New York Stock Exchange."
The SEC said it conducted two inquiries of Madoff in the last several years and did not find major problems. An SEC statement detailed that inspectors examined Madoff's brokerage operation in 2005, finding three violations of rules requiring brokers to obtain the best possible price for customer orders, while in 2007, SEC enforcement staff completed an investigation and did not refer the matter to the SEC commissioners for legal action.
The SEC has been accused of missing numerous red flags and ignoring tips on Madoff's alleged fraud. As a result, the SEC's chairman Christopher Cox has said that an investigation will ensure into "all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm." A former SEC compliance officer, Eric Swanson, married Madoff's niece Shana, a Madoff firm compliance attorney.
 Red flags
Outside analysts raised concerns with Madoff's firm for years. Financial analyst Harry Markopolos complained to the SEC's Boston office in May 1999 telling the SEC staff they should investigate Madoff because it was impossible to legally make the profits Madoff claimed using the investment strategies that he claimed to use. In 2005 Markopolos sent a detailed 17 page memo directly to the SEC, entitled The World's Largest Hedge Fund is a Fraud. The paper specifies 29 numbered red flags. In part, the memo concluded: "Bernie Madoff is running the world's largest unregistered hedge fund. He's organized this business as 'hedge fund of funds privately labeling their own hedge funds which Bernie Madoff secretly runs for them using a split-strike conversion strategy getting paid only trading commissions which are not disclosed.' If this isn't a regulatory dodge, I don't know what is."
Among the suspicious signs was the fact that Madoff's company avoided filing disclosures of its holdings with the SEC by selling its holdings for cash at the end of each period. Such a tactic is highly unusual. Madoff's use of a small auditing firm, Friehling & Horowitz, which has only one active accountant, is also highly unusual and was noted by hedge fund advisory fund firm Aksia LLC when it advised its clients in 2007 not to invest with Madoff. Friehling & Horowitz has reported since 1993, in writing, to the American Institute of Certified Public Accountants that it doesn't conduct audits. David Friehling assumed control of the firm from partner Jerry Horowitz, his father-in-law, who reportedly did accounting work for Madoff for decades.
While hedge funds typically hold their portfolio at a securities firm that acts as the fund's prime broker (typically a major bank or brokerage), allowing an outside investigator to verify their holdings, Madoff's firm was its own broker-dealer and supposedly processed all its trades.
Although Madoff was a pioneer of electronic trading, he refused to provide his clients online access to their accounts. He sent out account statements by mail, whereas most hedge funds email statements and allowed them to be downloaded via computer for easier analysis by investors.
Improbably steady investment returns despite exceedingly volatile markets were another red flag. A longtime friend said that "his rate of return [...] was never attention-grabbing, just solid 12–13 percent year in, year out". Robert Ivanhoe, chairman of the real estate practice of the law firm Greenberg Traurig, added that Madoff increased his allure by refusing some investors.
Charles Gradante, co-founder of hedge-fund research firm Hennessee Group, observed that Madoff "only had five down months since 1996", and commented on Madoff's investment performance: "You can't go 10 or 15 years with only three or four down months. It's just impossible." A 2001 story in MARHedge interviewed traders who questioned how Madoff could have 72 gaining months in a row, saying that type of stock success had never occurred before.
Madoff also operated as a broker dealer with an asset management division. Joe Aaron, a longtime hedge fund professional, found the structure suspicious and in 2003 warned a colleague to steer clear of the fund, saying "Why would a good businessman work his magic for pennies on the dollar?"
At the same time as potential investors such as Société Générale were finding red flags from Madoff's firm, clients such as Fairfield and Union Bancaire Privee claimed that they had been given an "unusual degree of access" to look into Madoff's funds and had seen nothing wrong with his firm's investments.
 Signs of trouble
Early indications that Madoff may have been in trouble emerged in 2007. The Madoff Family Foundation donated only US$95,000 to charitable groups. This was a major drop from previous years. In 2006, the foundation had donated US$1,277,600.
The scheme began to unravel when, in 2008, clients wanted to withdraw US$7 billion from the firm, and Madoff was struggling to raise US$7 billion to cover redemptions. On December 10, 2008, he suggested to his sons that the firm pay out several million dollars in bonuses two months ahead of schedule, from US$200 million in assets that the firm still had. Then at his apartment, he admitted to his sons that his firm was a fraud. His sons Mark and Andrew were allegedly unaware of the imminent insolvency of Madoff Investment Securities. According to the authorities, the sons confronted their father, asking him how the firm could pay bonuses if it could not pay investors, prompting Madoff's admission that he was "finished", after which they reported him to the authorities. The FBI investigation shows no signs of implicating family members of fraud, with federal authorities saying his wife Ruth is not accused of wrongdoing.
 Other Madoff-companies involved
Apart from 'Bernard L. Madoff' and 'Bernard L. Madoff Investment Securities LLC ("BMIS")' , the order to freeze all activities also forbids acting and trading from the companies:
* Madoff Securities International Ltd. ("Madoff International")
* Madoff Ltd.
 Criminal and civil charges
Sister project Wikinews has related news: Market maker Bernard L. Madoff arrested in $50B 'giant Ponzi scheme'
Madoff was arrested by the FBI on December 11, 2008 on criminal charges of securities fraud, turned in by his sons after he allegedly told them that his business was "a giant Ponzi scheme." According to the SEC, Madoff confessed to an FBI agent that there was “no innocent explanation” for his behavior, and that he "paid investors with money that wasn't there". The alleged behavior involves an asset management unit of his firm, rather than the better known market making unit.
The criminal complaint alleges that investors lost US$50 billion because of the scheme, though The Wall Street Journal reports "that figure includes the alleged false profits that Mr. Madoff's firm reported to its customers for decades. It's unclear exactly how much investors deposited into the firm." He was charged with a single count of securities fraud. He faces up to 20 years in prison and a fine of US$5 million if convicted. His attorney, Ira Sorkin, stated that Madoff "will fight to get through this unfortunate set of events."
The case is U.S. v. Madoff, 08-MAG-02735, U.S. District Court for the Southern District of New York (Manhattan). Madoff was released on the same day of his arrest after posting US$10 million bail. Madoff and his wife have surrendered their passports, and he at first was subject to travel restrictions, a 7 p.m. curfew at his co-op, and electronic monitoring as a condition of bail. Although Madoff only had two co-signers for his US$10 million bail, his wife and his brother Peter, rather than the four required, a judge allowed him free on bail but ordered him confined to his penthouse. Madoff wears an electronic ankle bracelet to ensure compliance. Madoff has reportedly received death threats that have been referred to the FBI, and the SEC referred to fears of "harm or flight" in its request for Madoff to be confined to his Upper East Side apartment. Cameras will monitor the apartment's doors, its communication devices will send signals to the FBI, and his wife will be required to pay for additional security.
 Others involved
Investigators are looking for others involved in the scheme, despite Madoff's statement that he alone was responsible for the large-scale operation. Harry Sussman, an attorney representing several clients of the firm, stated that "someone had to create the appearance that there were returns," and further suggested that there must have been a team buying and selling stocks, forging books, and filing reports.
The role of Frank DiPascali, an official at the firm, is being considered. DiPascali is represented by Marc Mukasey, the son of U.S. Attorney General Michael Mukasey, who has recused himself of any involvement in the case. According to an SEC memo, DiPascali "responded evasively" to questioning following Madoff's arrest.
Federal investigators have discovered apparently fraudulent documents and records in Madoff's Manhattan offices, and are looking into who prepared them.
Madoff's accountant was David G. Friehling, the only active accountant at Friehling & Horowitz according to the AICPA. The accounting firm has informed the AICPA in writing for 15 years that it does not conduct audits. An investigation into Friehling by Rockland County, New York district attorney Thomas Zugibe was stopped in deferment to the investigation by the US Attorney's office out of Manhattan.
J. Ezra Merkin, a prominent investment advisor and philanthropist, has been sued for his role in running a "feeder fund" for Madoff. Merkin informed investors in his US$1.8 billion Ascot Partners fund on December 11 that he was among those who suffered substantial personal losses, since all of the fund's dollars were invested with Madoff. The Connecticut Attorney General is looking into the possible role the boards of nonprofits might have played, in not conducting due diligence with donors' contributions.
 Recovery of funds
Madoff's assets have been frozen, and he has been ordered to develop a list of his clients. The victims of the alleged fraud are considering how to best recover some of their investments. The SEC filed a separate civil suit against Madoff on December 11, 2008. Separately, individual investors have filed civil suits against Madoff. The two firms leading the suits announced on December 12, 2008 that the firms have been retained by dozens of individual investors.
The use of the legal doctrine of fraudulent conveyance in bankruptcy proceedings might mean that investors who withdrew their money before the fraud was revealed might be forced to return their profits or even part of their initial investments. Returning funds is uncontroversial for clients who may have known that the Madoff's business was fraudulent, but it is not so clear for clients who were not aware of Madoff's activities. The current statute of limitations on cases involving fraudulent conveyance is six years, which means that clients who withdrew their money from Madoff's firm more than six years ago could not lose their withdrawals. But clients who withdrew their funds less than six years ago might have to return their withdrawals.
Investors may also have access to funds from the Securities Investor Protection Corporation (SIPC), which offers assistance to investors of failed brokerage firms. Investors may receive a maximum of US$500,000, but only for cash or securities that are missing from their accounts. It could take several years before investigations into the scandal are concluded and investors are able to file claims. Victims may also file suit to have taxes already paid on "fictitious income" restored to them.
 Affected clients
The Securities Investor Protection Corporation (SIPC) is liquidating Madoff’s brokerage and attempting to sell it before its 120 employees find other jobs, with Irving Picard acting as trustee. The SIPC provides up to US$500,000 in insurance for missing money or securities in individual brokerage accounts, but does not protect against bad investments.
Stephen Harbeck, president of the SIPC, stated that the investment management department's financial records, which according to other sources are in "disarray," will take six months to sort out. Assets are frozen, but employee salaries are still being paid. “There are some assets, but I have no idea what the relationships of the assets available are to the claims against them. The records are utterly unreliable on this case.”
Although Madoff filed a report with the SEC in 2008 stating that his advisory business had only 11–25 clients and about US$17.1 billion in assets, dozens of investors have reported losses, and Madoff estimated the fraud at US$50 billion. According to Bloomberg, “in all, companies, individuals and foundations have disclosed about $24 billion of investments with Madoff.” Those affected include banks, Wall Street investors, charities, as well as individuals.
Many European banks invested in Madoff; the largest was the private Swiss bank Union Bancaire Privée, with US$700 million of clients' funds invested. The large sovereign wealth fund Abu Dhabi Investment Authority also indirectly invested US$400 million with Madoff.
In December 2008, the Elie Wiesel Foundation for Humanity issued a press release on its website stating that nearly all of the foundation's assets (approximately US$15.2 million) have been lost through Madoff's firm.
Steven Spielberg and Eric Roth are two of the Hollywood investors defrauded by Madoff. Roth stated that his losses were heavy, although the full extent is unknown.
 Largest stake-holders
Potential losses between US$100 million and US$1 billion include Natixis SA, Carl J. Shapiro (a 95-year-old Boston philanthropist, and the individual who seems to have lost most, US$500 million; see also above), Royal Bank of Scotland Group PLC, BNP Paribas, BBVA, Man Group PLC, Reichmuth & Co., Nomura Holdings, Aozora Bank, Maxam Capital Management, EIM SA, and AXA SA. The potential losses for these investors total US$4.02 billion. Twenty-three investors with potential losses of US$500,000 to US$100 million were also listed, with total potential losses of US$540 million. They included Bramdean Alternatives run by Nicola Horlick. The grand total potential losses in the December 16, 2008 Wall Street Journal table is US$26.9 billion.
However, the most updated list, as reported by Bloomberg News on December 24, 2008, places the total amount of current financial losses related to Madoff's fraud at US$36 billion. A partial list of Madoff's victims from the updated Bloomberg report includes US Senator Frank Lautenberg's charitable foundation, the Horowitz Association at US$800 million, BNP Paribas SA at up to US$478.2 million, US$696 million in losses to Notz, Stucki & Cie, US$302 million in losses to Nomura Holdings Inc., US$400 million in losses to Fix Asset Management, up to US$614 million to Natixis SA and US$110 million to Yeshiva University.
 Suicide of client
On 23 December 2008, one of the founders of Access international Advisors LLC, René-Thierry Magon de la Villehuchet, was found dead in his company office on Madison Avenue in New York City. Both of his wrists were slit and de la Villehuchet had taken sleeping pills, in what appeared to be suicide. Access international Advisors LLC had invested US$1.4 billion with Madoff's firm. De la Villehuchet had also invested his personal money with Madoff's business. De la Villehuchet lived in New Rochelle, New York and came from a prominent French family. Access international Advisors LLC had connections to wealthy and powerful aristocrats from Europe. No suicide note was found at the scene. The FBI and SEC do not believe de la Villehuchet was involved in the fraud.
Before his arrest, Madoff's family was involved in philanthropic circles. When his nephew, Roger Madoff, died of leukemia in April 2006, paid death notices appeared in newspapers from a range of charitable organizations, including the Lower East Side Tenement Museum. Madoff donated approximately US$6 million to lymphoma research after his son Andrew was diagnosed.
Madoff served as the Chairman of the Board of Directors of the Sy Syms School of Business at Yeshiva University, as well as Treasurer of its Board of Trustees. He resigned his position at Yeshiva University after his arrest. Madoff also serves on the Board of New York City Center, a member of New York City's Cultural Institutions Group (CIG). He served on the executive council of the Wall Street division of the UJA Foundation of New York, a Jewish foundation which declined to invest funds with him due to the conflict of interest.
Madoff undertook charity work for the Gift of Life Bone Marrow Foundation, and through The Madoff Family Foundation, a US$19 million private foundation, which he managed along with his wife. They donated money to hospitals and theaters. The foundation has also contributed to many Jewish educational, cultural, and health charities. The various organizations were mostly given charity funds backed by Madoff securities. Madoff was also a major contributor to the Democratic Party, donating about US$25,000 a year.
In the wake of Madoff's arrest, the assets of the Madoff Family Foundation have been frozen by a federal court.