The authorities were finally onto Bernard Madoff more than two years before his ultimate arrest last December. But he avoided them by lying.

Even though they had been tipped off about him in 1999, the Securities and Exchange Commission did not seek to interview Madoff until 2006. Then he repeatedly lied to them.

He is now charged with perjury for lying under oath to SEC officials in May 2006.

Madoff Securities, his main New York firm, was registered with the SEC as a broker-dealer and investment adviser.

The prosecution alleges that Madoff "repeatedly lied" to the SEC in written submissions and under sworn testimony in 2006.

It added that Madoff "made numerous false and misleading statements for the purpose of deceiving the SEC and hiding his unlawful conduct".

The Department of Justice lists four areas where Madoff testified to the SEC, which it alleges were lies or part of his attempt to conceal his fraud.

They were:

• Madoff's firm executed trades in ordinary shares on behalf of its investment clients;

• The firm executed options contracts on behalf of its investment advisory clients;

• It had custody of the assets managed on behalf of its clients;

• It used the same trading strategy for all its investment advisory clients.

The Department of Justice details allegations that far from investing in a "basket of stocks that would closely mimic the price movements of the S&P 100 index" or hedging these stocks "by using investor funds to buy and sell options contracts related to these stocks thereby limiting potential losses", Madoff was making very few genuine investments.

The perjury charge backs up claims made by former fund manager turned private investigator Harry Markopolos who last month told Congress he had "gift-wrapped the largest Ponzi scheme in history" when he gave evidence to the SEC against Madoff.

'Wild promises' of stellar returns

Bernard Madoff allegedly promised to deliver returns of a staggering 46% a year for "certain clients".

He told investors he would put their funds into a basket of 30 to 35 stocks in the S&P 100 that would "closely mimic" the index.

But instead he "used most of the investors' funds to meet the periodic redemption requests of other investors", according to court papers filed in New York.

The promise of 46% annual returns raised fresh questions about how Madoff was regulated and the wisdom of his clients.

Madoff issued account statements each month to his 4800 clients and in November he reported the accounts held a total of $64.8 billion (£46.9 billion).

"In fact, Bernard L Madoff Investment Securities held only a small fraction of that balance on behalf of its clients," the papers said.