Madoff 'wired millions to London for laundering'

Nick Goodway
11.03.09

Bernard Madoff is alleged to have funnelled at least $250 million (£182 million) of his victims' money through his London office in Mayfair, partly to fund his own lavish property purchases and lifestyle.

US prosecutors also claim Madoff sent funds placed with him by investors in his $64.8 billion Ponzi scheme to Madoff Securities International, which was based in Berkeley Street, to give the illusion he was dealing in European shares and options on their behalf.

Madoff is expected to plead guilty tomorrow, and could be sentenced to a maximum of 150 years for fraud. He could also be ordered to forfeit $170 billion of ill-gotten gains.

Among the 11 charges against him are two of international money-laundering through his London office.

The Serious Fraud Office in London said that it could not comment directly on the money-laundering charges, which were put before a New York court last night.

A spokesman said: "We are working very closely with our US colleagues on this and co-operating closely with each other. We are vigorously pursuing a number of lines of inquiry."

Madoff Securities International has been under scrutiny by the SFO since January when it received a report from Grant Thornton, who were appointed liquidators and forensic accountants to the UK operations after Madoff's arrest in December. The London firm had reported net assets of £117 million, and was 88%-owned by Madoff.

Steven Raven, who ran the Mayfair operation, has sought to distance himself from Madoff's New York operations.

The money-laundering charges state that between 2006 and his arrest in December 2008, Madoff caused funds to be wired from his New York business (BLMIS) to the London business (MSIL).

These funds were then transferred back to the New York business "to give the false and fraudulent appearance that BLMIS was operating a legitimate investment advisory business in which client funds were being used to purchase and sell securities as Madoff had promised and to conceal the fact that no such purchases or sales were actually made."

The Department of Justice also claimed that Madoff used the same circuit of money transfers to "purchase and maintain property and services for the personal use and benefit of Madoff, his family members and associates."

Madoff and his wife Ruth were well-known socialites.

They owned nine properties, including a $7 million penthouse in Manhattan, a house in East Hampton on Long Island and four properties in Florida. He also owned four boats and three cars.

Money-laundering is relatively easy to prove because there is an electronic or paper trail of the transfer of funds.

The big numbers

$64.8 billion - Prosecutors' new estimate of the size of the fraud

46% - Dizzying guaranteed returns offered to favoured investors

4800 - The total number of Madoff's clients

$170 billion - The theoretical amount that authorities will seek to recoup