The US Securities and Exchange Commission has submitted to judge Louis L. Stanton, a federal judge in the Southern District of New York, the consent of Bernard L.
The US Securities and Exchange Commission has submitted to judge Louis L. Stanton, a federal judge in the Southern District of New York, the consent of Bernard L. Madoff to a proposed partial judgment imposing a permanent injunction and continuing relief previously imposed in a preliminary injunction order entered on December 18.
Madoff has consented to the partial judgment without admitting or denying the allegations of the SEC’s complaint filed on December 11. If the partial judgment is entered by the court, the permanent injunction will continue to restrain Madoff from violating certain anti-fraud provisions of US federal securities laws.
The proposed partial judgment would continue against Madoff the relief imposed in the December 18, order, including the freezing of assets. It 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. He is in addition almost certain to face criminal charges over the fraud if fit to stand trial.
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’s complaint alleges that Madoff and Bernard L. Madoff Investment Securities committed a USD50bn fraud in violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act of 1940.
The complaint alleges that Madoff, just prior to the filing of the complaint on December 11, 2008, informed two senior employees – now known to be his sons – that his investment advisory business was a fraud, saying 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.’
According to the complain, Madoff’s sons understood him to mean that for years he had been paying returns to certain investors out of the principal received from other investors. Madoff admitted that the firm was insolvent and had been for years.
At the time Madoff estimated the losses from the fraud were at least USD50bn, although some estimates believe this to be an exaggeration, and at best include the loss of reported gains which in fact never existed in reality.
