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Wednesday, February 23, 2011

SHOCKER: Lawyers Knew Of, and Profited From, Madoff's Illegal Activity

Irving Picard hits Securities and Exchange Commission's top lawyer with Bernie Madoff lawsuit
The New York Daily News by Wayne Coffey, Nathaniel Vinton and Teri Thompson - February 23, 2011

Irving Picard's assertion that David M. Becker profited from Bernie Madoff and is being sued could bolster the claims of Mets owner Fred Wilpon that he was unaware of the scheme.

The family of the top lawyer at the Securities and Exchange Commission invested with Bernie Madoff and earned more than $1.5 million in ill-gained profits, according to trustee Irving Picard, who has named the lawyer, David M. Becker, as a defendant in a clawback lawsuit, a Daily News investigation has found. The apparent conflict of interest raises significant questions about the watchdog commission's failure to stop Madoff and his $65 billion Ponzi scheme, despite repeated red flags and investigations into his operations. Becker, 63, who is leaving his post as general counsel and senior policy director of the SEC in five days to return to the private sector, has never publicly disclosed his family's ties to Madoff. He and his two brothers, who are also defendants in the suit, were named executors of their mother's estate, which included a Madoff account, after her death in 2004. They liquidated the account in 2005, withdrawing $2,042,845, and are being sued as co-executors of the estate and individually. David Becker was the SEC's general counsel from 2000-2002 and again from 2009 until this month. He joined the agency in 1998 as deputy general counsel. A spokesman for the SEC, John Nester, confirmed Tuesday that Becker received the complaint several days ago. "He had no involvement with his parents' financial affairs, and no recollection of his parents' account with Madoff prior to his mother's death and subsequent liquidation of the account," Nester said on behalf of Becker. The lawsuit, filed on Nov. 12 of last year against Becker and William P. and Daniel I. Becker, is one of up to 200 that Picard has filed in an effort to recover money from people who gained from Madoff's scheme and redistribute it among the far greater number of those who lost their savings. A spokesperson for Picard's law firm, Baker & Hostetler LLP, declined to comment on the Becker lawsuit, citing the ongoing litigation. For Mets owners Fred Wilpon and Saul Katz, the stunning assertion that an SEC heavyweight profited from Madoff's chicanery and is being sued by Picard could bolster their own claims that they were unaware of Madoff's scheme, financial and legal experts said. The crux of the 373-page complaint Picard recently filed against the Mets owners claims they "knew or should've known" about Madoff. No such claim is made in the straightforward, 24-page complaint against David Becker and his brothers. Helen Davis Chaitman is a nationally renowned litigator who represents a number of Madoff victims and is a Madoff victim herself, and has been sharply critical of Picard's methods in trying to recover funds. "This is amazing," Chaitman said. "It certainly proves how foolish Picard's allegations are (that Wilpon and Katz) knew or should've known, if the general counsel of the SEC didn't know." Bradley Simon, a former federal prosecutor who has watched the Madoff case unfold, said situations such as Becker's look bad for the SEC. "If families of high-ranking SEC officials were heavily invested in Madoff it may help explain why the SEC was less than vigilant in scrutinizing his activities," Simon said. "We know they were asleep at the switch. This may help explain why."

Legal records show that the Becker brothers' mother, Dorothy G. Becker, was a Madoff investor, and that her sons became executors of her estate after her will was admitted to probate on Sept. 22, 2004. A Madoff account (No. 1B0270) was formed in the name of "The Estate of Dorothy G. Becker," according to Picard, whose filings show that the check for $2,042,845 was wired out of the account on Feb. 10, 2005. Picard's clawback complaint claims that Madoff "made transfers to Defendants totaling at least $1,544,494 in fictitious profits from the Ponzi scheme," and that the funds were "non-existent profits supposedly earned in the Account, but in reality they were other people's money." Because the suit goes back only six years, it is unclear how long the Becker family invested with Madoff. David Becker's father, Sidney, died in 2000. At the time of the Becker estate transactions, the SEC had already received multiple warnings about Madoff, and indeed, had conducted one of its nine examinations of Bernard L. Madoff Investment Securities not even a year earlier, according to a report issued by the SEC's Official of the Inspector General. One of those complaints, an eight-page memorandum by Boston investment professional Harry Markopolos, had come under Becker's watch in 2001. Becker, who left to work in private practice at Cleary Gottlieb in 2002, was not an SEC employee at the time of the estate transactions involving his mother's account. He returned to the SEC in 2009 at the urging of chairman Mary Schapiro. Upon announcing Becker's departure from the SEC earlier this month, Schapiro said, "His experience and deep knowledge of the Commission and the securities laws has served the agency and the American people brilliantly." In a speech 15 months ago, Becker was eerily prescient in remarks he made about Madoff to the Committee on Federal Securities Regulations of the American Bar Association. "The plain truth is that the (SEC) did not protect investors from the biggest Ponzi scheme this country has ever known," Becker wrote. "There are explanations, but there are no excuses. Whatever we might think about some of the complaints that have been leveled against the Commission, the Madoff story has been a blow to the solar plexus . . . " Becker filed a friend of the court brief in support of Picard's litigation and tactics in September of 2010. A lawyer with ties to a number of Madoff victims, speaking on the condition of anonymity, expressed outrage about "the crookedness and incestuousness of this whole affair," in reference to the SEC's failure to investigate Madoff. "First, in a prison interview, you have Madoff calling Mary Schapiro 'a dear friend,' " the lawyer said. "Now you have the general counsel of the SEC - a lawyer whose job it is to police this world, being named as a defendant because his mother's estate had money with Madoff. "I don't care how much money David Becker and his brothers made or didn't make. It's wrong. It's just wrong. A lot of lawyers are getting rich and everybody else is getting screwed."


Former Schumer Insider said...

oooooooooooohhhhhhh, Chuckie!!!!
oooooooooooohhhhhhh, Mr. Chuck Schumer!!!!
What did you know?
Do tell, dear Senator!

madoff victim said...

Impossible. Lawyers would never sit back and do nothing about the financial crime of the century (to date, anyway). These folks are officers of the court, bound to speak up against injustice and criminal behavior. Unless, of course, and as we now see, they and their families were profiting from the illegal actions.

Anonymous said...

Lawyers at SEC protecting criminals and with lawyer hands stealing from the pot. What was Chuckie the Rat's part in the oversight and SEC funding? Was it all Bush's fault and Chuckie the Rat wasn't protecting his rat pack of lawyers? Where was AG Cuomo, or Chuckie the Rat's approved Bush US AG? Where now is Holder or the local FP who used to be Chuckie the Rat's lawyer?
All trails lead to Chuckie the Rat.

Kris Sergentakis said...

Wait till Shana Madoff starts signing to the Feds about how The Leukemia & Lymphoma Society helped Madoff steal millions.

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