Did Madoff Have Help?

The story goes that Bernard Madoff acted alone, but now the trustee managing his former empire has hinted that others were in on it.

Bernard Madoff, who stands accused of a $50 billion Ponzi scheme, didn't trade for customer accounts for more than a decade and didn't separate the activities of his broker dealer from his investment advisory business, according to a court-appointed trustee.

The finding may support those who say Madoff, whose firm was once among the largest market makers on Wall Street, could not have acted alone in pulling off the alleged fraud.

Irving Picard, the trustee liquidating Bernard Madoff Investment Securities, said Friday that his investigation so far showed no divide between the market maker and the investment adviser. Madoff, who was arrested in December after allegedly confessing to his two sons, is said to have insisted he acted alone.

"We have found nothing to suggest there was any difference" between the broker-dealer and the adviser, Picard told a crowd of Madoff investors in U.S. bankruptcy court in Manhattan. "It was all one."

Given the length of the alleged fraud, which is said to have been carried out for at least 30 years, and the complexities of handling and distributing monthly statements for potentially thousands of investors, the idea that one person acted alone has been seen as dubious.

The investment adviser, where the fraud is alleged to have occurred, operated on a different floor in the office building where the Madoff firm was located, and was kept closely guarded. While more than 160 employees were registered brokers with the market-making operation upstairs, regulatory documents indicate that no more than five employees worked with the investment adviser. Of course, all documents filed by Madoff with regulators are now suspect.

The Madoff firm was filled with relatives and close associates of Madoff, including his two sons, his niece and his brother. Prosecutors and those associated with the liquidation of the firm are leaving no stone uncovered, investors were assured Friday, but the criminal investigation needs to proceed before many of the assets held personally by Madoff can be pursued.

Madoff remains on house arrest, with bail secured by his wife's properties, until the case is resolved.

"We are operating out of a crime scene," Picard said. In addition to the headquarters in Manhattan, Madoff's firm had a warehouse in Queens, where more than 7,000 boxes have been cataloged, and an undisclosed "back up" site. "We're getting a feel for how this operation worked."

Picard is trying to sort out what assets at the firm can be returned to the more than 8,000 investors who have lost money. So far, 2,350 claims are in, and he urged investors on Friday to make claims if they had not already done so. The trustee identified $946 million of assets that could be returned to investors, a pittance compared to the scope of the alleged fraud.

Bernard Madoff Investment Securities, the market-maker operation, is being put out for bid and could be sold to recover more money for investors, Picard said Friday. A deal could come within weeks.

Among other things, the trustee has tried to cut costs, eliminating dozens of jobs to save $300,000 a week in costs. About 45 employees have remained at the market-making operation to keep it running. Picard is also studying whether and how he could sell artwork owned by the firm, which was seized by the Federal Bureau of Investigation in December.

Subpoenas for documents, correspondence and other information about the activities of the Madoff firm have been sent out to various parties, including the Chicago Board of Trade and the CME Clearing House.

The progress in the case is no comfort to the thousands who lost money as a result of the Madoff affair, some of whom say they lost everything. The Securities Investors Protection Corp. caps claims at $500,000. Those who took profits out of their Madoff investments are subject to a claw back, Picard said. None of those reported returns were real over the course of the decades-long scheme.

The most investors may be able to hope for is a recovery of a small portion of their investments, the trustee warned Friday, because to get to a fair distribution of what assets can be found means "sharing the pain."