Page
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
1
In
the
Matter
of
)File
No.
GIG-509
GIG-509
WITNESS:
Number Bc~
PAGES:
1
through
136
~acopv
Exchange Commission
PLACE:
Securities
and
100
F
Street,
N.E.
Room
2740
Washington,
DC
DATE:
Monday,
March
9,
2009
The
above-entitled
matter
came
on
for
hearing,
pursuant
to
notice,
at
9:40
a.m.
MADOFF
EXHIBITS-00160
Page
APPEAWINCES:
2
On behalf
of
the
Securities
and
Exchange
Commission:
H.
DAVID
KOTZ,
ESQ.,
Investigator
General
HEIDI
STEIBER,
ESQ., WILSON,
Assistant ESQ., Assistant
Investigator Investigator
CHRISTOPHER
DAVID
WITHERSPOON,
ESQ.
DAVID
FIELDER,
ESQ.
Office
of
the
Inspector
General
U.S.
100 F
Securities
Street,
and
N.E.
Exchange
Commission
Washington,
D.C.
20549
On
behalf
of
the
witness:
JACQUELINE
WOOD
PERRELL,
ESQ.,
PRO
SE
Proskauer
Rose,
LLP
1001
Pennsylvania
Avenue,
N.W.
Washington,
D.C.
20004
MADOFF
EXHIBITS-00161
Page
CONTENTS
3
WITNESS Jacqueline Wood Perrell
EXAMINATION 8
EXHIBITS
DESCRIPTION
IDENTIFIED
1 - Lancer 2 - E-mail
3 Email
Barren's 4 Planning G. 5 NASD
Funds from
from J.
bsl~lll) -McCarthy
12/11/03 from J. Perrell to
19 to
to J.
M. Kelly,5/21/03
Perrell,
21
article, memorandum 12/16/03 request 12/7/03
from J. Perrell
40
Walker, document
43 letter to Madoff 46
to E. Swanson with
Securities,
6 E-mail
draft
letters,
12/19/03
48
7 -
E-mail 12/18/03,
12/19/03
from
J. and
McCarthy M. Donahue
to
L. to
Richards, M. Daugherty,
53
8
-
Document J.
request cc: B.L. G.
letter J. Madoff Walker to
from Perrell, to
M.
Donahue
to 55 58 and 59
McCarthy, from from
12/24/03 SEC, M. 1/16/04
9 10
-
Letter E-mail J.
Donahue
Perrell,
1/29/04
11
-
E-mail
Wood,
from
1/29/04
G.
Walker
to
M.
Donahue,
J.
66
MADOFF
EXHIBITS-00162
Page
CONTENTS
4
EXHIBITS
DESCRIPTION
IDENTIFIED
12 - E-mail
13 14
15
from
from
G. Walker
J. notes Perrell by
Walker
to
to J.
to
M. Donahue,
M. Donahue, 2/4/04
1/29/04
2/3/04
66
69 71
-
E-mail Handwritten
E-mail
Perrell,
J. Perrell
from
G.
and
M. 16 17 -
Donahue, from from G. G. Walker Walker to to J. J. Perrell, Perrell, 2/6/04 J. Perrell, 2/4/04
78 80
E-mail E-mail
supplemental 18 E-mails
2/11/04
information between G. Walker
request, and
82
87
19 20 21
-
E-mail Letter E-mail
2/18/04
from from from
J. B. M.
Perrell Madoff Donahue
to to to
M. M. J.
Donahue, Donahue, Perrell
2/11/04 3/23/04 and G. Walker,
87 88
94
22
-
Mark-up
February
draft
2004 from from B. E.
letter
to
P.
Madoff
from
E.
Swanson,
95
23 24
-
Letter Letter
Madoff Swanson
to to
E. P.
Swanson, Madoff,
3/1/04 2/18/04
97 99
25 26
27
-
E-mail E-mail
Handwritten
from from
J. J.
notes
Perrell Perrell
re
to to
Madoff,
E. M.
Swanson, Donahue,
3/18/04
3/9/04 3/18/04
101 104
106
28
-
E-mail
copy J;
from
Perrell,
G.
Walker
3/23/04
to
M.
Donahue,
107
MADOFF
EXHIBITS-00163
Page
CONTENTS
5
EXHIBITS
DESCRIPTION
IDENTIFIED
29 - E-mail
J. Perrell,
from
G. Walker
Madoff
to
M. Donahue,
3/23/2004
copy
110
supplements,
30 - E-mail
J. Perrell,
from
G. Walker
3/24/2004
to
M. Donahue,
copy
111
31-
E-mail
3/25/2004
from
G. Walker
to
M. Donahue,
copy
J.
Perrell,
112
32
-
E-mail
from
M.
Donahue
to
G.
Walker,
copy
to
J.
Perrell,
4/7/2004
114
33
-
E-mail
from
M.
Kelly
to
L.
Ward,
B.
Snively,
K.
Stevens
and
J.
Reese,
4/16/04
116
34
-
E-mail
from
E.
Swanson
to
M.
Donahue,
3/16/05
118
35
-
E-mail
from
M.
Donahue
to
G.
Walker,
M.
Daugherty
and
Former OCIE Attorney Advisor
5/31/05
119
36
-
E-mail
from
G.
Walker
to
M.
Donahue,
6/2/2005
120
MADOFF
EXHIBITS-00164
Page
1 2 3 4 March 9, MR. 2009, KOTZ: at the of PROCEEDINGS We are United Inspector on the record Securities at 9:40 and a.m. on
6
States
Exchange
Commission,
Office
General.
S
6
7 8
I am going
please
Whereupon,
to
swear
hand?
you
in.
Okay.
Would
you
raise
your
right
JACQUELINE
WOOD
PERRELL
9 10 11 12
was was
called examined
as
a witness, and testified Would
and as
having follows: please
first
been
duly
sworn,
MR. full name for
KOTZ: the
you
state
and
spell
your
record?
13
14 Perrell,
THE WITNESS:
P-e-r-r-e-l-l.
Jacqueline,
J-a-c-q-u-e-l-i-n-e,
Wood
15 16 17
18 Wood.
MR. KOTZ: SEC you were known as
Okay.
And for
the
time
you
were
at
the
Jacqueline Jacqueline
Wood? Wood; Jacqueline Murray
THE WITNESS:
19 20 21 22 23
24
MR. KOTZ: Inspector Exchange of Inspector General Commission. General, of
Okay. the This Case You are
My name United is an States
is
David
Kotz.
I am the and
Securities by
investigation 509. to
the to
Office ask under you
Number going
I am going provide answers
certain
oath.
questions.
25
The
court
reporter
will
record
and
later
transcribe
MADOFF
EXHIBITS-00165
Page
1
2
10
THE WITNESS:
BY MR. KOTZ:
All
right.
Thank
you.
3
4 in?
Q
Okay.
So you were saying
you graduated
law school
5
A
December
of
1998.
6
7 law
Q
school?
Okay.
And then what didyou
do after
graduating
8
9
A
Stockbridge.
I continued
employment
as a lawyer
with Miles
&
10
11
q
A
Okay.
Yes.
As an
associate?
12 13 14
15
q A Q
Stockbridge?
Okay. Until
How long I came to of
did the
you do that SEC in 2003.
for?
What kind
law did
you practice
at
Miles
&
16
17
18
A
collar,
securities.
Business
criminal
and commercial litigation,
defense work, and a little bit
some white
of the
19 20 21
q A Stockbridge,
Okay.
What made you decide bit
to come to the SEC? at Miles &
I did a little
of securities that I actually
and the partner
worked for
22 23
24
became the federal So I decided
sec.
judge,
so that
type of work, elaborating. and come to the
to try to get more experience
25
q
And then
you started
working
with
the
SEC in
MADOFF
EXHIBITS-00166
Page
1 that a yes?
13
2
3 that,
A
but
Yes,
I do
yeah,
it.
sorry.
I
tell
my clients
not
to
do
4 5 6 7 8 were
Q oversight? A
Right, Are Well,
okay. you
And familiar
what with
is
the that
office office? office of that
of
market
my understanding that our group was sure
is
that
is
that
we
a group, I'm
a part of the
office I know
oversight.
not
really
delineation.
9 10
11
that market
probably.
we dealt oversight
with
mostly would be
self-regulatory oversightof the
organizations, exchanges,
but
12
13 that
Q
your
So
the
SRO groups
were
in
market
oversight.
Was
understanding?
14 15 16
17
18
A like work,
work,
that
Yes, is then
I was
that's SRO-1 there's
never
my understanding, and SRO-3 SRO-2,
fully
and does does
of
there same
are type
groups, of type of
there and
but
group.
that which
the
a different
I was not
aware
because
in
19
20
Q
A
And
when
in
2003
did
you
start
with
the
SEC?
September.
21
22
23
Q
you change
A
And
you
were
at
staff
allS
attorney
when
you
started.
Did
positions
No.
24
Q
When
did
you
leave
the
SEC?
25
A
January
16,
2006;
no,
January
13,
2006.
MADOFF
EXHIBITS-00167
Page
1 MR. KOTZ: This is from outside the SEC. I think
22
2
3
this
could
may
you
have
take
been
a
the
look at
tip
this
that
led
document,
to
that
Exhibit
initial
2?
exam.
So
4
5
(The
BY MR.
witness
KOTZ:
examined
the
document.)
6
7 ever
Q
seen
Okay.
this
Do you
document
recognize
before?
this
document?
Have
you
8
A
No.
9
10 about
Q
matters
Do you
related
remember
to
any
Bernard
communications
Madoff?
with
Mavis
Kelly
11 12 13 I don't
A
No, recall
I
don't any. You
believe
I
had
any
discussions
with
me.
Q
Okay.
don't
remember
Mavis
being
the
one
who
14
15
was
exam
providing
we did?
information
to
you
as
kind
of
leading
up
to
the
16 17
A documents,
Yeah, but I
I
believe don't recall
she
did any
provide conversations
information with her
18
19
about
directly
what
to
she
me
provided
or maybe
us.
she
So
she
either
them
provided
to Mark and
them
Mark
provided
20 21
22 23 24
25
provided specific
Q A Q
A
them
to
the
team. with
was on
But Mavis.
the
I
don't
recall
having
any
conversations
Okay, Mark Is
Yes,
who Donahue, that
Gen
team? maybe-Walker?
myself,
Genevievette
Walker.
MADOFF
EXHIBITS-00168
Page
24
1
A
I do not.
I know that I was never told it was from
2
3
a tip, and I never picked up on that through any of my
interactions on this project.
4
5 guys
Q
looking
Okay. Whatwere you told?
at?
I mean, what were you
6
7
8
A
Wewere Ipoking at his trading strategy and trying
Wewere looking at the way
to, based on what I can recall.
that he trades.
And I remember mostly about the black box
9
10
and how his automated trading,
done, the strategies behind
how that automated trading is
Whoever does those
that.
11 12
algorithms
or those mathematicians, I do recall,
how they'redone, although I fully
the don't
timing on the trading.
13
14
understand the split
at his trading.
strike conversion, we were just looking
15
9
Why were you looking
at his
trading?
In other
16
17
words, what was the concern about his trading?
remember?
Do you
18
19
A
As a staff
BY MS.
person
I was not fully
told
that.
STEIBER:
20
21 cause
9
exam?
What's
the difference
between
a routine
exam and a
22
A
Well,
for a routine
exam we may go in on like
a
23
24
25
cyclical
time, so we may o~ointo the NewYork Stock Exchange
For a cause exam we may get,
may come into the office
once every three years.
guess, a tip or something
I
to the
MADOFF
EXHIBITS-00169
Page 1 2 3 4
5
25 we more
higher would specific
ups, do with
and asking
to look
into
something, which is
and then something
an exam based to we're to look
doing.
on that, going the
as opposed
in to just last three
do a routine, to five years of
you know, we want
what you've been
at
6
7 routine
Q
or
And did
a cause
you
have
an understanding
if
this
was
a
exam?
8
9 I don't
A
I did
think it
not.
was
I did
a routine
not
have
exam.
an understanding.
I don't think I
Well,
was
10
11
told
that,
but
I wasn't
that it was
as
a
a staff
for cause
person
exam
really
either.
told
The
specifically
12
13
14
project
the ground
came
in.
I was
on
KOTZ:
staffed
on it,
and
then
I just
hit
running
BY MR.
that.
15 16
17
Q what
what
So is
it to
difficult ask
the
though what work
sometimes to do if
to you
figure don't
out know
questions
precigitated
or
exam?
18 19 20 21 22
23
A direction supposed being with
Well, also to look
I from
think,
you
know, chief, know, were
I was and
taking what
a lot we were really
of
my branch And, ago. else
is
at.
you There about
not
I don't specific
recall
it
so many Mark or
The
years anybody
in-depth
conversations doing
All
why we were
what I was told.
this.
I was
24 25
told trading,
is
that if
we were there were
looking any
at
this
trading with the
to
see
if
the But
concerns
trading.
MADOFF
EXHIBITS-00170
Page
1
2
26
I
what
don't
those
know.
concerns
were
from,
a higher
level
perspective,
3
O
Okay.
But
it
was
clear
there
might
have
been
some
4
5 6 7 8
concern
or you A certainly routine
that
wouldn't
Madoff
have I
was
been
engaging
looking you can
in
at
some
it.
improper
activity,
Well, we exam,
think be I
assumethat, at Madoff the
because unless it was a
wouldn't which
looking You
don't.
know,
broker-dealer
9 10 11
12
13
group, probably routine
concern
concerns,
which would exams.
or
I
is
a different have So, been yes.
but
fully
group the people
in
there, that went there
the
specifically, in was
specifics
just maybe
on the athose
I think
as
briefed
that
as
on
something,
wasn't
far
to
those.
of
14
15
16
Q
there
A
Okay.
a
For?
Did
you
about
have
an understanding
at
that
point
was
concern
front-running?
17
Q
On
the
part
of
Madoff?
18
19 20 21 22
23 you
A
try to Q youlre A
have
I don't
look But going I for you to don't be
recall.
that don't looking recall
I could
It's
of recall for as I
possible.
activity. specifically front sit here
my
I mean
we always
type
being
told
running? today.
recollection.
I mean
unless
documents,
refresh
24 25 at any
Q point
Okay. in
What time
about, while
do you
you were
recall working
any on
conversations this exam
MADOFF
EXHIBITS-00171
Page
1 can't get?
34
2 3 4 5 6
7
A the SEC, by
No. if the it's
I don't books broker-dealer. the
think and
that's records,
my understanding. that is that's ask for required why the FOIA does not to
I mean be have
capped FO~A. protection
outside
You know, can
You know, to
the
broker-dealers sure that that
make
information
go
Commission.
8 9
10
Q grogrietary,
to see it?
So notwithstanding but the
that to
the see
information it, they
is would be able
SEC wanted
11 12
13
A we did
Q
We always any exam
Okay.
ask while
for
proprietary we received
this idea
information it.
the accounts
whenever
and
What
about
were
14 15
16
typically were in
A
in cash.
I
cash
at
month's remember
that.
end,
every
month. an issue?
The
accounts
Do you
don't recall
thatas
17
18 he
Q
could
Do you
have been
remember
churning;
any
discussion
Bernie Madoff?
about
the
fact
that
19 20
21
A we were
specifics.
I think looking
that into,
played but,
into
the
commissions
issue
that of
beyond
I have
no recollection
22
Q
What
was
the
commissions
issue?
23
24
A
commissions.
The churning,
Imean,
is
he churning
and creating
25
Q
Oh,
okay.
When I think
of
commission,
I think
of
MADOFF
EXHIBITS-00172
Page
1 engagement letter orregorts, or any type of work gapers?
39
2 3
4
A doesn't
Sometimes,
I know mean that
~hat
I don't
recall didn't
in
that or
from
I did,
but
that know.
they
Gen Walker
the boxes
Mark.
the
I don't
broker-dealer
when
come
5
6
7
get
divided,
so
looking
BY MR.
I may not
at.
KOTZ:
alwals
know what
the
others
in
the
group~are
8 9
10
Q advisor
A
The group
Yes.
time in
you OC as
were well?
there,
was
there
an
investment
11
Q
What
did
they
do?
12 13 14 15
16
A investment to what
Well,
they
did and
the then four
routine
examinations they theirs that also an
for
the
advisors, we would tip that do. came
I assumed calls, a concern
do-similar investment would do a
The
advisor
through,
they
17 18
19
Q you
Okay.
Was there in seeking
group of
any
discussion assistance
in
the from
Madoff the
exam
participated
advisor
some
OC?
investment
20 21
A Q
Not Okay.
that
I Were
can you
recall. aware it talked about that the
22
23
original
funds?
tip
that
came
in
involved
issues
related
to
hedge
24
A
Not
that
I
can
recall.
25
Q
And you
don't
know why market
oversight
was
the
MADOFF
EXHIBITS-00173
Page 1 2 3
4 5
6
42
documents, you're e-mails,
have and more you're
and sometimes at are data, prose
trading so it's and tell
data not
can be very, as if you're
you know, looking at
looking which
of an
you more of a story
When you're looking it's at a little
and you
data
understanding. to piece things
trying
together,
different.
7
8 around
Q
when
So how many
you were
other
working
matters
on this
you
one?
were
working
on
9 10
A spreadsheets.
I
can't All
recall. of the
The opening
group
keeps
these were all matters
matters
11
12
13
14
and
many
a list
projects
Q
A
of
each
you
staff
have.
more
member,
I recall
five?
and
they
keep
track
of
how
many.
Many
Yes.
like
than
15 16
Q A
More Probably
than
10? between five and 10.
17
18 time?
Q
Were
you
working
on
any
market
timing
cases
at
that
19 20 2004,
A then
Well, yes.
at
the
time,
if
my
recollection
of
Madoff
was
21 22 more
MR. particular
KOTZ:
Okay,
why
don't
I going
show to
you mark
some this
of as
the
documents?
We're
23
24
25
Exhibit
Genevievette
4.
It's
a planning
12/16/2003,
memorandum
3:25
from
p.m.
you
to
Walker,
MADOFF
EXHIBITS-00174
Page
1 A No. She left sometime after I left.
45
2
3 abilities?
0
What
was
your
impression
of
her
skills
and
4
A
You know,
Gen
is
a good
lawyer.
Sometimes,
things
5 6
7 8
may not things
pick up Q
have along,
more If
been but
work you
prepared
as quickly
as you'd on a team
like
to speed you
I mean when you're
than look others. in these documents
sometimes
that
we
just
handed
9
10 11 12
you,
on the
the
last A Q
different
document Okay. "The staff
drafts
under
of
the
planning
of action."
memos,
if
you
look
"Course
intends
to
send
a
letter
to
NASD
13 14
requesting period of
execution January i,
data 2001,
from
Madoff
Securities 31,
for 2002.
the
time The
through
December
15
16 17 18
19 20
staff
will
review
and
which
analyze
trades the
the
or alleged why
to
execution
series of
data
trades
produced
may have
by
NASD to been
identify to
utilized
commit
front-running was
the
violations."
A party, an
Do you
Because outside we
recall
wanted
that
see
put
in?
from a third-
data
source.
21 22
23 from
Q A
the
Why Just
actual
would to
you make
do sure,
that? compare it with what we received
firm.
24 25 NASD
Q
Okay.
Do
you
know data?
if
a
letter
was
ever
sent
to
requesting
execution
MADOFF
EXHIBITS-00175
Page
1 2
3 4 5 But point these welll
53
said,
to you
look know,
at
your for
data;
So we may have to
at
bifurcated your
it
and
now we want
to look are at that
look
the
at
commissions.
of the hedge at back that and ask fund.
We want conversions look
identity and, we will
strategies; and then
then, come
6 7
8 9 10
11
12
for
trading
data. letter
So unless hadn't been
know you you
that
you sent
can out,
tell
me that asking
maybe for
a
follow-up
trading Q Madoff
the
events.
we're
may be the go to
normal
data, But directly,
and
then even
you if then
my answer reguesting also
in the
different. trade data party
of
were would
data,
from like
a third
course
NASD
reguest
13 14 15
A generally sometimes
Right. speaking we would
I
don't we would get it
know, get from
you it both.
know. from So one I
I
don't or the
know other, know.
if or It
don't
16
17 18 19
20
just
would just
depends
get asked it for MR.
on the
from
project.
both, but data All
two
I mean
I know the let
it's
quite
were
possible
times when
we
we
there entity me
that
trading KOTZ:
are
from
itself. you
e-mails
right,
documents
show
are
another
from John
document.
There
21 22
23
McCarthy to
as
to
Lori
Richards,
12/18/2003, We're
and
from
Mark to mark
Donahue these
Matthew
Exhibit
Daugherty,
12/19/2003.
going
24
(SEC
Exhibit
7
was
marked
for
25
identification.)
MADOFF
EXHIBITS-00176
Page
1 nor any other gerson or entity affiliated with Madoff
59
2 3
4
Securities if that
A
manages statement
Not that
or raised
I
buys
as any
recall.
hedge concerns?
funds."
Do you
remember
can
5 6 7 8 9 10
11
Q thought Securities A many focused
Q
So, he was was I
do
you
think, the
I mean, truth, that the but buys time. I at
the he
team was
generally saying funds? Madoff
telling the
manager know at
hedge This mean the we data.
don't in the da·ta
was were
just
one
o~
statements on
this and
letter. looking
the
really
Okay.
What
about
statement,
"Please
know
we
12 13 14. 15
16
have this or I
no
communications to investors,
or
disclosures owners, if that made or
from
customers
using investors
strategy owners."
persgective was ever
Do you wasthere
was true?
know any
statement to determine
vetted? the
mean,
effort
whether
statement
17
A
Not
that
I
can
recall.
18 19
(SEC
Exhibit
10
was
marked
for
identification.)
20
21 handwritten
MR.
KOTZ:
dated
Okay,
I'm
going
to
marked
show
as
you
Exhibit
some
10.
notes
1/29/2004,
22 23 24 25
It's wanted were,
a
series to if get any (The
of a of
notes sense them
in of were
different do you know
handwriting. whose handwriting
So,
Chris they
yours,
etcetera. the document.)
witness
examined
MADOFF
EXHIBITS-00177
Page
1
2 3
61
anybody
information A
who had provided
as Say part that of the
information
work
to get
exam?
further
on this
again?
4
Q
You don't
remember
any point
in time
that
folks
on
5
6 7
your team went back to somebody to get more information
you received A documents I believe from we went Madoff? and did a second request to
after
8 · Madoff, 9
10
but in terms of other NASD, I don't
other information.
outside us going
sources,
besides sources
possibly
or any
recall
to any other
11
Q
Okay.
If you see
in here
there
are
references
on
12 13
14 15
16
the first strategy;
not high.
page:
"Returns
are too consistently strategy,
the
high for this option trading is
not doing that
How does
because
options?
he trade
He doesn't this strategy.
understand
Perhaps he
how he consistently
doesn't really use
makes money off
the strategy.
17
The volume
of options
trading
doesn't
seem to be
18 19
20
enough to protect traded
bells
the size differently."
of the equity
trading.
Perhaps ring
at
he
options
in terms
And does any of this
issues you were
any
of some of the
looking
21
22
about
what
the options,
he's saying
about
he's
the fact
that
perhaps
he doesn't
do
doing?
23
A
Well,
I think
that's
the
whole
reason
why we were
24 25
looking particular
into
his with
strategies, this black
his
trading
strategies
in that he
box, which is the strategy
MADOFF
EXHIBITS-00178
Page
1 2 3
4
62
was
using
to to, out,
trade you is
and
with. know, trying
how he
And the to
gets
so
I
think
what issues trading
from
I
recall that
in were
addition pointed
that he
front figure
these
running out the
returns
strategy
these
uses
5
strategies.
6 7 8 9 we
9 A sent
And All
what I
did
you is to
figure at some
out point I not
about we don't have
that? box things any at that up and
recall up what
everything as to
NYRO. or
And may
recall found
specifics
we may
10
11
point
we were
unless
working
you
can
on this
show
and
me something.
then I don't
Because
want to
from
say
my view
12
13
suddenly,
So we didn't
but
at
finish
some
our
point
exam
in
in
time
D.C.
it
was
sent
to
New York.
14
BY
MS.
STEIBER:
15
Q
How
long
does
it
usually
take
you
to
finish
an
exam
16 17
18
from
tip A
to It's
concluding so varied
memo, on
if the
there
is
a concluding of the exam.
memo? Are
complexity
you
saying
for
cause?
19
20 take
Q
for a
For
cause
cause,
exam
in
to
your
be
experience,
completed3
how
long
does
it
21
22
A
Q
I
would
just
be
guessing.
I mean,
months.
Months?
23 24
25 would
A Q
seem
Months, So
like
maybe;
you
know, so
several
months. over six months
several
a long
months,
time?
anything
MADOFF
EXHIBITS-00179
Page
1
2 recall
69
A
that.
I don't
recall.
No.
As I sit
here
today,
I don't
3 4 5 document. February
MR. KOTZ: This 3, 2004, is
Okay. an e-mail
Why don't from We're you
we show to Mark to
you
the
next
Donahue, it as
2:20
p.m.
going
mark
6
7
8 9
Exhibit
Will you
13,
take
and it
a look
is
an attachment
at this
(SEC
of three
pages,
as well.
document?
Exhibit 13 was marked for
identification.)
10
11
12
MS.
MR.
BY
STEIBER:
WILSON:
MR. KOTZ:
You
Yeah,
might
it got
have
cut
to
off.
show
her
that.
13
14
15
Q
or at
A
Yeah.
had
Yes, it
Okay.
a hand
appears
It
in
does
drafting
so.
appear
this?
as
if
you drafted
this,
least
16
17 second
Q
page,
Okay.
And you
can
see
that
you
say
in
here
these
on the
four
"Commission
revenues
generated
from
18
19 20
institutional
of commission this
clients
revenues trading
account
generated strategy
for
the
for has
overwhelming
the firm since made
majority
2001.
Obviously,
yielded
21 22 23
24 25
unbelievable is well-guarded A
majority Q
profits,
which
would
explain
why this
strategy
by Madoff." at the profit
What did numbers
you mean by that? they make up a
Looking
of his
revenues. did you mean that it was "unbelievable
What
MADOFF
EXHIBITS-00180
Page
1 profits?"
70
2
3
A
Q
I
But
don't
do
recall
you recall
what
that
I mean
there
by
unbelievable.
was a concern that
4
these
profits
were
not
believable?
It
seems
as
though
you
5
say
that
here.
6 7 8 9
10 11 12 13 14 15 16 17 18 19 was look profits, use, would
A unbelievable, Q A
Q A Q
I
don't I
believe mean
that
the if you
unbelievable, that. mean by
when
I
say
imaginary, would
Okay. Large
Okay. High Okay, unbelievable
So what profits.
unbelievable?
profits. but I mean profits, that that that's And by issue then Madoff. of Madoff's it could probably says Do in you the mere fact of words the matter these you the large, want OC high to exam
whichever would be? what there be
was look A Q
that into, I
something how
believe
we
were that what
doing. the you strategy did to
Okay.
"well-guardedl into this
know
unbelievable
profits?
20 21 22 23 24 25
A February are first from many,
Well, 3, so 2004. that
I
believe We were was our
we did doing response. This production,
follow-up, follow-up This information which
according questions was taken was yielded
to which from
the
the
document the first
production. document
gathered follow-up
questions.
MADOFF
EXHIBITS-00181
Page
1 BY MS. STEIBER:
71
2
Q
At
the
time
did
it
strike
you
as
strange
that
he
3
was
making
a
majority
of
his
profits
from
this
hidden,
4
5
unknown,
market
hedge
maker?
fund
side,
rather
than
from
his
well-known
6 7 8 9 10
11 12 13 14 15 16 17 not
A could did make follow-up Q or
I
I a
don't decision
believe at
at that
that time,
moment which
at I
that think
time is
that why we
I
questions. But do you wow,
trading Madoff's market r wasn't. to KOTZ: STEIBER: me Okay. Is that 13 or is that part of 12? to
remember here
entity. business
at is
the
time, unknown
Swanson trading
an making entity, more
or
Donahue
anyone
shouldn't
saying,
say side of
this
It's
entity.
but profit this
not
unknown than his A said
that's
well-known No. anything MR. MS.
maker? Noone that -affect. the three of them -had
18
MR.
KOTZ:
Okay,
yeah.
So
the
next
document
I'm
19 20
21 22
going going
to to
show mark
you it
is as
a
series 14.
(SEC
of
notes
dated
2/4/04.
We're
Exhibit
Exhibit
14
was
marked
for
identification.)
23
24
(The
BY MR.
witness
KOTZ:
examined
the
document.)
25
Q
Okay.
Are
these
your
notes?
MADOFF
EXHIBITS-00182
Page
1 A Yes.
72
2
Q
Okay.
They
are
your
notes.
Great.
And
so
there
3
was
a
conference
call
with
Madoff
on
2/4/20047
4 5 6
A Q A
Apparently, Do I you remember
yes. remember a that couple at of all? calls with Madoff.
7 8
Q A
Which Peter,
Madoff I believe.
would
that
be?
Bernie?
9 10 11 from
Q like A
Could "Because "Because
you
kind market market
of
go
through
these required for model
notes?
Start
conditions conditions
did
not
12
13
present
Q
itself,
What
therefore
does that
no
mean?
trading
Doyou
activity."
know?
14 15 16 there he
A was said
1 no because
can
guess
that activity, were
may
be and
there maybe
were we
periods askedwhy. for
where And the
trading there
no
market
conditions
17 18 19
20 21 22
23
model, of time,
0 A Q
A
so
that
the
model There
did was
not no
generate trading present
any activity
trading for
because that
the
algorithms. because
Okay. Strategy Okay.
The same,
the
opportunity
didn't
itself.
doesn't
operate
all
the
time.
number
2,
"The
same
as
a
commission."
24
25
Oh,
means.
we
must
It
have
means
been
the
asking
same as
what
a
commission
equivalent
"When a dealer
commission.
MADOFF
EXHIBITS-00183
Page
1
2
73
trades,
execution
charge
on
a
dealer
commission
trades,
equivalent;
no compensation
compensation
charged
for
on a
3
4
principal
trade."
Number 3, "All identified." Six, "Black box model
5
6 7 8
that
the
executes
strategy Q Do what this
the
gets you
strategy.
executed." remember black box if
The
black
box
determines
when
you
asked was?
him
any
guestions
about
model
9
10 we had
A
Speci~ically,
discussions with
I
him
don't
about
recall,
the
but
black
I'm
box
pretty
model.
sure
11
12 Bernie or
MS.
Peter?
STEIBER:
When
you
say
with
him,
you
mean
13
14 15 16 17 different Peter on
THE WITNESS:
this MR. THE black matter. KOTZ: WITNESS: box
With
Peter.
I
believe
we
dealt
with
Okay,
go "Madoff
on,
15. has" -"Madoff something has built -"15 15
systems."
Oh,
18
19
different
percentage
black
of
box
correlate
systems
to
over
the
the
S~P
years.
100,
On variable
by the
determined
20
21
client's
smallest
risk
list
parameters.
of securities.
95% correlation
Took an index
has
fund
to
be
doing
using
S~P
22
23 24
500,
100%
correlation.
If you want securities to
Strategy
achieve can be
using
95% used
S&P
correlation, to
100.
must the
determine
which
achieve
25
strategy.
Client
tells
you
the
percentage
of
correlation
the
MADOFF
EXHIBITS-00184
Page
1 client wants. Specific conditions: All securities must be
74
2 3
4
resident which
eligible.
in stocks
S&P 100 you
Has to
index to"
dollar
must --
be greater. something --
Will "each
dictate security is
have
be
wages.
5 6 7 8 9 time test
Takes model,
the
security
and
runs
it
throu~h Correlation
a back is than No is
test,
a historical If
database. derivative the is cell
continually percent, discretion then
monitored. the the model part
greater order.
five
triggers of Madoff.
on
Everything
determined
10
11
by the
box.
black
box."
So this
wasthe
discussion
on the
black
12
BY
MR.
KOTZ:
13
Q
So
what
does
he
mean,
that
no
discretion
on
the
14
15
part
of
A
Madoff?
The black
EverLthing
box has
is
determined
set
by
the
black
based
box?
on
algorithms
that
16
17
certain
Q ~
criteria
But the
it
will
black
go ahead
box
and
trigger
when to
a cell
buy
order.
and sell.
determines
18
19 20 these
A
Q
That's
And was
my understanding.
this an effort do to you try think? to ask him about
unbelievable
returns,
21 22 23
24
A But black
equivalent
I don't that works.
also.
know, this But
specifically, seems ask them
about to stem
the
high
returns.
I know box
discussion we did
on how the the commission
about
25
Q
Did
he
seem
to
give
you
any
real
information
about
MADOFF
EXHIBITS-00185
Page 1
2 3
4
75 all
how the
the
black
box works?
We don't black
he
It
have out
just
kind
of says
to is
it
makes
it.
decisions. this
A Well,
anything that
the
do with incredible?
and
There's
box
talks
there
about
correlation
what
5 6
7
stocks they're
taking
are just
notes.
being three
used. pages,
they
I mean these I don't
talk about
notes
here,
although only one
think
I was the
uses
But
how each
8 9
10
correlations, just
of the
these first
conditions. call
then at
I mean, where
that
perhaps getting
I mean,
this
was a flavor
the
telephone
box, and
we were
point.
black
it's
not
11
12
unusual
numerous
for
other
us to have
calls.
one call,
which
would
then
trigger
13 14
15 two
Q A
perhaps,
Do you
remember we did
that
there have
being
numerous
other
calls? one or
I remember
around
a couple,
a few more,
time
period.
16
Q
Do you
remember
if
Peter
Madoff
or
Bernie
Madoff
17
18
ever
returns?
did
explain
how this
black
box was able
to get
these
19 20
21
A don't recall
Based
on this,
unless beyond
you can show me something, our notes,
that
I
anything
questions that
and possibly
to that.
the
~ollow-up
we had
may relate
22 23
24
Q to
Or,
Did you generally Madoff
did that
feel
satisfied answered
after your
you talked guestions?
Peter
how
that
go?
he had kindof
25
A
Well,
I think
what
we normally
do is
once we get
MADOFF
EXHIBITS-00186
Page
1 BY MR. KOTZ:
81
2
3 4
Q
recollection disclaiming
Okay.
about himself
Does this
this to
refresh
any more of your
issue about advisor? Madoff
particular be an
investment
5
A
It
doesn't
bring
up any
specific
thoughts
or
6
7 8 9
memories.
followed can't asked
I would
up with
think
that
at
this
point
we may have
asking request we must for, if have, and we I
another based
document first clients,
request document which
remember for the
on our of all
names
10
11
12
13
because
here
the
he's
identified
know their
clients
by years.
But if
and
This
she
says
we don't
15-client
classifications
I don't know.
the
doesn't
exemption,
refresh
exemption,
anything.
14
Q
But,
looking
at
this,
would
you
agree
that
this
15 16
17
would
be A
Q
something I'm
Well,
that aware
I'm just
should that
asking
be it
followed-up
on? on.
not
wasn't
you.
followed-up
18
19 running
A
It
with.
seemed
like
this
was
something
that
Gen was
20
21 have
Q
been
But
you
would
up on,
agree
that
it
it's
was
something
or was
that
not?
should
followed
whether
22 23
24
25
A Q
area,
like
I believe And in
it
that, order
make
sure, to get
absolutely. really
to go to
the
the
expertise
IA side if
in
this
an issue
wouldn't
this arose?
sense
MADOFF
EXHIBITS-00187
Page
1 THE WITNESS: I don't know. I mean, it's with the
84
2
3 4
5
SEC internal.
something with Mark that and
MS.
So that
you another
STEIBER:
information
get from, chief,
you felt
it's
because so.
like
my understanding
she had an issue
is
could
branch
But
she
was
comfortable
6 7
8
working frustrated?
sounds
with
Donahue Like when
a
at
this she
time, says,
frustrated.
that "beat
she a dead
wasn't horse," it
like
she's
little
9
THE
WITNESS:
Right.
No.
I
didn't
have
that
sense
10
11
as
I
said
at
I
this
am
time
aware
while
that she
we were
had
working
issues with
on
Madoff
Mark
together.
12
13 14
15
subsequently
at came this time
thereafter.
I wasn't this
KOTZ:
And so,
aware it was
you
know,
that's
because
why I say
Madoff
Madoff, lodged.
earlier
BY
when
MR.
complaint
was
16
17 issues?
Q
Do you
have
any
sense
of
the
general
nature
of
her
18
19 20
21 22 Miles
A
working Q
A
I don't.
with Did
No.
I just
but share
at all. He was
don't
mean
think
specifically
she
was
I
very
happy
recall. for Mark?
from He had
Mark, you
Not
I
can't
any
concerns
Actually, at the
about
Mark Rockville
working
and I
came
& Stockbridge.
office.
23
24
25
a stellar
meet
very
reputation
here again
and
at
in
the
I
firm,
love
and
we just
with
I would
so
happened
He
with
to
is
him
up
OC.
working
and
mark.
work
personable
knowledgeable,
MADOFF
EXHIBITS-00188
Page
1
2
85
again
think
today.
that was
But
just
some
one
people
instance.
just
don't
get
along,
and
I
3
BY
MS.
STEIBER:
4
5
9
A
And
Yes.
are
you
still
friends
with
Mark
today?
6
7
9
A
Did
I
you
talk
saw
to
him
him at
about
the
your
metro.
testimony?
I think it was
actually
8 9 10 11
12
Thursday hugged you we
I
and him I'm
he
was said
going hello. in on
up
and And I
I
was said
coming I just about me
down. wanted Madoff. telling
And to
I let And
and
know had no
coming
Monday
to
talk
substantive
in.
discussions
besides
him
that
was
coming
13
14 15 minutes,
MR.
okay? THE
KOTZ:
All
right.
Why don't
we
take
a
few
WITNESS:
Do
you
by
any
chance
know
how
much
16 17
18
longer the SEC
you'll that
MR.
need I have
KOTZ:
me? to
Because take care
Let'sgo
I
have of
another
production
to
today.
off the record.
Okay.
19
20 thins on
THE WITNESS:
the record?
Can
I
actually
just
say
one
other
21
MR.
KOTZ:
Sure.
Sure.
22
23 24 against chief.
THE WITNESS:
Mark There Donahue was some and
When
this
complaint
who
was
is It was
lodged
the branch whatever
former OCIE Branch Chief
internal,
I
think.
25
group
outside
group
handles
those
types
of
complaints.
Gen
MADOFF
EXHIBITS-00189
Page
1 2 what Would were you the have level viewed of priorities this Bernard of different one projects. as a
90
Madoff
3
4
particularly
the market
high
timing
priority
or other
or
lesser
priority
than
some
of
projects?
5 6 7
8
A on that,
I don't because that
think you're you
that working
I would
set
a level
of
priority on if
aren't
on a matter the entity.
depending Because
you
documents
don't have
received
from
from
your
you
documents
document
request,
9
doing
as
much
as
you
would
be
once
you
received
that.
So
10
11
it's
there
quite
was
possible
down-time
that
on
Madoff
some of
exam was fit
the other
in whenever
because
projects,
12
those
projects
also
entailed
very
large
volume
document
13 14
15 16
17
productions. projects
was said
readjust
So I don't at that
in. this
the
think It
that
I prioritized what
any of my I had and what
to me and I
time.
But, needs of to
was basically
if first someone over
coming that
course, be done
came this,
then
schedule.
18
19
Q
something
Did
else?
anybody
come
to
you
and
say
do Madoff
over
20
A
Not
that
I
can
recall.
21
22 given
Q
Were
there
like
other
that?
times
where
other
projects
were
priority
23
24
25
A
was very
Perhaps
quick.
very
the
It
market
came
timing
at
that
time,
We had
since
to get
it
on very
quickly.
documents
quickly.
MADOFF
EXHIBITS-00190
Page
1
2 training?
91
Q
Okay.
You
When you first
know, about how to
joined
do an
OC, did
exam?
you have
any
3
4
A
something
It's
that
really
myself
on-the-job
along with
training.
other
I mean,
individuals
that
in the
was
5
group
wanted
to
have
more
formalized
training.
We thought
it
6
7
was very
formal
important
training, but
to bring
it just
people
didn't
on and do some type
happen for some
of
reason.
8
9
10
And your
those
from
training
was really
already
on-the-job
on the job
as well
and
as talking
help
to
people
them.
who were
getting
11
12 to
Q
spot
So you
fraud or
didn't
something
have
any
like
training
that?
in,
you
know,
how
13
14 type
A
of
No.
training
I don't.
at
And I don't
But no,
know
I
if
they
it's
have
a
that
OC now.
mean,
team.
15
16
17
It's
with
and
very
other
you get
much
more
a team
environment
people,
that as
where
so
well.
you
you
are
learn
put
from
on a team
them
experienced
from
direction
18
19 20 21 22 been and
9
operations A Q brought
Is
itfair
are
to
pretty agree;
say
that
Madoff's
trading
strategies
complex? it's complex. obviously, to this information exam, different has
I So,
would I to
mean, light
you
know,
subseguent
23
24
25
situation
that at
involving
least in your
Bernie
Madoff.
But
given
is
the
have
it
lack
fair
of
to
say
situation,
that it
particularized
training,
would
been
difficult
MADOFF
EXHIBITS-00191
Page
1
2
100
question
that
BY
we would
MS. STEIBER:
ask
of
any
broker-dealer
firm.
3 4 5 6 7
8
Q A requested those so he's
And I
did
you that
find
that
Madoff this to this always is on
was
cooperative? whenever us with we
found
throughout he seemed again,
process, provide a voluntary avoluntary
documents, documents. going
to
And, to produce
production, basis
documents
pursuant
these
questions.
9 10 11 12 that
Q responds
And
did to
you your or
find document someone you
it
odd
at
all
that rather
he than
is
the his
one
reguest else know, I at don't
compliance A
officer No, because,
the
firm? know the extent of
13
14 15 16
his
had which didn't.
involvement
as much was
in
information
the
broker-dealer,
as their But chief it
but
it
appears
that
officer,
he
compliance wouldn't strike
Peter
at
this
time.
me.
It
17 18 document
Q
Did reguest
you
recall from the
ever CEO
receiving of a
a company?
response
from
a
19
20
A
Not
BY
that
MR.
I
KOTZ:
can
think
of
off
the
top
of
my head.
21
Q
The
document
we
showed
you
before,
it
talked
about
22
23
24
that
Do you
book
is
of
the
that?
examination
was
front-running.
Right?
remember
A Yes.
25
Q
Now,
were
the
guestions
that
you
asked
in
the
MADOFF
EXHIBITS-00192
Page
1
2
103
that
Madoff
A
was using?
that I can recall.
Not
3
4 you've
Q
got
Doyou do any follow-upwith these 16 institutions
the names fort
5
A
Not that I recall.
I know I did not.
6
7 with
Q
those
Would that have been normal to do the follow-up
institutions?
8
9
A
I think it depends. Youhave to be really careful
when you contact other people you don't want to scare
10 II
clients.
So I think that's an internal decision that's made So once you go outside to the clients of the
by the staff.
12
13
14
entity that you're examinin~.that could scare their clients,
and that could cause business issues.
any -- not that I can recall
So I was not privy to
of whether we
-- discussions
15
16
were goiny to just call these clients, but I knowthat I did
not.
17
BY MS.
STEIBER:
18
19
20
21
Q
Okay. Can I ask you a guestion? Youmadea point
doesn't he have to make his books and
you?
of saying that Madoff was voluntarily comglying, but as a
broker-dealer
available to
records
22
A
Right.
What he was sending us our documents
23 24 25
pursuant to, if he were to say I'm not going to send you something, we could go to enforcement and get the subpoena for those documents. So that's what I mean in that sense. I
MADOFF
EXHIBITS-00193
Page
1 2 (SEC Exhibit identification.) 27 was marked for
106
3
MR. KOTZ: Okay.
Show you another
document.
These
4
5
are some notes.
3/18/04, two pages
It says on the top "Madoff," and it says
of notes, marked as Exhibit 27.
6
7
8
(The witness
THE WITNESS:
BY MR. KOTZ:
examined
These are
the
document.)
my notes.
9
Q
So
can
we
go
on
we
these
then?
10 11
12 13 14 15
16
A that
Sure.
These first
couple e-mail
are the same questions that
call
you saw on the previous
there 2004. funds was the
you just
with
typed out.
on with
Apparently, March clients, 18,
conference
Bernie
The question, allocate certain program.
of the
I guess, amount
"Communications of money to trade.
Money amount
is the authorized
goes
into
agent
Investment
client.
manager/advisor
17
Calls
Madoff
regarding
amount
of money to
invest.
18
19
Account
statement
sent
to the fund itself.
based on strategy
Only
directive Madoff
communication
because
20 21 22
23
follows calculated prices,
of the
the criteria by Madoff; average
day.
and enters settlement stock
into
the box.
No profit/loss statements, at the end
must
date on account average
50."
price
trades,
price
DVP: commissions
A/P equals
Oh, that
24
25
be like
would be
a trade
50.04,
at 50, the commission billed
because the four cents would
to the client
be the
MADOFF
EXHIBITS-00194
Page 1
2
107
commission
S&P index.
equivalent.
When he's
in/out,
and then something
3
Q
Okay.
So looking
over
the
notes,
does
that
refresh
4 5 6 7
8
your
recollection
anything
further
than
the
words
on the
gage
in terms A appeared
questions.
of what was discussed No. that Not as to this he was answering
in these conversation,
meetings? no. It just
some questions,
follow-up
9
10 11 12
13
Q
would questions that the
A
When you would
off seem more the to phone have
have
with
a conversation
him. Was it or more
I mean
with
a sense was it the
Madoff
that the
you
get
been he
answered, the
sense there
some
answers
gives
of both;
questions
he answered
are.
A combination
14 15
questions spawn at
and the
then end of
some the
questions call with
he
answered
which with
could everyone
a discussion
16
17
further
a combination
questions
of
and need
both.
for
clarification.
So it's
really
18
19 with
Q
you?
Did
you
get
the
impression
he was
being
forthright
20 21 phone
A call
I did. and
I mean feeling
I don't there
recall was
ever feeling
getting uneasy.
off
of
a
like
22
23
24
Q
call and
A
Did anybody
feeling
Not to
else
express
ever
getting
off
the
phone
uneasy?
me. No. Not to me.
25
(SEC
Exhibit
28
was
marked
for
MADOFF
EXHIBITS-00195
Page
1
2 the
112
any of
Q
members
Do you
of the
remember
team that
in
general
in fact
the
he
conclusion
was front-running?
of
3 4
5
A recall.
on, and I
No. This
wasn't
I is
don't. just
lead
It's one
on
five many
so
years exams
it's
ago. that
another
I I
really working
don't
of
this,
was
thing
where
I
6
7
was
the
leading
lead
other
examiner
exams,
attorney.
so
I
recall
more
of
that
since
I
was
8 9 10
11
Q Genevievette March 25,
Okay. to 2004,
I'11 Mark 3:10
show with p.m. a
you copy Mark
(SEC
another to this
Exhibit
document Mark Exhibit
31 was
from to 31.
marked for
and
you
dated
12
identification.)
13
14
(The
BY MR.
witness
KOTZ:
examined
the
document.)
15 16
17
Q conclusion
A
Do
you
remember do appear
anything to be in
about sync?
this
for
a
they
No.
18 19 of
Q work was
But
I done.
mean It
it
is looks
fair like
to
say there
a was
substantial guite a bit
amount of
20
21
analysis
exam.
by
Genevievette
and
probably
others
in
the
Madoff
22
A
She
appears
to
and
it's
quite
possible
that
she
was
23 24 25
lead and but
of there this
this
because seems to be
of
all
this
analysis. that I she was
She
did
a portion with,
a portion that
running
was
not
something
recall
analyzing.
MADOFF
EXHIBITS-00196
Page
121
1
2
3
Q
group
A
So it's
also about a year and a half after
on it?
your
started
Yeah.
working
4 5
6
7
8
Q
So I mean, you know, we were talking things take. There was a year
group about Madoff.
before
about exam
how long these
that
right?
A Hm-hmm.
and a half
Is that
was conducted
by your
9
10
0
A
Yes?
Yes.
11
12 13 have that
Q
been
Okay.
able to
From looking
look at
at our records,
that
we noted,
indicate was a
we
documents 2003,
seem to 2004, it
from about
December
to April
14
15
significant
mails that
amount of work.
refer to the fact
And then we have a couple
that there should
of eon
be a focus
16
17
18
19
mutual
we don't
Madoff.
A
fund cases.
have
Do you
I don't.
Between that
of records
why that
time period
of a lot
and a year
on
later
a lot
know
of work done
would
be?
20
21 it
Q
was
Do you remember a big lull
being worked on for several
in the Madoff case where
months? Eric Swanson
22
23
24
says,
little
well?
"We're fairly
happens for
suspicious,"
a year.
and then it seems like very
NYRO works on it as
And then
25
A
Yes,
that's
what
happened.
MADOFF
EXHIBITS-00197
Page
1 2 case Q was So like there in was limbo? a long time period where the Madoff
122
3
4 reason,
A
no
That
work
there
was
was
being
no
activity
on this
on
Madoff.
exam.
For
some
done
5
MS.
STEIBER:
Would
you
call
it
like
a
decision
6
7
from
someone
THE
to
put
it
on
I
the
don't
back
know.
burner?
I mean it could be
WITNESS:
8
that
with
everything
else
that
was
going
on
in
the
office
9 10
11
that that
burner.
there case,
It
was there
just
more was
activity not an
that
on
other
types pull
because
of it
there
projects. off
were
In the back
other
affirmative
way
happened
12 13 14
15
issues
that I
were don't that
In
going know. this
my
on I was
in
that
time. recall taken
now, it's
don't purposely
back
hearing off and
from put
as
Mark on
you
or the
had
anyone
back
else
burner.
looking
exactly
16 17 18
19
described projects Madoff
then.
it. in there the
There office just
was
a
lot have a lot
of
activity, precedent
and
then and
other then time
may not
taken of
was
activity
at
that
20 21 22 Madoff 9 case
BY MR. And so
KOTZ: the be amount affected of work by your you would higher do ups. on the Right?
would
23 24
How
would
you
know
that
there
wasn't
supposed
to
be
too
much
activity?
25
A
Sure,
the
branch
chief;
I would
know
that
from
my
MADOFF
EXHIBITS-00198
Page
1
2 Swanson
127
Q
and
Did you hear
Shana Madoff?
about
the
allegation
regarding
Eric
3
A
Yeah.
4
Q
What
do
you
think
about
that?
5
A
I don't
think
he was
dating.
I don't
believe
he
6 7
8 9
10
was dating engaged
I read was
don't
Shana
back
then
at
that
time.
He was actually why, you know,
But that I think time. he So I
to another
this and and
woman, I think.
it another looks
So that's
like.
I know what engaged to
dating
know.
woman at
11
12 13 be
Q
a well A
But
known
we've
figure.
had
some
e-mails,
Bernie
Madoff
seemed
to
Absolutely.
14
15 16
17
18
Q
into but
guy,
other
So do you think
decision? put it on the
probably
that
necessarily burner,
that
could
to this stop
have
played
at
a role
it,
the to
Not back
looking
guy's
Let's
a well-known
look at some
there's
matters7
nothing
there.
19 20
21
A being
mean.
Perhaps.
I don't
have like,
that,
any recollection but
so
of anything Madoff,
that is
told
Yeah,
to me; nothing
nothing like
it's
I think
Bernie
that
I
the
22
23
24
likelihood
as
been
theory
that
to
that,
that's
that
you know,
what
affect.
I probably
But
would
nothing
conclude
has
well
said
maybe
me to
happened.
25
Q
So,
I mean,
you
are
aware
I guess
that
NYRO did
an
MADOFF
EXHIBITS-00199
Page
1 exam, then there was an enforcement exam?
128
2
A
I was not
aware
of the
enforcement
exam.
3
4 exam?
Q
Did you ever find
out what happened
with the NYRO
5
6
A
No, I was leading
a New York Stock
in the office
Exchange Exam
who had a lot of
and I was one of a few people
7
8 9 10
11
the projects,
Q
so it wasn't something I followed up on myself.
looking at it
And, you know, given you guys started ofa lull, but then NYROpicked of time,
have
and it was kind looked at it
explanation
it up and
for guite
of how the
a period
SEC could
do you have any
this?
missed
12 13 14 15 stated of,
A Q that
I don't.
I have with
no theory. how OC does things, some have
In connection there's a check sort
of an approach You check
when you do an exam off all the boxes and
you know,
list.
16
17 18 19 20
you may not see kind of a forest
that could that it could possibly that seems
for the threes,
on?
do you think
I mean how examination
be what was going there everybody one of the
be explained yet, Well, it
was substantial didn't. issues,
of Madoff, A
I think
and this
is
21
22
something
to provide
that
I along with some colleague
training.
thought,
need
you need
to make
meaningful
And you also
23 24
sure you have people experience
in the office
who have industry and can spot these
who have been in the industry
25
issues
based on experience.
And, certainly,
I'm not saying
MADOFF
EXHIBITS-00200
Page
129
1
Z
you have to fill the entire staff with experiencedpeople,
because that's not just practical. They should be able to
3
4
teach people whoare just comingin whodon't have that kind
of experience.
5
6
But I think back in 2003when came,it wasa very I
young group and a group of people who wanted to be trained
7
8
9
10
moreand probably there should have been better training.
And I think that for me, that was one of the issues that I
had with the group.
problem.
I think that could be part of the
II
12
Q
A training.
So you felt like you weren't adeguately trained to
these comglex matters?
deal with all
13 14
Well, I think that there could have been more You know, when we went on site, when we were
15 16 17
trained by other attorney-examiners whohad been there, so certainly that is just as important. But whenyou s tart to get really busy, those people are harder to go to because
18
19
their ownplates full of their ownwork. So having more
formalized training would help that group.
20
21
22
P
research
A
So you felt in certain ways you had to kind of
things
Sure.
by yourself
to figure
them out?
23 25
Q
So, you know, it might have been better if you
24 either had some training on it or been able to go to somebody
and get that information, rather than trying to figure it out
MADOFF EXHIBITS-00201