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UNITED SOUTHERN
STATES
DISTRICT OF
COURT NEW YORK
~oC~ECH\~~
Os~arm zig
INFORMATION 09 Cr.
i:
s
DISTRICT
UNITED
STATES
OF
AMERICA
-v-
BERNATZD
L.
MADOFF,
Defendant.
x
COUNT ONE
~DC,~,;E~T noc~
(Securitiesraud)pc~
The United States
Relevant
EI-·~QO~i
Attorney
Persons and
charges
Entities
I. L. L. Madoff Madoff
At
all
times Securities Securities
relevant LLC,
to and
this its
Information, predecessor, and in separately, New York,
Bernard Bernard
Investment Investment had its
~collectively place of business
LI
d
I
a.
I
"BLMIS"), York, most was
principal at 885
New
recently a broker-dealer
Third that
Avenue, engaged in
New York, three
New York. types
L
o
o
a,
BLMIS
principal
N
2
$
O
r
Of business:
market making; proprietary
BLMIS was registered
(`SEC")
trading;
with
as
and investment
Uri'ited
broker-dealer
1 ~-~ advisoryservices.
Securities and
the
a
States
and
Exchange
Commission
was,
beginning
adviser.
in
or
about
2006,
registered
with
the
SEC as
an
investment
2.
At
all
times
relevant
to
this
Information,
Madoff
Securities
International
Ltd.
1`MSIL")
was
a corporation
MADOFF
EXHIBITS-05154
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incorporated BLMIS which
3.
in
the
United principally
L.
Kingdom. in
MSIL was proprietary
the defendant,
an affiliate trading.
was the
of
engaged
BERNARD
MADOFF,
founder
of
BLMIS,
and
served
as
its
sole the of the
member business voting
Board of
and
principal. of of MSIL,
In
that
capacity,
MADOFF controlled the majority
of
activities shares
Directors.
BLMIS. and
MADOFF also
MADOFF owned
served as the
Chairman
MSIL's
served
on
the
Board
of
Directors
of
the
National
Association
of
Securities period served
Dealers as the
Automated Chairman
The
Quotations of NASDAQ.
to Defraud
(`NASDAQ"),
and
for
a
Scheme
4. about December
From 11, a scheme
at 2008, to
least
as
early
as
the
1980s the of
through
on
or
BERNARD L. defraud the
MADOFF, clients
defendant, BLMIS by
perpetrated
soliciting
failing to
billions
invest
of
dollars
of
funds
funds
as
under
promised,
false
and to
pretenses,
investors' and converting
misappropriating
investors'
funds
MADOFF's
own
benefit
authorization
and
the
of
benefit
the
of
investors.
others
without
the
knowledge
or
5.
To
execute
the
scheme,
MADOFF
solicited
and
caused
others with
to BLMIS,
solicit based
prospective upon, among
clients other
to things,
open his
trading promise
accounts to use
investor other
funds securities
to
purchase of large,
shares
of
common stock, corporations,
options and
and
well-known
MADOFF
EXHIBITS-05155
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representations
clients, with
that
limited
he would
risk.
achieve
In truth
high
and
rates
in fact,
of
return
as
for
MADOFF well
knew, his
invest as he
these promises
the had
representations to
BLMIS promised.
were by,
advisory
false. among
MADOFF failed other things,
funds his in
to
honor to
BLMIS clients
investment Instead,
failing
securities to
clients'
notwithstanding
promises
the
contrary,
and caused
and
to
notwithstanding
be made on tens
representations
of thousands of
that
account
MADOFF made
statements
and to
other BLMIS
documents clients
sent throughout
through the
the
United of
States this
Postal scheme,
Service MADOFF
operation
operated
a massive
and
Ponzi
scheme'in
to the
which
use
client
of
funds
were
BLMIS, and
misappropriated
others.
converted
MADOFF,
6. MADOFF, money, the
In
connection accepted from
with
this billions
Ponzi of investors,
scheme, dollars
BERNARD L. of investor
defendant,
cumulatively,
individual
charitable
organizations,
others, and
trusts,
established
pension
on their
funds,
behalf
and
hedge
funds,
of
among
accounts at
thousands
BLMIS.
From
the
outset
of
the
scheme,
and
continuing
throughout
its
wire
operation,
transfers
MADOFF obtained
from financial
investor
institutions
funds
through
interstate
outside New
located
York
Postal
State
Service.
and
through
mailings
delivered
by
the
United
States
MADOFF
EXHIBITS-05156
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7.
L. MADOFF, the
In
the
course
of
made,
carrying
and caused
out
this
others
scheme,
to make,
BERNARI~
false
defendant,
representations
and prospective to clients
concerning
clients of
his
investment
Among clients strike would
strategies
other an conversion" invest their within of market select things,
to
clients
MADOFF
BLMIS.
marketed strategy Clients basket Poor's publicly capitalization.
andprospective to as a "split BLMIS
investment strategy. funds the the in a &
referred were of 100
promised
that
approximately Index (the
35-50 "S&P
common a
stocks collection of their he would
Standard 100 largest
100"), in terms
traded
companies
MADOFF claimed
that
a basket
of
stocks
that
would
closely
mimic
the
price
movements
of
the
S&P
100.
those investing
MA~OFF further
purchases, clients' and
claimed
would in be
that
"out
he would
of the
opportunistically
market" in United States hedge the intermittently, States Treasury investments investor
stocks,
time
funds securities claimed basket
these such that of
periods as United
Government-issued bills. that
funds
MADOFF also he made
to buy
he would
in
and
the
sell
common stocks
contracts related
by using
to those
option
thereby
in stock
limiting
prices.
8.
potential
losses
caused
by unpredictable
changes
Further,
to
induce
new
and
continued
investments
by clients clients
and annual
prospective returns
clients, in varying
MADOFF promised amounts up to at
certain least
MADOFF
EXHIBITS-05157
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approximately
clients that
46 percent
the fee for
per
his
year.
services
MADOFF also
would be
told
based
certain
on an
approximately
MADOFF traded
$0.04
for
per
such
share
clients.
commission
on
the
stocks
that
9. would would
marketed,
Contrary funds client to funds
used
to
his
promises securities to the
to
those on strategies
funds
clients their
that behalf, he had
the
he and
use invest
their
purchase pursuant
of the
MADOFF
most
investors'
to
meet
periodic
MADOFF
redemption
took some of
requests
these
of
clients'
other
investors.
investment funds
In
as
addition,
"commissions," proprietary
others received
which trading
millions
he
used
to
support of BLMIS,
in
the and
benefits.
market from
making which he
and and
businesses
of
dollars
10.
BERNARD
L.
MADOFF,
the
defendant,
created
and
caused
the
to
be created
and
a broad
support the
infrastructure
appearance advisory
at
that
BLMIS to
BLMIS was in
generate
impression
operating
a legitimate
investment
business
which
client conceal conducted.
to serve
funds the
were fact
actively that
traded
as
he had was
promised, actually numerous
advisory
and being
to
no such things,
for
business
Among other
as a "back office"
MADOFF hired
this investment
employees
business. had little
Many of
the
employees pertinent
hired training
to
perform or
those
functions in the
or no prior
experience
securities
industry.
MADOFF caused
those
BLMIS employees
to,
MADOFF
EXHIBITS-05158
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among and
client
other fraudulent
account
things,
communicate including,
and
with
clients but not
and limited
generate to,
that
false monthly
documents
statements
trade
confirmations
purportedly
MADOFF MADOFF that claimed further were sent
reflected
had caused to clients been
the
purchases
conducted on statements to reflect
and
behalf
sales
of and
of
securities
clients. confirmations returns
that
BLMIS's trade
account
fictitious
consistent
clients.
with
the
returns
that
had
been
promised
to
those
11. proprietary or about 2002
Moreover, trading and in more
to
support
BLMIS's at
market least as
making early the
and as in
businesses, or about than
between 2008, $250
BERNARD L. of
MADOFF,
defendant,
caused
million
BLMIS
investment
advisory transfers, of these
to
clients' to the
funds operating
to
be directed, accounts that
through funded
a series the
of
wire
operations investor
(the
businesses.
be sent from
Specifically,
a BLMIS to "MSIL
the
MADOFF caused
account in held and
to
those
funds `BLMIS United
be
NewYork, by MSIL
New York in London, funds
Client Kingdom
Account"), (the
from
accounts
Accounts"),
Accounts
further
either the
caused
BLMIS
to
transferred
MSIL
Client
Account
or
to
another
bank
account
in
New
York,
New
York,
which
was principally
Operating
used
to
fund
BLMIS's
operations
these funds
(the
"BLMIS
in
Account").
MADOFF directed
transfers,
part,
to
give
the
appearance
that
he was
conducting
securities
MADOFF
EXHIBITS-05159
"Y"
transactions he the was not
in
Europe
on such from
behalf
of
the
investors
when,
in directed
fact,
conducting of property his
12.
transactions. the MSIL for and Accounts the
MADOFF also to purchase use
transfer
funds and family
To conceal
and benefit
maintain of
services members
his
personal
and
MADOFF,
associates.
BERNARD L. MADOFF, the
scheme,
defendant, regulators and in sworn
among and
other repeatedly
things, lied
withheld to the
information SEC in written
from submissions
testimony. In furtherance
false and
13.
the defendant,
of
the
scheme,
BERNARD L.
certified
MADOFF,
caused
fraudulent
financial
statements
for
BLMIS,
including
balance
sheets,
statements
of
income,
control, fraudulent
statements
to be
of
created.
cash
flows,
MADOFF
and
further to be
reports
caused sent to
on
internal
false and and
such clients
financial
statements
prospective
also caused
clients
such false
through
and
the
United
States
financial
Postal
Service,
to
and
be
fraudulent
statements
filed
with
the
SEC.
Among
other
things,
MADOFF knew
that
the
certification averred with that Generally
attached those
to
the
BLMIS financial had been prepared and
statements in
falsely
statements Auditing
accordance Accepted
Accepted
Standards
Generally
Accounting
Principles. 14. As of on or about November 30, 2008, BLMIS had
approximately
4,800
client
accounts.
On or
about
December
1,
MADOFF
EXHIBITS-05160
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2008,
BLMIS 2008
issued
account that
statements those
for client
the
calendar held
month a total
of
November
reporting
accounts
balance
a small
of
approximately
of that
$64.8
balance
billion.
on behalf
In
of
fact,
its
BLMIS held
clients.
only
fraction
Statutory
AlleQation
15.
December 11, 2008,
From
in
at
the
least
the
1980s
District
through
of
on
New
or
York
about
and
Southern
elsewhere, willfully,
means and
BERNARD L. and knowingly,
MADOFF,
the
defendant, and
unlawfully, by
the
directly
of
indirectly,
commerce,
the
use
mails,
of
instrumentalities
interstate
and
the
facilities with manipulative of by: (b) to Title (a) making state made, not the
of
national
securities and sale of
exchanges, securities, and
in did use and in
connection employ violation 240.10b-5, defraud; omitting statements were acts, operate (Title Title made,
purchase and 17,
deceptive Code of
devices Federal
contrivances, Section and artifices facts order under in to and make
Regulations, schemes, of material in
employing untrue material in light
devices, statements facts of the (c)
to
necessary circumstances engaging
the they
which
misleading; and courses deceit States Federal
United
and of
transactions, operated and would
practices, as a fraud
business persons.
which
and
upon
15, United 17, Code of
Title 18
Code, Sections Regulations,
States Code,
78j (b) Section
Section 2.)
and 78ff; 240.10b-5;
MADOFF
EXHIBITS-05161
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"
"''"
COUNT
TWO
(Investment
Adviser
Fraud)
The 16.
United The
States allegations
Attorney contained
further in
charges: paragraphs 1 through
14,
above,
are
as 17. if
hereby
fully From
2008,
repeated,
set at least
the
realleged
herein. the 1980s
District defendant,
and
incorporated
by
reference
forth
through
of
on
New
or
about
and an
December elsewhere,
11,
in L.
Southern the
York as
BERNARD
MADOFF,
acting
investment of
mails
adviser unlawfully,
means and
with
respect willfully,
to
clients
and
potential by the use
clients of the
BLMIS,
and
and
knowingly,
of interstate
instrumentalities
commerce,
directly
and
indirectly,
did:
(a)
employ
devices,
schemes,
and
artifices
in
to
defraud
clients
and
and
prospective
courses of
clients;
business and and
(b)
which
engage
transactions, as and a
practices, fraud (c) and deceit in
operated clients;
upon
clients
prospective courses of
engage
acts,
practices,
business
(Title
that
were
fraudulent,
States United
deceptive,
Code, States
COUNT
and
manipulative.
and 2.) 80b-17;
15, United Title 18,
Sections Code,
THREE
80b-6 Section
(Mail
Fraud)
The United
18. The
States
allegations
Attorney
contained
further
in
charges:
paragraphs 1 through
14,
above,
are
as if
hereby
fully
repeated,
set forth
realleged
herein.
and
incorporated
by
reference
MADOFF
EXHIBITS-05162
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19. about December
From 11,
at 2008,
least in
as the the
early Southern
as
the
1980s
through of
on
or and
District
New York
elsewhere, willfully, a scheme
BERNARD L. and and by knowingly,
MADOFF, having to defraud, and
defendant, devised and for and
unlawfully, intending to money devise and
artifice means of and
obtaining pretenses,
property
false promises,
fraudulent for the
representations,
purpose
of
executing
such
scheme
offices things
and
and to
artifice
authorized sent
and
attempting
depositories
so
for by the
to
do,
mail
did
matter,
place
in
matters and
post
and did
be
and
delivered
Postal
Service,
deposit
and
and
cause
by
to
private
be
deposited
and
matters
and
interstate
things
to
carriers,
be sent
and
delivered
commercial
did
take
and
receive
to be
therefrom
delivered,
such
by
matters
mail and
and
such
things,
carriers
and
did
knowingly
cause
according
to
the
directions
thereon,
and
at
the
places
at
which
they
were
were directed
addressed,
1, Postal to a 2008,
to be delivered
such matters
sent false New
by the
things,
caused fraudulent New
persons
to
to
to whom they
on or
and
and
and and York,
wit,
be
about
delivered statement
December via from the
MADOFF Service client a in
sent account
BLMIS
York.
(Title
18,
United
States
Code,
Sections
1341
and
2.)
10
MADOFF
EXHIBITS-05163
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COUNT
FOUR
(Wire
Fraud)
The 20. 14, above, are as 21.
about December
United The hereby if fully From
11,
States allegations repeated, set at
2008,
Attorney contained
further in
charges: paragraphs incorporated 1 through by
realleged herein. as
the
and
reference
forth
least
in
early
Southern
as
the
District
1980s·through
of New
on
York
or
and
elsewhere, willfully, a scheme means promises, wire and of
BERNARD L. and and false did radio signs, such knowingly,
MADOFF, having to defraud,
the
defendant, devised and for and
unlawfully, intending to money devise by and by foreign for or the about means of
artifice and transmit
obtaining representations
fraudulent and
pretenses, cause in pictures, to be
transmitted and sounds wit, on of to
communication signals, scheme and
interstate and to
commerce, purpose August funds New of 5, to
writings, executing 2008, be
York.
artifice,
MADOFF caused by wire from
approximately Bloomington,
$2 million Minnesota
investor New York,
sent
(Title
18,
United
States
Code,
Sections
1343
and
2.)
11
MADOFF
EXHIBITS-05164
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COUNT
FIVE
(International Specified The 22. 14, above, are as 23. through of on or if United The hereby fully From about the at States allegations
Money Laundering To Unlawful Activity) Attorney contained realleged herein. as 11, early 2008, and as in in the or further in
Promote
charges: paragraphs incorporated 1 through by
repeated, set least forth
and
reference
about Southern
2002, District
December
New York, the
United
Kingdom, in an
elsewhere, involving
BERNARD L. and willfully affecting and
MADOFF, interstate
defendant, and foreign
offense
commerce,
unlawfully,
knowingly, transport, transmit transfer, outside
United
transported, transmit and transfer, from and
transmitted transfer, and a place attempt in and
within
and and to the
transferred, others
attempted to transmit, to a place the
the
to
caused transport,
transport, and
funds the
States
United from
United
States a place
States,
United
to
States,
a place
funds
the
outside
with
intent to and funds
the
to
promote in
the the
carrying sale of
on of securities,
specified mail to nit,
unlawful fraud, wire
activity, fraud,
wit, theft to
fraud from
an employee transferred
Account England, the
benefit from
in
plan,
MADOFF caused including
the and MSIL to in be the
be wire
investor in London, from
BLMIS bank
accounts,
to
BLMIS
New York, in the United in
New York, Kingdom,
Accounts transferred
MS1L Accounts
London,
England,
12
MADOFF
EXHIBITS-05165
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United Operating
fraud theft (Title
Kingdom, Account,
the an 18, sale
to
BLMIS bank in
of
accounts, New York,
mail plan.
including in order
wire
the to
fraud,
BLMIS promote
and
New York,
securities, benefit
in from
fraud,
employee United
states
Code,
COUNT
Sections
SfX
1956~a)
(2) (A)
and
2.)
(International
The The 24. 14, above, are as
25.
Money
Proceeds United The hereby of States
Laundering
Specified Attorney
To Conceal
Unlawful further in
And Disguise
Activity)
charges: paragraphs incorporated 1 through by
allegationscontained repeated, set
at least
realleged herein.
as early as
and
reference
if
fully
From
forth
in
or
about
2002,
through of
on
or
about the
December
11,
2008, and
in
the
Southern
District
New York, the
United
Kingdom, in knowing an
elsewhere, involving
BERNARD L. and affecting in in some the form
MADOFF, interstate certain custody of and
defendant, commerce,
offense that to the
property investor the
involved funds of knowingly
financial and care activity,
transactions, of BLMIS,
wit,
represented willfully conduct the
in
proceeds and
unlawful did
unlawfully, attempt in.fact
to wit,
would
conduct
and which
to
such
financial of
of
transactions
unlawful
involved
fraud
proceeds
the sale
specified
activities,
securities,
mail knowing to
fraud, that
wire the and
fraud, transactions disguise
and
theft were
from
an
employee in whole
benefit and in
plan, part the
designed the
conceal
the
nature,
13
location,
the
source,
MADOFF
EXHIBITS-05166
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ownership
unlawful
and the
activity.
2~. Such
control
of the
proceeds
of said
specified
financial
transactions
included,
but
were
not
limited
to,
the a.
following: From
2008, transferred
at
least
in
L.
or
about
the
2006,
through
on
caused
or
about funds
December to be wire
11,
BERNARD from
MADOFF, bank
defendant, in
BLMIS
accounts
New
York, Accounts
thereafter
New York, in
to
including England,
transferred
the
BLMIS in
from
Investor United
Account, Kingdom,
Accounts
to and
in the
the
MSIL
London,
be
the
the
MSIL
United
Kingdom the
to
BLMISbank Investor were that
accounts Account and to was which give
in the the
New York, BLMIS false
New York,
including which
BLMIS
Operating and
Account,
transfers appearance advisory purchase conceal being
designed BLMIS in
fraudulent investment being used and were to to
operating client as such
a legitimate funds were
business and the made; sell fact and b.
securities that no
MADOFF had or
promised, sales
purchases
actually
From
2008, BLMIS
at
least
in
caused
or
about
funds to
2002,
be
through
wire New York,
on
or
about transferred
December from
11,
MADOFF bank
accounts
in
New
York,
including
London,
the
England,
BLMIS
in
Investor
the United
Account,
Kingdom,
to
the
and
MSIL
thereafter
Accounts
to
in
be
transferred
from
the
MSIL
Accounts
in
the
United
Kingdom
to
14
MADOFF
EXHIBITS-05167
U=1V
purchase
and benefit
and maintain
of MADOFF, 18,
1956(a)
property
his family
and services
members Code,
&
SISVEN
for
and
the
personal
use
associates.
(Title
United
(1) (B)
COUNT
States
(i)
Sections
z.)
(f)
and
(Money The 27. 14, above, are as 28.
aboutDecember elsewhere,
Laundering) further in charges: paragraphs incorporated 1 through by
United The hereby if fully From
11,
States allegations repeated, set at
2008, L.
Attorney contained
realleged herein. in
the the
and
reference
forth
least
in MADOFF,
or
about
the
District
19808,
of in an
through
New York
on
or
and
Southern defendant,
BERNARD
offense
involving unlawfully,
engage criminally $10,000 on or in
and
affecting
interstate and
others
and
foreign
commerce, and attempted
transaction greater activity; than to wit,
willfully,
and cause
knowingly
to engage was
engaged
in of
to
in
a monetary a value unlawful
derived and about was April
derived
property derived 13, from 2007,
from fraud
that
specified MADOFF caused
in the
approximately
of securities, mail
$54,485,750
sale
fraud, transferred York,
United
wire
fraud, from the the
and
theft
from Investor Accounts
an
employee Account in
benefit
plan, New in the
to
be
BLMIS BLMIS
New York, England,
to
one
of
in
London,
Kingdom. (Title 18, United States Code, Sections 1957 and 2.)
is
MADOFF
EXHIBITS-05168
"VU
VV'
1V'~VVV
I
UYV
COUNT
EIGHT
(FaLse
Statements)
The 29. 14, above, are as 30. paragraph
United The hereby if fully Beginning
States allegations repeated, set
Attorney contained
further in
charges: paragraphs incorporated 1 through by
realleged herein. about among 2006, other
and
reference
forth in was, or
as things,
described an
in investment
1 above,
BLMIS
adviser periodic
Form
registered examinations
with
the by the
SEC. SEC,
for
As such, and was
BLMIS was required
Adviser
subject file
to an SEC
to
ADV Uniform
Application
Investment
Registration
("ADV")
31.
the defendant,
On or
filed
about
and
January
caused to
7,
be
2008,
filed
BERNARD L.
an ADV with
MADOFF,
the SEC
(the
"BLMIS ADV"). under
that the
The BLMIS ADV was penalty
information
signed the
by MADOFF, who laws of
therein
certified,
States,
of
perjury
and
under
statements
the
United
were
made
true and
and
correct, act.
32. The
and
that
he
was
signing
the
BLMIS
ADV as
a
free
voluntary
BLMIS
ADV
contained
false
statements
made
for
the
purpose
of conduct
deceiving described with
the in the
SEC and paragraphs
hiding
the 4 through
defendant's 14, above. things, in
unlawful
The BLMIS ADV filed substance,
securities.
SEC stated, of
among
other clients'
that
BUUIIS had
custody
advisory
16
MADOFF
EXHIBITS-05169
"VU
VV''V"'VV
'
UYV
33.
District of New
On or
York,
about
January
L.
7,
2008,
the
in
the
Southern
BERNARD
MADOFF,
defendant,
unlawfully,
willfully,
and
knowingly,
in
a matter
within
the
jurisdiction
United fictitious,
wit, MADOFF
of
the
namely,
executive
the
branch
SEC, made
of
the
Government
false,
of
the
States, and
filed
materially and
the
fraudulent
the BLMIS
statements
ADV with
representations,
SEC, in which he
to
made
the
following of
false BLMIS's
statement investment
that
was
material business:
to
the
SEC's
oversight
adviser
SPecification MADOFF falsely advisory clients'
(Title 18,
stated securities."
that
BLMIS
had
"custody
of
..
United
States
COUNT
Code,
NINE
Section
1001(a).)
(Perj The 34. 14, above, are as 35. certain adviser periodic conduct markets times, registered examinations investigations and, in or about if United The hereby fully As States allegations repeated, set forth in things, the by the SEC. SEC. various
ury) further in charges: paragraphs incorporated 1 through by
Attorney contained
realleged herein. paragraph
and
reference
described other with
1 above,
BLMIS and was
was
at
among
a broker-dealer As such, BLMIS
investment subjectto
The
SEC has of
broad the such
authority securities an
to
into
aspects conducting
2006,
was
17
MADOFF
EXHIBITS-05170
UYV
investigation. 19, 2006,
As part employees
MADOFF,
of that
investigation, the voluntary
oath
on or about testimony
May of
of the
the
SEC took
BERNARD L. Testimony").
defendant,
under
(the
"MADOFF SEC
36. BERNARD L.
During the
the
course
of
the
MADOFF SEC Testimony, numerous false and
MADOFF,
defendant,
made
misleading hiding above.
(a)
statements his unlawful
for conduct
the
purpose described
of in
deceiving paragraphs in
behalf
the
SEC and 11, that:
4 through substance,
of its contracts
MADOFF testified,
executed advisory trades clients;
among
of
other
things,
stock on
BLMIS
common (b)
investment
BLMIS
executed
options
on behalf
custody advisory for all of
of
the
its
investment
assets and managed (d)
advisory
on behalf used clients. 19, the
clients;
of the its
(c)
BLMIS had
investment trading strategy
clients; its 37.
BLMIS
same
investment On or
advisory about May
2006,
in
the
southern having
District taken in an
of oath
in
New York, before
which the
BERNARD L. a competent
law of the
MADOFF, tribunal,
United
defendant, officer and
authorizes
person,
an
a case
to be
States
oath
administered, that that he would any written
by
namely, testify,
in
testimony
before depose and
an officer certify
of truly, and
the
SEC, and
declare,
testimony,
him subscribed, and matters
declaration,
would contrary which
18
deposition
be true, oath, not believe
certificate willfully, subscribed
unlawfully, stated to and be true,
knowingly, material
to he
such did
MADOFF
EXHIBITS-05171
UrV
namely,
in
his
testimony
on
or
about
May
19,
200~,
MADOFF
knowingly portions
testified of his cited
falsely
as
to
the
material
matters
in
the
testimony
underlined
One 20-25) of the
below:
Specification (Page 55, Lines Q: Let's
discussed
just
get
before.
back
to
You
some
mentioned
basics
earlier
that
that
we
the
basket hedged
A: Yes.
in the institutional with options. Does
trading that in
business may fact happen?
be
Specification (Page 57, Lines Q:
~Ituo 15-20)
Let's focus on the actual execution portion of it. Let's go back to the equities. You mentioned that you used this AHOE system, and you mentionled] that it exposes a sliced order to the European market. Is it correct then that the equities are traded in Europe?
Yes.
A:
Specification
(Page ~3, Lines
Three
11-23)
Q:
Now you mentioned that there was whom you put out this indication Generally, with how many of them
in each execution?
a group of of interest do you end
dealers to each time. up trading
A:
Within
close to
the
50.
basket,
we're
probably
interactins
with
40,~
Q: A: Q: A:
That's Ecnuities. A dozen. Pretty
for
equities O~tions Do all is of
and
options.
a dozen. them all end trade up on trading a - Yes. usually? It's usually
much.
They
that have
they all DarticiDate an interest in these
durins stocks.
the
tradins. These stocks
They are
the
marketplace.
19
MADOFF
EXHIBITS-05172
.,,,,,,..,.,vvv
i
uyv
LV
VI
LV
Specification
Four
(Page
65,
Lines
16-18)
Q:
A:
Who are
Thev're
the
counterparties
Euro~ean
to the
banks.
options
contracts?
basically
(Page
66,
the
Specification Five Line 19 - Page 67,
Line
20)
Q: A:
So how does
relate to
the
time
frame
frame for
for
the
the
options
trading
trading?
time
equities
First we're putting the ecnritv basket on, and then we're putting the options on after the ecruitv basket is complete, so the options are being done basically in
the morning tvpicallv between 8:00 and 9:00 a.m.
Q:
With the options trades, is there any documentation generated? For example, for some derivatives, there is an after agreement and you have a confirmation, a 2page document. Is there something like that for the
options trades?
A:
Yes. there's electronically,
that's attached
an affirmation and there's
to that that's
that's generated a master option
also electronic.
agreement
Q:
And the electronic trade with each
Correct.
affirmation stores particular dealer.
data
for
each
A:
Q:
So if
go .
you
wanted
to
find
out
with
whom you
bought
these
contracts
A: Right.
on a particular
day,
that's
where
you would
Specification
Six
(eage
Q:
A:
85,
of
Lines
the
2-3)
assets?
Who has
We do.
the
custody
20
MADOFF
EXHIBITS-05173
''""'''"'''
""
'
"""
""''"""""
'
"r"''
"
'"
S~ecification
Seven
(Page
Q: I wanted attorneyl
than the
116,
to go asked
Line
back you
17 - Page
117,
Line
2)
[an SEC persons other
discussed so
to the question that about other persons,
customers that we
institutional
far
and
proprietary
is it also institutional
situations.
pursuant trading
The
to the business?
trading
same
for
these
[as]
persons, in the
A: Yes.
strategy
Q:
What is approximately for these persons? My guess
dollars.
the
total
amount
of
assets
traded
A:
would
be
something,
a
few
hundred
million
(Title
18,
United
States
COUNT
Code,
TEN
Section
1621.)
(False
Filing 38. The
With
The
Securities contained realleged herein.
And
Exchange in paragraphs
Commission) 1 through by
allegations repeated, set
about
14,
above,
are as
39.
hereby if fully
On or
and
incorporated
reference
forth
December L.
20, MADOFF,
2007, the
in
the
Southern
District
of
New
York,
BERNARD
defendant,
unlawfully, and documents
willfully, required Exchange did make Act
and to of
knowingly, be filed with and to be to
in
applications, the rules SEC under and
reports, the
Securities thereunder, false and
1934,
the made
regulations that to were wit,
and with
cause respect
statements facts,
misleading
material
21
MADOFF
EXHIBITS-05174
UYV
"
V'`V
MADOFF caused
to be filed
a false
with the
and
SEC.
misleading
certified
BLMIS audit
report
(Title
Title 17,
15, and
United
of
States
Federal
Code, 18,
Sections United
2.)
78q(e)
Sections
and Code,
78ff;
Code
Regulations,
Section
COUNT
240.17a-5,
240.17a-13
210.2-01;
Title
States
ELEVEN
(Theft 40. 14, above, are
as 41. about December if
From An Employee allegations repeated,
set at 2008, least in forth as the the
Benefit in
Plan) paragraphs incorporated 1 through by
The
contained realleged
herein. early Southern defendant, as
hereby
fully From 11,
and
reference
the
1990s
through of
on
or and
District
New York
elsewhere,
BERNARD L.
MADOFF,
unlawfully,
willfully,
converted
and
to his
knowingly,
own use,
embezzled,
and to the
stole,
use of
abstracted
others,
and
moneys,
funds, assets benefit September
securities, of employee and 2008,
$10 trust and on
premiums, welfare funds
credits, benefit
properties, plans therewith, to invest
fund
and employee to wit, promised
sent
other pension on or about
and
plans 24,
connected
MADOFF failed
million behalf converted in of pension
as
assets 35 to
approximately a master plans,
of others.
to
BLMIS pension the use
by
approximately those funds
labor his use
union and
instead
~Title
18,
United
States
Code,
Sections
664
and
2.)
22
MADOFF
EXHIBITS-05175
UYV
FORFEITURE
ALLEGATION
(Offenses
42. constituting ~ 1956(c)
of this
Constituting
As the result unlawful in
Specified
of committing activity One,
Unlawful
the as Three,
the
Activity)
offenses in and 18 U.S.C. Eleven
specified ~7), as alleged
defined Four,
defendant,
Counts
L.
Information,
BERNARD
MADOFF,
shall
forfeit s sa1(a) personal,
to the
to
the
United and 28
States, U.S.C. or
said
pursuant ~ 2461, is all
to
18 U.S.C. property, from proceeds real and traceable
(1) (C) that
commission
constitutes
of the
derived
offenses.
Substitute 43. property, as If any of of the any
Asset
Provision forfeitable of the the exercise defendant: of due
above-described act or omission upon
a result a.
cannot be diligence;
located
b.
has been transferred with, a third person; has
the
or
sold
to,
or
deposited
c.
been
Court;
placed
beyond
the
jurisdiction
of
d.
has
or
been
substantially
diminished
in
value;
e.
has been commingled cannot be subdivided of the United States, 853(p), to
with other property without difficulty; pursuant seek to forfeiture Title of 21,
which
it
is
the
intent
United
States
Code,
Section
any
23
MADOFF
EXHIBITS-05176
U~V
other
property
of property 18,
Title
the
defendant described States
United
FORFEITURE
up to above. Code,
States
the
value
of
the
forfeitable (Title
and
United
28,
Sections
Code,
981(a)
Section
(1) (C),
2461.)
ALLEGATION
(Money
Laundering)
44. money and laundering alleged
As the
result in
of
committing of
one
or
more
of
the
offenses in Counts
violation Five through
the 18
18 U.S.C. Seven of
shall all
~~ 1956 this
forfeit property, to
1957,
Information, the United
BERNARD L. States, pursuant
MADOFF, to
defendant, U.S.C. ~ 982,
real
and
and
all
personal,
property
involved
traceable
Substitute
in
to
the
such
Asset
said
money
laundering
offenses
property.
Provision
45.
If
any
of
the
above-described
forfeitable
property,
as
a result
a.
of
any
act
or
omission
upon the
of
the
exercise
defendant:
of due
cannot be diligence;
located
b.
has been transferred with, a third person; has
the
or
sold
to,
or
deposited
c.
been
Court;
placed
beyond
the
jurisdiction
of
d.
has
or
been
substantially
diminished
in
value;
e.
has been commingled cannot be subdivided of the
Section
with other property without difficulty; pursuant to
21,
which
it
is
the
States
intent
United
States,
982(b) and
Title
18,
States
United
Code,
Title
United
24
MADOFF
EXHIBITS-05177
i
UYV'V
V'
LV
Code, Section
the defendant
above.
853(p),
up to
to seek forfeiture
the value of the
of any other
forfeitable
property
of
property
described
(Title
18,
United
States
Code,
Section
982.)
L.
DASSIN
Ac~ing
United
Seates
Attorney
25
MADOFF
EXHIBITS-05178