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Madoff whistleblower: 'NZ would have been on his list'

Published: 10:38AM Monday February 11, 2013 Source: ONE News

The whistleblower who helped uncover Bernie Madoff's infamous Ponzi scheme, says New Zealand was next on the fraudster's target list.

Harry Markopolos, a financial fraud investigator, uncovered evidence over a nine year period which showed that Madoff's wealth management business was actually a massive pyramid scheme.

"[New Zealand] would have been on his list, along with the Philippines, Indonesia, and Malaysia. He definitely would have come here and Australia. It would have been his last and final frontier, he needed the money," he said.

Markopolos is speaking at the Economic Crime Seminar in Auckland today, which is being held ahead of a two-day private conference of leaders from global crime agencies.

He told TV ONE's Breakfast this morning that his talk will discuss the Madoff investigation, as well as techniques on how to spot Ponzi schemes early.

"Ponzi schemes are a continuing problem in New Zealand, but it will not only be New Zealanders in the audience, it will be the top white collar law enforcers from around the world," he said.

'A titan of industry'

Markopolos also told Breakfast about his struggle to convince authorities that Madoff was undertaking fraudulent activity.

"He was seemingly so wealthy; he was trading 5%-10% of the daily stock exchange volume in the US. So no one thought he was above reproach.

"He went to the right schools, lived in the best neighbourhood, donated to charities, he seemed like a titan of industry," he said.

Markopolos added that he began to get suspicious about the scheme when his boss asked him why their firm was not making the same returns as Madoff.

"I was managing billions of dollars at an investment management firm in Boston. I had to compete against Madoff, and he was using strategies very similar to my firms' yet his performance numbers were totally unbelievable, too good to be true.

"My bosses were pressuring me to duplicate his returns, to figure out his strategy, and I did immediately. I said it's either a Ponzi scheme or its front running, but whatever it is its illegal - he's going to go to prison," he said.

The scheme fell apart in 2008, and Madoff, now aged 74, pleaded guilty in 2009 to the biggest investment fraud in Wall Street history, involving as much as $US65 billion.

He was sentenced to 150 years' imprisonment and is incarcerated at a medium security prison in North Carolina.

A lot of risk

About two and a half years into his investigation, Markopolos said he began to feel concerned for his own safety

"For the first two and half years I didn't [feel worried]. But then I went to Europe in June of 2002 and I met with 20 banks.

"They were feeder funds into Bernie Madoff... and I realised that they were dealing with offshore clientele and it was clear to me that Bernie was stealing from the Russians and the Colombians - two groups who if you steal from them, have a unique way of dealing with you."

"I knew he had a lot of risk on the table, and if he knew I had a team tacking him through North America and Europe we had a lot of risk."

Markopolos said he was "very frightened" to return to the US.

"I immediately started carrying a gun wherever I went and I would check for bombs underneath my vehicle before I would get into it."

Timely visit

New Zealand's Serious Fraud Office (SFO) said that the attendance of Markopolos at the conference is "timely given the recent conviction in the B'On case and the suspicions around Ross Asset Management".

Jacqui Bradley, director of B'On Financial Services was last year found guilty of fraud-related charges, involving the loss of $15.5 million.

Meanwhile, Financial Markets Authority (FMA) staff raided Ross Asset Management offices in late October last year after investors complained they could not get their money.

The investment company is now under investigation.

Also featured at the conference are talks from two FBI agents, and delegates from the UK, US and Malaysia.

The conference is an "exciting opportunity to increase the understanding of the drivers and impact of economic crime in New Zealand and internationally and should bring up some interesting talking points," the SFO said.

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