The chairman of the brokerage firm, Maurice Cohn, its chief operating officer, Marcia Cohn, and registered representative, Robert Jaffe, have been indicted for attracting investments with the promise of high returns and using these funds to make payment to others investors.
The SEC also filed a suit against Stanley Chais, a Califorina based investment adviser, for supplying money to Madoff through feeder funds.
SEC filed civil fraud case in District Court in Manhattan.
Defendants sued for abetment
The charges are the result of second phase of investigation, where the focus is on others who helped Madoff in crime. In this regard, the court appointed trustee, Irving Picard, sued the erring firm.
“Cohmad’s primary business was directed towards helping BLMIS recruit an ever-expanding list of high-net-worth clients into the Ponzi scheme, and ultimately Cohmad and its registered representatives diverted several billion dollars to Madoff,” claimed Picard.
Jaffe and the Cohns, the SEC said, "collectively raised billions of dollars from investors for Bernard Madoff's Ponzi scheme”.
"They ignored and even participated in many suspicious practices that clearly indicated Madoff was engaged in fraud," it further said.
In a statement Robert Khuzami, director of the SEC's enforcement division, said the defendants helped Madoff "cultivate an air of exclusivity by pretending that he was too successful to trouble himself with marketing to new investors", while providing "a constant in-flow of funds to sustain his fraud".
Claims baseless
Jaffe’s defense lawyer, Arkin Kaplan Rice, said that the claims were baseless. He added, "The complaint filed today, which we learned about only from the press, smacks of impulsiveness and efforts at self-justification."
The lawyers of the other accused in the Ponzi scam were not available for comment.
Post new comment