SEC Staffer Was Waved Off Madoff Probe

Investigator's questions could have exposed Ponzi scheme in 2004
By Rob Quinn,  Newser Staff
Posted Jul 2, 2009 5:52 AM CDT
The Securities and Exchange Commission is investigating the relationship between a senior staffer and Bernard Madoff's niece.   (AP Photo)
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(Newser) – An SEC investigator whose questions could have exposed Bernard Madoff's fraud in 2004 was shifted to an unrelated case after raising the alarm, the Washington Post reports. One of the supervisors who told the staffer to focus instead on a mutual funds investigation later married Madoff's niece, and the relationship is now being probed by the SEC.

The SEC investigator was assigned to examine paperwork provided by Madoff on his trading strategy, and found major inconsistencies and trading patterns that didn't make sense. She gave her bosses a list of follow-up questions for Madoff, some of which touched on elements of what was later revealed to be a massive Ponzi scheme. Insiders say she was never consulted on the Madoff case again.