Yesterday, I did a blog entry on how the Madoff scandal had out accountants in the gun. The view now is that no-one could have pulled off a scam as big as this, and kept it going for so long, without some outside help.
Now The Wall Street Journal reports that investigators have jumped on a key aide and Friehling & Horowitz, the firm that audited Madoff's financial statements.
The WSJ reports: "Authorities are trying to determine who helped Mr. Madoff carry out what they say appears to be at least a 30-year scheme that may have caused at least $50 billion in losses. They are seeking information from the accounting firm that handled Mr. Madoff's audits for decades and are examining the role of Frank DiPascali, who dealt with client accounts and worked at Mr. Madoff's firm for more than 30 years, said a person familiar with the matter.
" 'If you wanted anything, a new account, money in, money out, you called Frank," said one Madoff investor. "Nothing moved in that office without him, operationally,' this person said. "Frank DiPascali would like to see investors get back whatever they can,' said Marc Mukasey, a lawyer for Mr. DiPascali. He declined to comment further.
"After Mr. Madoff's arrest on December 11, investigators from the Securities and Exchange Commission showed up at the Madoff firm's headquarters in Manhattan and questioned Mr. DiPascali. He told the SEC he didn't know who was responsible for clearing and settling trades in the investment-advisory side of the firm, according to an SEC memorandum reviewed by The Wall Street Journal. He 'responded evasively,' the SEC memo said.
"Mr. Madoff was charged with fraud after authorities say he told his sons that the investment-management business was a 'giant Ponzi scheme' and that he had potentially lost at least $50 billion.
The 52-year-old Mr. DiPascali hasn't been charged with any wrongdoing.
"Investigators issued a subpoena to David Friehling, a New City, N.Y., accountant who audited the Madoff firm's financial statements, and are seeking documents related to the Madoff firm going back to Jan. 1, 2000, said a person familiar with the matter. He has until Dec. 29 to fulfill the request. Andrew Lankler, a lawyer for Mr. Friehling, declined to comment on his client's knowledge of the Madoff investment-advisory business.
"Mr. Friehling, 49, who operates out of a small office about an hour north of New York City, took over the accounting firm from Jerry Horowitz, who did work for Mr. Madoff for decades. A lawyer for Mr. Horowitz didn't return requests for comment."
Meanwhile, Bloomberg reports that Friehling & Horowitz now has a "for rent" notice on its front door.
And Reuters reports that the American Institute of CPAs has begun its own investigation into the audit firm.
And it appears that the firm was not doing it by the book, according to the institute's spokesman William Robers. Reuters reports: "David Friehling is the only active certified public accountant at the three-person firm, according to New York state records. The records show that Jerome Horowitz, the other partner in the firm, is inactive and living in Florida.
" 'It appears that he (Friehling) did an audit of Madoff's investment advisory, while he was telling us that he didn't do audits and therefore wasn't subject to the normal professional reviews that audit firms are required to have,' Roberts said.
no comment untill now