The Securities and Exchange Commission announced Friday that it filed civil charges against Peter Madoff for his role in the $65 billion Ponzi scheme perpetrated by his brother, Bernard Madoff. The charges, which include fraud, making false statements to regulators, and falsifying books and records, stem from Madoff's failure to carry out his duties as chief compliance officer of Bernard L. Madoff Investment Securities. The civil charges were announced alongside Madoff's agreement to plead guilty to criminal charges relating to the same conduct.
According to the complaint, Peter Madoff was "responsible for catastrophic compliance failures" during his tenure as chief compliance officer. These failures included intricate efforts to create the appearance of a rigorous compliance program, including constant revision of policies and procedural manuals. Additionally, Madoff was also involved in making numerous material representations concerning his brother's registration as a registered investment advisor, among which included the gross understatement of the number of clients investing with BLMIS (he said there were 23 client accounts, when in reality there were over 4,000) and the amount of assets under management. Finally, Peter acted at the direction of his brother in the final days of the scheme when it became apparent that there were insufficient funds to satisfy redemption requests and the two took measures to distribute hundreds of millions of dollars to family and friends. For this, alleged the SEC, Peter Madoff was rewarded handsomely, receiving tens of millions of dollars in salary, bonuses, and doctored profitable trades.
The SEC is seeking injunctive relief, disgorgement of ill-gotten gains, pre-judgment interest, and civil monetary penalties.
A copy of the SEC's complaint is here.