Lapses!? Madoff Was Protected

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[Policing Wall Street]

On October 31, 2009,  appropriately time for Halloween pranks, The New York Times published an article “Lapses Kept Scheme Alive,  Madoff  Told Investigators.”

It’s like saying “Lapses Led To Crime By Mafia, Gotti Tells Investigators.”

Madoff attributed the survival of his scheme to “lapses” by investigators from the Securities and Exchange Commission.  This statement does not ring true.  Like Madoff’s statement that he “acted alone”;  this should not be believed.  Madoff was protected. 

“Lapses,” is a sly way to get a whole army of collaborators off the hook. Will the public be hoodwinked that easily?

Already Frank DiPascali, Madoff’s right hand man, has admitted to assisting Madoff in his scam.  On Tuesday Madoff’s former accountant, David Friehling, pled guilty to securities fraud, making false filings to the Securities and Exchange Commission, and obstructing administration of federal tax laws.

But Madoff  stated that he had “acted alone.”  So, whom should we believe? The abettors who are now stepping forward or the master thief Madoff and the “lapses” ruse?
I can’t stand it when newspapers allow mental “lapses” in determining what propaganda is; what’s a cover-up; and what’s an exit strategy for people who assisted in Madoff’s phenomenal crime.

There is no benefit for Madoff to tell the truth.  He can only bury his family- and Madoff does not want that.  

One part of Madoff’s statement I believe.  Madoff spoke of Arthur Levitt, former Chairman of the American Stock Exchange and later Chairman of the Securities and Exchange Commission. 

Madoff said that he knew Arthur Levitt “very well” and lunched with him on one occasion.  Levitt denied that.  But from my own experience I know that Levitt failed to investigate narcotics smuggling and money laundering as well as a series of sexual assaults at the Amex.

I know it because I was a Wall Street trader at the time and reported many of these crimes to Levitt. Readers who’ve been following my column in this newspaper should be familiar with this by now.

Nothing happened. So Madoff may have a point here.

Madoff and Levitt had to have met because of their respective positions- Levitt as Chair of the Amex and Madoff as President of NASD.

In 1985 I had breakfast with Levitt one morning at the Amex.  There were perhaps eight of us.  Before breakfast several of the attendees asked me to speak to Levitt about the manipulation of the XMI by Morgan Stanley. 

When I spoke to Levitt after breakfast about manipulation of the XMI Levitt was cold as ice.  Levitt ignored me even after I explained that several complaints about front running in the XMI had been made to Trading Analysis and the front running had been covered up.  The reason? A prominent member of the Amex Board was trading on the basis of inside information, which he had received from Morgan Stanley.

As I’ve noted in several past columns, Levitt failed to see through an investigation of money laundering by individuals such as Louis Miceli and Robert VanCaneghan, who were laundering drug money via their Amex specialist firm.

Madoff has referred to Mary Schapiro, the current Chair of the SEC, as “a dear friend.”  David Kotz, the SEC’s inspector general, denied that assertion.  Yet in a previous stint at the SEC, Schapiro also failed to press investigations of allegations of front running, illegal trading, margin violations, and other transgressions.

There was no “lapse” at all as readers can now conclude.


Manfredonia, a Wall Street trader in the 1980s, tried unsuccessfully to expose corruption as a whistleblower. Instead he was thrown from Wall Street. He’s on a mission to expose past and present crimes. Reach him at

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