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Judge Urged To Jail Madoff Without Bail

STEVE INSKEEP, host:

This may please investors who say they lost their money with Bernard Madoff. Congress is asking what went wrong. And prosecutors are asking a judge to send the investment adviser to jail. They say he tried to hide his assets by sending jewelry and other items to friends and relatives. Here's NPR's Jim Zarroli.

JIM ZARROLI: Until recently, the relationship between law enforcement officials and Bernie Madoff had seemed to be a cooperative one. Authorities said that Madoff had willingly answered questions about the collapse of his financial firm. Yesterday, the mood seemed to have changed. Assistant U.S. Attorney Marc Litt told a federal judge that Madoff had been sending watches and jewelry to family and friends. And he suggested that Madoff was trying to conceal the assets from authorities who are compiling a restitution fund for investors. Outside the courthouse, Madoff was mobbed by reporters.

Unidentified Reporter: Why were you getting rid of all the jewelry, Mr. Madoff? Why were you getting rid of the jewelry?

ZARROLI: Madoff's attorney told the court the items were family heirlooms and that Madoff had been trying to recover them. The judge said he'd rule later on whether to revoke Madoff's bail. In Washington meanwhile, members of Congress are investigating the Madoff case. Allan Goldstein, a 76-year-old retiree, told the House Financial Services Committee that he and his wife had placed their life savings with Madoff on the advice of their accountant. Now, he said, he's had to cash in his life insurance policy to pay his mortgage.

Mr. ALLAN GOLDSTEIN (Madoff Investor): Ruth and I thought we were living the American dream. Our dream, as well as so many others, has turned into a nightmare. We had considered Madoff's securities not a get-rich scheme, but a buffer against risk. We entrusted Mr. Madoff with all we had, and now everything I worked for over a 50-year career is gone.

ZARROLI: Goldstein said he blamed government regulators for failing to stop Madoff. His words were echoed by lawmakers, some of whom had tough words for the Securities and Exchange Commission. Republican Scott Garrett of New Jersey noted that regulators had been warned about Madoff several times over the years.

Representative SCOTT GARRETT (Republican, New Jersey): What's most unfortunate is that the SEC regulators had numerous chances to uncover the scheme and that they continually either didn't see the multiple warning signs, didn't follow up on them, or simply chose to ignore them.

ZARROLI: Others went further. Democratic Congresswoman Carolyn Maloney of New York said she no longer trusted the SEC to provide proper oversight of the markets. The lone SEC official to testify was Inspector General David Kotz who's been charged with investigating the Madoff scandal. Kotz was peppered with questions about the case, and he repeatedly said the answers would have to wait until his investigation was finished. At one point Kotz alluded to stories about the ties between Madoff's firm and the SEC. He noted that many SEC officials go to work at big Wall Street firms when they quit their jobs.

Mr. DAVID KOTZ (Inspector General, SEC) One of the things that we do need to look at, and one of the things that we've already looked at, is that relationship between SEC employees when they leave SEC and when they go into private industry.

ZARROLI: Kotz told the committee he is so concerned about the SEC's handling of the case that he's expanding his investigation. He said he'll look not just at the Madoff scandal itself, but at the agency's inspection and enforcement divisions and make recommendations for change. And with the uproar over the Madoff scandal, many lawmakers say an overhaul of the agency is both necessary and likely. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.
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