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Financial Fraud Law

Madoff Brother, Convicted and Jailed, Now is Disbarred

 Peter Madoff – Bernard Madoff’s brother – has been disbarred.

Just about five years to the day after Bernard Madoff’s Ponzi scheme came to light, just about one year to the day after Peter Madoff was sentenced to consecutive five year terms of imprisonment for each of his admitted crimes, and more than 40 years after Peter Madoff was admitted to practice law in New York, he has officially been told by the courts: Stay Away.

A bit of the history:

On June 29, 2012, in a criminal action entitled United States v. Madoff that had been filed in the U.S. District Court for the Southern District of New York under Docket No. 10 Cr. 228, Peter Madoff pleaded guilty to one count of conspiracy to commit securities fraud, falsify books and records of an investment adviser, falsify books and records of a broker/dealer, make false filings with the U.S. Securities and Exchange Commission, commit mail fraud, falsify statements in relation to documents required by the Employee Retirement Income Security Act, and obstruct and impede the lawful governmental functions of the Internal Revenue Service in the ascertainment, assessment, computation and collection of taxes, all in violation of 18 USC § 371, and one count of falsifying books and records of an investment adviser, in violation of 15 USC §§ 80b-4, 80b-7, and 80b-17, 17 CFR 275.204-2, and 18 USC § 2.

Madoff admitted that he had conspired with others to commit several violations of the law, including attempts to interfere with the administration of internal revenue laws, falsifying books and records of an investment adviser, making false filings with the SEC, and mail fraud and securities fraud. Moreover, Madoff admitted that he had conspired with others to prevent the IRS from collecting proper tax revenue—to his and his family's benefit—in a number of different ways. Specifically, he admitted that he had received benefits from the company that employed him, Bernard L. Madoff Investment Securities (BLMIS), that he failed to report as income on his tax returns. In addition, he admitted that he had falsely placed his wife on the BLMIS payroll, resulting in her receipt of untaxed 401(k) contributions to which she was not entitled. He admitted that, in 2005, 2007, and 2008, he received gifts from his brother, Bernard Madoff, the principal of BLMIS, that were used to provide his children with substantial sums of money. He admitted that, although not expecting to be repaid by his children, had them execute promissory notes to avoid paying gift taxes. Additionally, he admitted that his brother provided him with gifts that were documented as loans so as to avoid paying gift taxes. He further admitted that, between 2006 and 2008, he knowingly signed and approved false compliance documentation in connection with BLMIS. He admitted that, at the time he made these statements, he knew that they were false. He also admitted that he conspired with others to falsify employment and payroll records of BLMIS.

As a result, the New York Appellate Division has now officially disbarred Peter Madoff.  The decision is Matter of Madoff, 2013 N.Y. Slip Op. 08444 (App. Div. 2d Dep’t Dec. 18, 2013).

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