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Madoff friend wants SEC, trustee charges dismissed.

Byline: Reuters

NEW YORK: A friend of Bernard Madoff accused of helping fund billions of dollars to the imprisoned swindler asked judges to dismiss charges against him by the U.S. Securities and Exchange Commission and the trustee of Madoff s investment advisory firm.

Lawyers for Robert Jaffe asked a Manhattan federal court to dismiss four counts in the SEC s civil fraud lawsuit, while complaining that the regulator was wrong to be "salaciously branding Jaffe a henchman of Bernie Madoff."

They also asked a Manhattan bankruptcy court to dismiss nine counts in a lawsuit by Irving Picard, the trustee for Bernard L. Madoff Investment Services LLC, who is seeking funds for victims of Madoff s alleged $65 billion Ponzi scheme.

Jaffe is a former vice president of Cohmad Securities Corp, which Madoff and his brother Peter partially owned.

The SEC and Picard sued Cohmad, its chairman Maurice Cohn, its chief operating officer Marcia Cohn, and Jaffe in June. The SEC said they aggressively marketed Madoff s services for many years, receiving $98.4 million of payments from 1996 to 2008, while concealing the scheme through false regulatory filings.

SEC spokesman John Nester declined to comment on the SEC filing, but said "we look forward to responding to the motion at the appropriate time." Kevin McCue, a spokesman for Picard, did not immediately return a request for comment.

The Cohns and Jaffe are trying to remove Picard s case from bankruptcy court and merge it with the SEC case, court filings show.

According to the SEC, Jaffe hid his involvement with Madoff by holding himself out to regulators as running Cohmad s Boston office. The regulator said that Madoff in fact paid Jaffe directly, and that Jaffe personally brought more than $1 billion into Madoff s investment advisory business.

Jaffe wants the SEC to dismiss counts that include alleged violations of federal anti-fraud laws, including allegations that Jaffe was involved with improper securities transactions and breached duties to customers.

"The complaint is an unfair effort to tar Jaffe with conclusory allegations of fraud," Jaffe s lawyers said. "And it has failed to take account of the undisputed fact that Jaffe himself is a victim of Madoff s fraud, having lost millions of dollars of his own and his family s money."

Jaffe faces other SEC charges concerning compensation arrangements, inaccurate books and records, and other matters.

Madoff is serving a 150-year prison sentence in North Carolina. A Ponzi scheme is where money from later investors is used to pay off earlier ones.

The SEC case is SEC v Cohmad Securities Corp et al, U.S. District Court, Southern District of New York, No. 09-5680. Picard s case is Picard v. Cohmad Securities Corp, U.S. Bankruptcy Court, Southern District of New York (Manhattan), No. 09-1305. (Reporting by Jonathan Stempel; Editing by Carol Bishopric, Gary Hill)

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Publication:Times of Oman (Muscat, Oman)
Date:Aug 23, 2009
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