Madoff London Employees Said to Avoid Facing U.K. Fraud Charges

Dec. 1 (Bloomberg) -- U.K. prosecutors are unlikely to charge former Madoff Securities International Ltd. Chief Executive Officer Stephen Raven or any London employees of Bernard Madoff, people familiar with the matter said.

The Serious Fraud Office, which has said it will decide by the end of this month whether to prosecute anyone relating to the Madoff fraud, is scrutinizing several funds that invested money with the convicted con artist, one of the people said. The U.K. won’t prosecute anyone at Madoff’s London operations because the SFO doesn’t have enough evidence to prove that any employee knew of his scheme, the person said. The Wall Street Journal previously reported the U.K. is unlikely to prosecute.

Madoff pleaded guilty in March to using money from new investors to pay off old ones in a Ponzi scheme, sparking investigations and dozens of investor lawsuits in the U.S. and Europe. Investors lost more than $13 billion in Madoff’s fraud, U.S. prosecutors have said in court.

The SFO is probing whether anyone at London-based FIM Advisers LLP or 20.20 Medici AG Chairman Sonja Kohn knew of Madoff’s scheme when sending money to him, according to the people. FIM Advisers, run by Carlo Grosso and Federico Ceretti, managed Kingate Global Fund Ltd., which invested $2.8 billion with Madoff. A call and e-mail to FIM seeking comment weren’t returned.

Kohn is being investigated in connection with Madoff in the U.S., U.K. and Austria, said a lawyer for 20.20 Medici, Andreas Theiss, earlier this year. 20.20 Medici, which changed its name from Bank Medici, managed and distributed three funds that entrusted $3.2 billion with Madoff. Kohn didn’t receive any personal payments from Madoff and didn’t know what transactions were being carried out, Theiss said in July. Kohn’s lawyer, Wolfgang Brandstetter, declined to comment when reached today.

‘Appearance’

The SFO could face jurisdictional issues if it attempts to bring charges against Kohn in the U.K., the person said.

SFO spokesman Sam Jaffa declined to comment. Raven’s lawyer, Peter Binning, didn’t immediately respond to a request for comment.

Madoff is accused by U.S. prosecutors of sending more than $250 million between 2002 and 2008 to the U.K. unit in London’s Mayfair district from New York-based Bernard L. Madoff Investment Securities LLC, and then back to U.S. accounts.

He did this “to give the appearance that he was conducting securities transactions on behalf of the investors, when, in fact, he was not,” according to the indictment.

Madoff Securities International Ltd. in London was owned almost exclusively by Madoff and served as his proprietary trading unit, Irving Picard, who was appointed by the Securities Investor Protection Corp. to unwind Madoff’s businesses, said in a Feb. 19 filing with a London court.

Guilty Pleas

New York-based Madoff Securities and Madoff International “may well be inextricably intermingled,” Picard said.

Madoff International had a staff of 25, including traders, managers and support workers, according to Picard.

Four others have been charged in the U.S. over Madoff’s scheme. Frank DiPascali, the former chief financial officer in Madoff’s firm, pleaded guilty to 10 felony counts in August. David Friehling, Madoff’s accountant, pleaded guilty in November to securities fraud, investment-adviser fraud and helping to prepare false tax returns. Prosecutors last month arrested and charged Jerome O’Hara and George Perez, computer programmers who worked in Madoff’s Manhattan offices, for their roles.

A French judge last month filed the first charges in France against Patrick Littaye, the co-founder of mutual fund company Access International Advisors LLC.

To contact the reporter for this story: Lindsay Fortado in London at lfortado@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.