January 02, 2009 Madoff skeptic to appear at House meeting Ex-investment firm employee's suspicions triggered earlier inquiry
By IAN KATZ, Bloomberg News
WASHINGTON Harry Markopolos, a former investment firm employee who flagged suspicions about the $50 billion Ponzi scheme allegedly run by Bernard Madoff, will appear Monday at a congressional meeting on the scandal.
Along with Markopolos, Inspector General David Kotz and Stephen Harbeck, president of the Securities Investor Protection Corp., will speak to the House Financial Services Committee. The meeting will help the committee's work during the next session of Congress "in undertaking the most substantial rewrite of the laws governing the U.S. financial markets since the Great Depression," according to the committee.
Madoff, 70, was arrested Dec. 11 after allegedly telling his two sons and federal investigators that he had been using money from new investors to pay off old ones in what may be the biggest such swindle in history. Madoff's clients had about $37 billion with New York-based Bernard L. Madoff Investment Securities LLC, according to Bloomberg News data.
In 2007, the SEC closed an investigation of tips and press reports suggesting Madoff's investment returns were too good to be true. Markopolos helped trigger that inquiry by suggesting Madoff may be running a Ponzi scheme or front-running, in which traders buy shares for their account before filling customers' orders, a person with knowledge of the case said.
SEC Chairman Christopher Cox on Dec. 16 ordered an internal probe, to be led by Kotz, that will review "deeply troubling" revelations the agency failed to act for almost a decade on "credible and specific allegations" of wrongdoing by Madoff.
Monday's House meeting, to be held a day before the 111th Congress is sworn in, will be run by "returning members of the 110th Congress," said Abigail McDonough, a spokeswoman for committee member Paul Kanjorski. a Pennsylvania Democrat who leads a subcommittee that oversees capital markets.
