Were Banks 'Complicit' in Madoff Fraud? Madoff Says So

In first prison interview, Madoff tells the New York Times that banks and hedge funds displayed "willful blindness"

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We've heard nothing from Bernard Madoff since he was convicted of orchestrating a $65 billion Ponzi scheme and sentenced to 150 years behind bars, though fellow inmates have painted a picture of the prison-era Madoff as a kind of unrepentant criminal celebrity.

But Madoff is mum no longer. The New York Times' Diana B. Henriques has just published the first interview with Madoff since his arrest in December 2008. He looked "noticeably thinner and rumpled in khaki prison garb" and "seemed frail and a bit agitated," Henriques notes, but still speaks "with great intensity and fluency about his dealings." Here are some of the biggest revelations from the interview:

Banks 'Had to Know' of Fraud

Madoff--who long maintained that he acted alone--suggested for the first time that unnamed banks and hedge funds were "complicit" in his Ponzi scheme by demonstrating a "willful blindness" when it came to his regulatory filings and suspicions about his financial results.

"They had to know. But the attitude was sort of, 'If you're doing something wrong, we don't want to know,'" Madoff said. Henriques adds that "while he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors."

Madoff's statements are particularly relevant at a time when Irving Picard, the trustee for Madoff's victims, has accused JPMorgan Chase of harboring serious concerns about Madoff's investment business but not notifying authorities or halting business with him. Yet, as Henriques notes, federal prosecutors have yet to accuse the major banks and hedge funds that dealt with Madoff "of knowingly investing in his Ponzi scheme."

Madoff Has Helped Trustee

Madoff claimed he's met with his victims' trustee, Irving Picard, and provided him with information about the banks and hedge funds he did business with, though he says he hasn't shared this information with federal prosecutors working on criminal cases.

Family Crisis Unforeseen

Madoff said he didn't foresee the extent of the suffering his fraud would inflict on his family. His relations are confronting a barrage of lawsuits and his son, Mark, committed suicide in December. Madoff called some of the press coverage of Mark's death "disgraceful" and stated that he didn't attend Mark's funeral because of prison regulations and because he didn't want to turn the funeral into a "media circus."

Mets Owner 'Knew Nothing'

Picard alleges that New York Mets Owner Fred Wilpon and his brother-in-law, Saul Katz, knew or should have known from their financial dealings with Madoff that he was defrauding investors, but Madoff vehemently denies this: "They knew nothing. They knew nothing," he asserted.

This article is from the archive of our partner The Wire.