By Lucy Komisar
March 17, 2009
There’s a mysterious “Bank Madoff, New York” that U.S. authorities don’t appear to know about.
International securities clearing houses move trillions of dollars a year for banks and brokerages and are a natural way for crooks to launder and hide ill-gotten gains. So it would be natural for investigators to check the paper trails of Madoff accounts in CSDs (central securities depositories) around the world.
They already know about the one listed in the name of “Bernard L. Madoff Investment Securities LLC New York, US broker/dealer.”
But they don’t seem to know about “Bank Madoff, New York.” It appears on a list published by Clearstream, the international clearing and settlement house in Luxembourg. That “bank” has not been publicly mentioned by investigators.
(See the listing on its full page.)
There is no Bank Madoff, New York, listed by the Federal Reserve Board, which compiles information about all American banks. But Clearstream spokesman Bruno Rossignol confirms that Bank Madoff, New York, with the number 7 62619, appears, as indicated above, on its 2004 list of 38,000 banks and securities firms.
Rossignol said, “Neither Bernard Madoff nor his firms were customers of Clearstream.” He explained that the account, published by Clearstream’s Frankfurt office, compiled the names and numbers of international clearing partners and that the Madoff listing “was requested by Euroclear in 1997.” Euroclear, in Brussels, is the other international clearing and settlement house.
“These are references given to Clearstream Bank in Frankfurt by other central securities depositories to provide Clearstream customers with the latest information they need regarding their counterparties,” said Rossignol. “So our customers know when they have to settle a trade to which number they should allocate their order.”
The list was posted on the internet by Wikileaks, a website that specializes in making secret documents public.
However, Euroclear says that Bank Madoff was not its client. Spokesman Denis Peters said, “We’ve had no transactions with that entity, and none of the Madoffs had or have an account with Euroclear.”
He explained, “We checked what we know and we can’t determine any entity with that name with that jurisdiction. What may have happened is that information on a CSD (central securities depository) opening an account for a company named Bank Madoff was communicated to us and we would have communicated to other CSDs.”
He said the number on the account is not a typical Eurclear number. He said, “We’re guessing it’s a code that the CSD that opened the account in the name of Bank Madoff used to identify it.” He explained that CSDs wouldn’t disclose account numbers to other providers, unless there was a transaction that needed to take place. Curiously, on the Clearstream page, it appears in sequence related to the numbers of accounts just before and after.
Peters emphasized, “We would have received information from someplace else and passed it to any other CDS with which we do business. This was done in 1997, and we don’t have any trace of that at this stage.”
Clearstream does have listings for other Madoff entities. Bernard L. Madoff Investment Securities LLC New York, with the number 11 00646, is on the same 2004 list. That is the Madoff broker/dealer. Rossignol indicates that it is another “counterparty,” not a Clearstream account. But it’s number on the Clearstream page 646 is both in sequence, relating to the accounts listed before and after, and also the same number given to it by the U.S. CSD, the Depository Trust Company, discussed below.
See full page.
Oddly, out of more than 33,000 accounts, including 2,176 from the U.S., there are only five with “DTC” prefixes, and the four others are all DTC/DTCC company accounts.
A company called Bernard L. Madoff New York, ID 726, Acct No DTC646, created Feb 11, 1999, is listed on a 2001 Clearstream roster of 33,381 accounts. The DTC preface indicates that this is a mirror of the broker/dealer account and is listed with the Depository Trust Company, the U.S. clearing and settlement house. It should logically be the same as the “Bernard L. Madoff Investment Securities” company. The DTC confirmed that.
A third Madoff company is Madoff Securities International Limited, 12 Berkeley Street, London. Peters said that the company opened relationships with LCH.Clearnet (a European central counterparty group) and Euroclear, but, “The Madoff entity never activated its account and therefore was forever dormant.”
There’s also a curious anomaly in the Federal Reserve Board’s listing of U.S. Madoff companies. Its website serves up Bernard L. Madoff Investment Securities (#3854790) and Bernard Madoff, securities broker/dealer (#2385671). The DTC says the first company is the broker/dealer. Then, what is the second? Fed spokesperson David Skidmore said he didn’t know.
He said, “Some entries are for non-bank institutions that are not regulated by one of the banking agencies that participate in the database. Thus, we don’t have further information. So, why are they even in the database? Because in those cases the entries were created because the non-bank entities were participants in a syndicated loan with a regulated bank or thrift.”
“So it is possible,” he said, “– we can’t say for sure at this time — that the two Madoff entities are separate entities, and it is possible that they are the same entity.” He explained that two banking agencies might have created duplicate entries with different names.
Meanwhile, Bank Madoff, New York, remains a mystery. The spokesmen for Clearstream and Euroclear said they had not been contacted about the Wikileaks posting by U.S. investigators.