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Bernard Madoff cultivated ties to the Washington establishment

By Carol Eisenberg

December 16, 2008 at 10:01am

The Wall Street trader who engineered what may be the largest scheme in history to defraud investors, including the world’s biggest banks and the rich and famous, spent nearly $1 million to lobby lawmakers and members of the Securities and Exchange Commission.

At one point, Bernard Madoff even advised the SEC on ways to protect investors from scam artists, former SEC chairman Arthur Levitt told the Associated Press.

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Levitt said he had appointed Madoff to a committee set up in 2000 to devise new stock market rules in response to the growth of electronic trading. As a former chairman of the NASDAQ Stock Market, Madoff was a well-regarded player.

“You can see where people would pull the shades down over their eyes in terms of recognizing what could be one of the great frauds of our time,” Levitt said in a Bloomberg Television interview. “I’ve known him for nearly 35 years, and I’m absolutely astonished.”

In fact, the 70-year-old trader, who was arrested Thursday in what prosecutors say was a $50-billion Ponzi scheme, spent years cultivating ties with the regulatory establishment, as well as with key lawmakers.

At an SEC hearing in 2004, Madoff joked with then-SEC Chairman William Donaldson about his profits and teased that he wasn’t inclined to provide any advice that might help his business rivals. He agreed, finally, to “take off our selfish hats here and speak for the public good,” and commissioners guffawed.

Yet throughout that period, financial analysts were raising concerns about Madoff’s practices, including one letter to the SEC as early as 1999 that accused him of running a Ponzi scheme, but the agency did not conduct even a routine examination of the investment business until last week, the Washington Post reported.

Madoff and his employees have given $372,100 in campaign contributions since 1991, with 89 percent to Democrats, according to the nonpartisan Center for Responsive Politics.

The firm also spent $590,000 on lobbying in the last 11 years, according to the watchdog group - all but $10,000 of it with the lobbying firm of Lent, Scrivner & Roth, which is led by former Congressman Norman Lent.

In total, he and his wife, Ruth, gave $238,200 to federal candidates, parties and committees since 1991, including:
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