From Barings to Madoff: lessons (to be) learned

Regulations are no match for human failings. As lawyers, financial investigators and chastened investors continue to pick through the rubble of the Madoff scandal and other massive frauds, new, more inventive versions of the same old story are being written.

Richard Abbey may be contacted on +44 (0) 207 029 5000, rabbey@kroll.com

On 16 December 2008, shortly after Bernie Madoff’s arrest, a team of FBI investigators sealed off the crime scene at Bernard L Madoff Investment Securities LLC in midtown Manhattan, and started to sift through the evidence. Former FBI Special Agent Keith Kelly, who joined Kroll, the global risk consultancy, earlier this year in its financial investigations unit in New York, led the FBI criminal investigation. For months, he and his fellow sleuths combed through 13,000 boxes of records in Madoff ’s New York and London offices, revealing details of the scheme that bilked investors of an estimated US$18bn. While still ongoing, the criminal investigation has led to five arrests, three guilty pleas and nearly US$8 billion recovered in forfeitures, helping to ease the pain caused by a massive scam that, for over 20 years, had fooled almost everyone.