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A new lawsuit alleges that convicted Ponzi scheme mastermind Bernie Madoff used investor's money to support a cocaine laden and high charged sexual work atmosphere. The 264 page lawsuit also claims the disgraced swindler upon believing federal authorities were on to him, diverted funds to his London office and began spending vast amounts.

The suit was initiated by former investors and seeks unspecified punitive damages and compensation. However, aside from the legal posturing of disgruntled investors it gives a public account of the work environment Madoff and his team flourished in while bilking clients out of billions.

The allegations say that during the mid-1970's Madoff started sending his own employees to buy drugs for company use. He reportedly kept two people since 1975 on payroll just to run drugs. The cocaine use was so rampant and prevalent that many financial insiders and employees dubbed the firm BMIS (Bernard Madoff Investment Services) as the "North Pole." In addition to the drug use, office parties featured topless women wearing nothing but g-strings, masseuses and sex in the office was commonplace.

Some of the more salacious quotes from the suit include the following:

-- "A culture of sexual deviance existed in the office" with employees having "late night affairs in exciting places - such as their boss' sofa - with whomever they could find."

-- "Employees described it as a wild, fast-talking, drug-using office culture." And Madoff's "affinity for escorts, masseuses, and attractive female employees was well known in the office culture."

The suit was spearheaded by plaintiff Jay Wexler, a New York resident who lost hundreds of thousands of dollars in Madoff's multibillion-dollar Ponzi scam.

Published reports say attorneys Joseph Cochett and Nancy Fineman filed the complaint on Tuesday in New York's State Supreme Court. Their suit partly based on a four-hour long prison interview with Madoff in July was conducted on behalf of former investors. The suit also claims that major financial institutions, including KPMG, the Bank of New York and JP Morgan Chase, knew that Madoff was siphoning stolen funds from his New York office and transferring the money to his London office for personal purchases.

Lawyers in the complaint allege he used this money to buy extravagant items for himself, family, and friends. Some of the items Madoff purchased during his reign of freewheeling and stealing were lavish homes, jewelry, yachts and generally providing his friends and family an exorbitant lifestyle.

The lawsuit claims there is "substantial evidence that KPMG either knew or failed to disclose or failed to detect" the massive Ponzi scheme. The suit goes on to name numerous people for being complicit or grossly negligent in their duties. One such person is KPGM London employee David Yim.

"Either Yim knew or was willfully blind to the blatant fraud occurring. Yim was in constant contact with Madoff and his phone number was in Madoff's directory of key contact information," the suit alleges. Others named in the suit include Madoff's two sons, brother and various business associates.

10/22/09 - Ayinde O. Chase - AHN Editor - New York, NY (AHN)

http://www.allheadlinenews.com/articles ... nvironment

Bernie Madoff, cocaine kingpin?

New additions to a lawsuit against the jailed Ponzi schemer charge that he presided over an office so fueled by the drug that it was known as the "North Pole."

The suit, filed Tuesday night in Manhattan Supreme Court, alleges that Madoff, as far back as 1975, used two street toughs on his payroll to set up a cocaine pipeline into the offices of Madoff Securities.

It portrays the firm's headquarters as an animal house with "a culture of sexual deviance" that often hosted drug-fueled parties featuring topless waitresses who wore little more than G-strings.

The suit also points out that Madoff now spends his days in the company of other noted jailbirds, including former Colombo crime family boss Carmine Persico and Naval intelligence anaylyst-turned-spy Jonathan Pollard.

He's also surrounded by plenty of lesser-known crooks, the suit notes.

"Most of his fellow inmates are in prison for drug crimes or sex crimes and Madoff will spend the rest of his life in prison with them," the suit says.

It also casts Madoff as a frequent patron of escort services and massage parlors who kept a list of his preferred female masseuses in his personal phone book.

"Madoff's affinity for escorts, masseuses and attractive female employees was well known in the office culture," the suit says.

A "significant" chunk of the money stolen from Madoff investors, the suit claims, bankrolled lavish indulgences that included hookers, drugs and strippers and covered expenses for his family, employees and favorite feeders.

It also reveals that Madoff shares a cell with a 21-year-old doing time for drug offenses and eats pizza prepared by a convicted child molester.

In addition to Madoff, the suit, which was originally filed in June, adds a host of new corporate defendants, including JPMorgan Chase, KPMG, the Bank of New York, Oppenheimer Holdings and Massachusetts Mutual Life Insurance.

Lawyer Joseph Cotchett, who filed the suit, met with Madoff last summer shortly after he arrived at a federal prison in North Carolina.

http://www.nydailynews.com/money/2009/1 ... _bars.html