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Paris prosecutor to investigate Madoff's France businesses for fraud

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] The Paris prosecutor's office on Tuesday announced that it has opened an investigation into the French business operations of US financier Bernard Madoff, following accusations of abuse of confidence and fraud. The inquiry was sparked by a French citizen's suit against the Swiss firm UBS for fraud and betrayal of trust, after the firm invested and lost her savings in the Luxembourg fund LuxAlpha. On Wednesday, the Association of the Luxembourg Fund Industry announced that sixteen Luxembourg-based funds connected to Madoff, including LuxAlpha, have stopped investor redemptions. Dozens of French citizens are expected to join the LuxAlpha suit or file similar actions, with total damages incurred by French investors in Madoff-connected funds estimated at 500 million euros. The prosecutor's office has discretion to dismiss the case, bring charges, or open a judicial inquiry. Earlier this month, the UK Serious Fraud Office (SFO) announced an investigation into Madoff's UK business operations to determine whether any criminal offenses have been committed in the country. Madoff was charged last month in the US with securities fraud after he allegedly told two employees that his investment advisory business was "basically, a giant Ponzi scheme." In the week following Madoff's charges, US Securities and Exchange Commission (SEC) Chairman Christopher Cox said that he would launch an immediate investigation into how the fraud allegedly perpetrated by Madoff went undetected for so long. During confirmation hearings last week, SEC Chairman-Designate Mary Schapiro expressed her commitment to reinvigorate enforcement at the SEC, and Attorney General nominee Eric Holder confirmed his commitment to investigate and prosecute financial fraud.

Full post as published by JURIST - The Paper Chase on January 21, 2009 (boomark / email).