Man who blew Madoff whistle meets SFO

The man who exposed the massive Ponzi scheme fears 'political' issues are blocking justice in London

Harry Markopolos, the whistleblower credited with unearthing the $60bn Bernie Madoff hedge fund fraud in the US, met with officials at the Serious Fraud Office in London last week to discuss the involvement of British feeder funds in the scandal.

Mr Markopolos, who was in London to promote his new book on the hedge fund investigation, No One Would Listen, also met officials at the SFO, including Polly Springer, who is in the investigations team.

The SFO was forced into an embarrassing climbdown in February after it abandoned attempts to bring prosecutions against directors of Madoff's Mayfair-based operation, Madoff Securities International. Stephen Raven, the man who ran the fraudster's London business, consistently distanced himself and his 30-strong team from the New York operation.

The SFO cited insufficient evidence, although it left the door open to prosecutions against those involved in "wider aspects" of the Madoff collapse. It's believed attention is now focusing on those who marketed and sold so-called feeder funds which channelled investments directly to the fraudster's business.

A source close to the SFO said: "There is still mileage in this. The marketing of the feeders is a scandal and those responsible shouldn't think they've got off scott free."

An SFO spokeswoman did not return calls and Mr Markopolos declined to comment on the meeting.

Mr Markopolos, who has been linked with a host of top jobs at the US Securities and Exchange Commission since helping to unmask Madoff, said that the role of European feeder funds in the hedge fund collapse needed thorough investigation. "There needs to be a proper investigation into the feeders, absolutely," he said at the Association of Certified Fraud Examiners' conference in London. "London played a key role in Madoff. You just have to look at some of the marketing literature used by these funds to see something wasn't right."

But the likelihood of any successful investigation in London and Europe was slim, he said. "The European authorities aren't investigating this as they should be because it's politically too explosive," he said. "Too many influential figures would end up being done for tax evasion. It seems that the rich certainly get a better level of justice than the poor over here."

Mr Markopolos said that while he was flattered by suggestions he could be brought into the SEC's crime fighting unit, he had not been approached. He added that the Madoff investigation still had a long way to go: "If the investigation were a nine-inning baseball game we would be at the bottom of the second at the moment."

Mr Markopolos said it was likely Madoff will be offered an early release from jail in exchange for greater co-operation with investigators. "So far, he has said nothing so the authorities will need to give him an incentive to say something, which could be an early release from prison, before he dies," he said.