SFO drops Madoff UK case over lack of evidence

The Serious Fraud Office (SFO) says it has insufficient evidence to press charges against Bernie Madoff's London-based company or its directors.

It says it would be unable to obtain a realistic prospect of conviction against Madoff Securities International Ltd.

This is despite the London unit, which was officially placed into liquidation in January, being owned almost exclusively by Bernie Madoff himself. It functioned as his proprietary trading unit and his personal piggy bank, according to investigators.

It listed assets of $500m and debt of more than $1bn, when it filed for bankruptcy in Florida last year.

In its charges against Madoff, the US government claimed he used the UK arm to launder client money by transferring it from the investment-advisory business in New York to London and back to the US.

Investigators believe the transatlantic money route was to create the illusion of legitimacy, with money flowing into the US giving the impression London was a profit centre.

In 2008 alone, £698m was transferred to the UK business' principal bank account from Madoff's US trading operations. In the same year, £1.1bn was transferred back to the US trading arm.

Although the UK operation, unlike its US counterpart, did conduct some legitimate business, trading shares of large-capitalization stocks and currency, it was not particularly profitable. In 2007, for instance, the UK business reported a trading profit of only £7.6m.

Madoff, 71, was sentenced in June to 150 years in prison for running a 20-year Ponzi scheme.

KPMG, which audited Madoff's accounts, is among the parties being sued by investors who lost money in the fraud.