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Unfortunately, Markopolos said, his report was sent down to the SEC's New York branch chief Meaghan Cheung, whom he said "never grasped" the concepts "nor was the slightest bit interested in asking questions...
Markopolos, who said that he feared for the safety of his family's life prior to Madoff's arrest, read parts from his nearly 60-page written description of the SEC's "investigative ineptitude" and "financial illiteracy." At the start of his oral statement, Markopolos injected a bit of metaphorical humor into his charge, describing the SEC as a regulatory agency that "roars like a mouse and fights like a flea." With the sober, academic look of an accountant, the former investment manager for Rampart Investment Management in Boston (he is currently an independent certified fraud examiner) detailed Madoff...
...story that seemed part financial doctoral thesis and part financial thriller, Markopolos told of his years of toil on the Madoff case, with often "disastrous meetings" with SEC enforcement chiefs. It was in 2005 when Markopolos wrote his now famous and lengthy report detailing Madoff's giant Ponzi scheme and pointing out 29 red flags. He sent it to the SEC, and nothing happened. But when he finally met the SEC's Boston branch chief, Mike Garrity, who had a willingness to "think outside the box," he felt some hope...
Garrity, he said, understood Madoff's impossible returns, but the problem was location: Madoff was not in the New England region. Were jurisdiction not a problem, "he would have had an inspection team inside Madoff's operation the very next day," Markopolos said. Ed Manion, a 15-year SEC-certified financial analyst, also urged Markopolos to continue his investigation. Manion, he said, was the "only one who understood [Madoff's] threat to the public...
...that point, Markopolos decided to go to the press. He told the committee he went to a reporter at the Wall Street Journal, John Wilke, but the editors never approved an investigative piece, so things went back to the SEC's Cheung, and there it stopped. "It is a sickening thought," but if the SEC or the Wall Street Journal "would have picked up the phone and spent one hour contacting the leads" provided, Markopolos said, Madoff would have been stopped in 2006, and "untold billions" would have been saved...