WASHINGTON — An investigator at the Securities and Exchange Commission warned superiors as far back as 2004 about irregularities at Bernard Madoff’s financial-management firm, but she was told to focus on an unrelated matter, according to agency documents and sources familiar with the investigation.
Genevievette Walker-Lightfoot, a lawyer in the SEC’s Office of Compliance Inspections and Examinations, sent e-mails to a supervisor, saying information provided by Madoff during her review didn’t add up and suggesting a set of questions to ask his firm, documents show.
Several of these questions directly challenged Madoff activities that much later turned out to be elements of his massive fraud.
But with the agency under pressure to look for wrongdoing in the mutual- fund industry, she wasn’t able to continue pursuing Madoff, according to documents and two people familiar with the investigation, and her team soon concluded its work on the probe.
Walker-Lightfoot’s supervisors on the case were Mark Donohue, then a branch chief in her department, and his boss, Eric Swanson, an assistant director of the department, said two people familiar with the investigation.
Swanson later married Madoff’s niece, and their relationship is now under review by the agency’s inspector general, who is examining the SEC’s handling of the Madoff case.
Madoff confessed in December to running “a giant Ponzi scheme” worth potentially $50 billion, and he was sentenced Monday to 150 years in prison after victims told a judge about how Madoff had destroyed their lives.
Authorities are continuing to investigate other people and firms that might have abetted the fraud.
