Madoff Update: Due Diligence Firm Saw Red Flags, Recommended Against Investing With Firm

At least some potential investors in Madoff Investments were not impressed with the firm after conducting due diligence.  Among other things raising red flags, Bloomberg reports, Madoff’s auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York:

Jim Vos, who runs due diligence firm Aksia LLC, said he spent several months probing Madoff’s firm on behalf of clients, only to recommend against investing in it. Vos said eight “feeder funds” invested about $15 billion with Madoff. Vos declined to name the clients.

Among the red flags, Vos said: Madoff’s auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York. Vos had an investigator stake out the office. A call to the New City, New York, office of Friehling & Horowitz after business hours wasn’t returned.

Vos told Bloomberg he was “shocked by how investors turned a blind eye to returns that were too good to be true, constant steady small positive monthly returns.  When something is too good to be true, it probably is.”

Read the Bloomberg article