Governor Rell Signs Bill that Protects

Investors from Securities Fraud

Law Created in Wake of Madoff Ponzi Scheme

Listen to Governor Rell

            On the same day convicted financier Bernard Madoff was sentenced for masterminding one of the biggest financial scams in history, Governor M. Jodi Rell today signed a bill that targets money managers who defraud Connecticut investors and puts in place protections for victims by establishing the groundwork for a restitution fund. The law expands the state’s organized crime law to include securities fraud and ensures that those white collar criminals face significant jail time and steep penalties.

            “The investors and families who fell victim to Madoff’s Ponzi scheme had their lives turned upside down. He derailed their future by brazenly taking their hard-earned money and replacing it with nothing but lies,” Governor Rell said. “Victims of white-collar crime are robbed of their security. They are robbed of their future and they are robbed of their trust in others. This bill helps us protect them.”

            The bill was crafted in the wake of the high-profile federal prosecution of Madoff, who was convicted in a multi-billion Ponzi scheme. Some of his thousands of victims included private investors, businesses and non-profits in Connecticut as well as the town of Fairfield.

            House Bill 6339, An Act Concerning the Forfeiture of Property Obtained by Securities Fraud, expands the state’s organized crime law to include securities fraud. It allows the state to freeze the assets of anyone convicted of investment fraud. If a defendant transfers property to avoid forfeiture, the new law allows a court to set aside that transfer. Seized property can then transferred to an innocent party or converted to cash and given to a state agency for public use.

            The bill also requires the state Banking Commissioner – along with the Attorney General and Chief State’s Attorney – to conduct a study in order to establish a restitution fund for victims and report those findings to the General Assembly by March 31, 2010.

            “This law will help us prevent another Madoff-type scam from claiming more victims in Connecticut. What happened to the people who believed in Bernie Madoff should serve as a sobering warning that the criminal element exists everywhere,” Governor Rell said. “White collar criminals are as slick as the schemes they peddle and will be dealt with severely in the State of Connecticut.”