June 30, 2009

RELL SIGNS 'MADOFF BILL' INTO LAW

By Angela Carter, Register Staff

HARTFORD — Gov. M. Jodi Rell gave a copy of a new state law that protects investors from fraud to a nonprofit agency Monday, the same day the inspiration for the legislation, Bernard Madoff, was handed a 150-year prison term.

Madoff was a wealth manager based out of New York who will serve time for a multibillion dollar fraud scheme that wiped out thousands of investors. By extension, the Center for Children's Advocacy in Hartford lost out on an $85,000 grant from the JEHT Foundation in New York, which had invested assets with Madoff.

"The foundation had to close its doors," said state Rep. Patricia Dillon, D-New Haven, who introduced House Bill 6339, An Act Concerning the Forfeiture of Property Obtained by Securities Fraud.

Rell signed the law at the center, which promotes and protects the legal rights and interests of poor children and is affiliated with the University of Connecticut School of Law.

"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," Rell said. "White collar criminals are as slick as the schemes they peddle and will be dealt with severely in the state of Connecticut."

The legislation expands the state's organized crime statute, the Corrupt Organizations and Racketeering Act. It allows the state to seize assets from anyone found guilty of investment securities fraud. If the defendant transfers property to avoid forfeiture, then the court can set aside the transfer.

Dillon said the bill received bipartisan support in the General Assembly and provides state-level protection for investors. The U.S. Securities Exchange Commission has been criticized for not heeding warnings about Madoff's scheme.

"We can't rely on the federal government for everything. States have to be more vigilant in protecting our own people," Dillon said.

There also is a provision for the state Department of Banking to collaborate with other departments to study the establishment of a restitution fund for victims and report to the General Assembly by March 31, 2010. The law takes effect Oct. 1.