Phyllis Molchatsky, a 61-year-old retiree of Valley Cottage, New York, who lost almost $2 million investing with Bernard Madoff, filed an administrative claim for relief against the U.S. Securities and Exchange Commission alleging negligence in failing to detect fraud, the Wall Street Journal reported.
The investor, who filed her claim yesterday, seeks damages of $1.7 million from the SEC, the newspaper said, adding that the agency declined to comment. Molchatsky's lawyer, former SEC enforcement lawyer Howard Elisofon of Greenberg Traurig in New York, claims the SEC failed in its regulatory duties to protect the public interest.
The Journal reported Molchatsky invested $2 million in 2001 with American Masters Broad Market Fund LP, which relied on Madoff. She received a statement in October saying her account was valued at $3.8 million, the Journal reported.
Investigators probing the investment scandal surrounding Bernard Madoff have issued a subpoena to David Friehling, an accountant who audited financial statements from Madoff's firm, the Wall Street Journal reported, citing an unidentified person familiar with the matter.
Investigators want documents tied to Madoff's firm that date back to January 2000, the newspaper said.
Meanwhile, Friehling's firm has a for rent notice on the door, according to the firm's landlord.
Friehling & Horowitz, which operated out of a 550-square foot office space in New City, New York, a northern suburb, wrote that its audit of Madoff's financial statements provided reasonable assurance they were free of material misstatement, according to the fiscal 2007 audit.
It's a little obvious his life is in turmoil, Joshua Chesir, said of David Friehling, 49, the accountant running the firm. There's a for-rent sign on the door right now.
Chesir, a medical doctor, operates his pediatric practice out of the office next door to Friehling & Horowitz. He owns both his own and Friehling's space in the condominium office park.
The auditing firm is under investigation by the district attorney in New York's Rockland County. Federal prosecutors and regulators are also investigating his ties to Madoff. Neither Friehling nor Jerome Horowitz, 80, who is retired and living in Florida, has been charged with any crime. Neil Friedman, of Palm City, Florida, a long-time investor whose $4.5 million account disappeared in the alleged fraud, said last week that he had learned of Madoff through Horowitz, a friend for almost half a century.
Friedman said Horowitz is Friehling's father-in-law. He said Horowitz had been an outside accountant for Madoff for decades, and he believed Horowitz lost his life savings as well.
Attorney Andrew Lankler, who represents Friehling, declined comment on Friehling or the status of his office.
If Horowitz did indeed lose money with Madoff, he isn't the only accountant to do so, according to attorney Robert Anello, who represents Sosnik Bell, an accounting firm based in Fort Lee, New Jersey.
Scott Sosnik and Larry Bell, the principals of Sosnik Bell, held large personal investments with Madoff's firm and thus share in the loss, Anello said.
Sosnik Bell handled paperwork for hundreds of Madoff's investors, Anello said. They summarized the information from monthly statements for individuals and weren't an agent of Madoff's, he said in a telephone interview.
