Whistleblower Claims He Tipped 'WSJ' to Madoff Fraud, Paper Failed to Act

Paul Steiger's denial doesn't sound credible. The "does not recall" is the usual manner of avoiding the truth that he was informed. ---BBB

Former 'WSJ' Editor 'Highly Doubts' Madoff Tip Occurred
By Joe Strupp
Published: February 05, 2009 12:25 PM ET

Former Wall Street Journal Managing Editor Paul Steiger said he does not recall the tip a Journal reporter supposedly received about Bernie Madoff three years ago, and adds he "highly doubts" it happened.

"I don’t recall it and it would have come up to me," Steiger said a day after testimony from a congressional witness alleged the Journal had been contacted in late 2005 about Madoff's ponzi scheme. "This whistle-blower's assertion that we were afraid of Madoff is just preposterous, it is silly."

That whistle-blower is Harry Markopolos, a fraud investigator who testified at a House hearing on the Madoff scandal and other SEC issues Wednesday. He claims in testimony that he approached Journal reporter John Wilke in December 2005 with a tip on Madoff, and produced emails showing that Wilke wanted to pursue the story. But Markopolos claims that Wilke could not get approval from higher-ups.

Wilke did not respond to a request for comment, but Steiger -- who served as Journal managing editor from 1991 to 2007 -- said it likely never occurred. He also said anyone who would assert the Journal would be afraid to investigate anyone is wrong.

"Just look at the people the Journal has done tough stories on," Steiger recalled. "People that were much bigger than Madoff. We would have loved to have done the story."

He does say he wishes his former paper and others had picked up on the scandal earlier, even though there was little evidence to pursue in the past: "It would have been wonderful to do it. But for every real ponzi scheme, there are scores of possible ponzi schemes."

Steiger said he did not even recall Madoff as a potential target of investigation three years ago. "I don’t remember him at all, I may have met him, but I certainly don't remember him," he said. "My knowledge of him is what I am reading since the Madoff case became public."

"It is one of the more amazing stories," Steiger adds about Madoff. "This was clearly a story everyone missed -- the SEC missed it. It would have been great to cover it not three years ago, but 10 years ago."

But he defends the press that did not dig up the story earlier, stating, "when you have an entity that was not publicly traded, it is easier to fly below the radar. Perhaps there were signs that we and others could have picked up, but didn’t."

I heard about this. If this is true, then the SEC was asleep at the wheel. If so, breathtaking incompetence at the highest levels.