Mets Owner Among Hedge Fund Fraud Victims

The news of Bernard Madoff's alleged $50 billion Ponzi scheme sent shock waves down Wall Street this morning, but it seems enough 'red flags' had been raised by at least one due diligence firm to steer some hedge fund managers, high net worth individuals, and institutional investors away. Yet it was also revealed today that even the owner of the Mets baseball team is among his victims.

The powerful New York financial advisor whose handful of clients routinely expected -- and received -- double digit returns, up market or down, may have instead been running a decades-long scheme that defrauded investors of $50 billion, according to a one-count criminal complaint unsealed Thursday in federal court in New York. Madoff, 70, a former chairman of NASDAQ, was an investment adviser who catered to a handful of high net worth clients, one of whom told ABC News that Madoff was so sought after that, as recently as two months ago, he was turning down potential new business.

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Employees of the firm are now packing up their belongings and some have lost their life savings. But the research firm Aksia which also provides advice to pensions, endowments, foundations and insurance companies, says they were already steering clients away from Madoff's hedge fund based on a "host of red flags."

According to the letter to its clients, Aksia "published extensive reports on several of the 'feeder funds' which allocated their capital to Madoff Securities ... Our judgment was swift, given the extensive list of red flags."

Aksia said in its letter that when the firm checked the auditor of Madoff's fund they found the operation was quite small, given the amount of money being handled.

The accounting firm, says Aksia, had just three employees, "of which one was 78 years old and living in Florida, one was a secretary, and one was an active 47-year-old accountant (and the office in Rockland County, N.Y., was only 13 ft x 18 ft large)."

Click here to read Aksia's letter to its clients.

In addition to Aksia, today news began to swirl around the case that raised questions as to whether the Securities and Exchange Commission had responded appropriately to other red flags raised earlier by investors.