Lawsuit: Madoff's New Friends Include Druggie, Child Molester

Oct. 21, 2009 — -- Convicted con man Bernard Madoff, who slept on luxury linens and dined at the finest restaurants, is now sleeping in the lower bunk of a two man cell in a federal prison, with a 21-year-old convicted drug dealer for a roommate and a child molester cooking his pizza, according to a new victims' lawsuit filed by the lone outsider to visit him behind bars.

San Francisco attorney Joe Cotchett says the former billionaire now spends time with former Colombo crime family boss Carmine Persico and convicted Israeli spy Jonathan Pollard, amid a gang of fellow inmates in prison for drug and sex crimes.

Click here to go behind the scenes of Brian Ross' investigation into Bernie and Ruth Madoff.

Madoff should feel comfortable among the former drug dealers given his long association with office messengers who provided him and his wife Ruth with large amounts of marijuana over the years, according to accounts by former employee in a new book by ABC's Brian Ross, "The Madoff Chronicles."

As the former Madoff staffers told Ross, Bernie liked to let off steam.

"Especially in the early days, a messenger known in the office as Little Rick would be dispatched to Harlem to bring back marijuana for Bernie and others in the office."

"Little Rick ended up losing his job in 2003 when he couldn't kick his own problem with cocaine and drugs were discovered in his desk. He says he wasn't the only one with a problem at the Madoff firm. "There was white powder all over that office. It was like the freaking North Pole," Little Rick said. "Are you freaking kidding me?"

And as the firm grew, as reported by Ross in the "Chronicles," Bernie liked wild times at office parties.

"At one Christmas Party, Bernie rented out the entire floor of the disco New York, New York, and there were topless waitresses and waiters in just g-strings," said Little Rick.

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The lawsuit also brings new accusations against KPMG, a prestigious "Big 4" accounting firm, responsible for so-called independent audits of a several of the largest of Madoff's U.S. "feeder funds," as well as Madoff's London office.

The lawsuit alleges there is "substantial evidence that KPMG either knew or failed to disclose or failed to detect" the massive Ponzi scheme.

And in particular, the suit questions the role of David Yim, a director in KPMG's London office, whose cell phone number was found in Madoff's personal address book and who was one of the auditors assigned to Madoff's London operation, according to the lawsuit.

"Either Yim knew or was willfully blind to the blatant fraud occurring. Yim was in constant contact with Madoff and his phone number was in Madoff's directory of key contact information."

Following Madoff's arrest, investigators learned he had used the London office as a front to cover up the fact that he was not buying or selling stocks on behalf of his clients. Madoff claimed all the trades were going through the London office.

KPMG's london office denied any wrongdoing. A spokesperson said, "We are not aware of any suggestion that the financial statements of MSIL contain errors."

The KPMG employee cited in the lawsuit, Yim, told ABC News he had no personal relationship with Madoff.

Asked why his name was in Madoff's personal phone book, Yim said, "You'll have to ask Bernie why my cell phone is in his personal diary. Sorry, I can't make any more comments."

Click here for complete Blotter coverage of Madoff and his Ponzi scheme.

Previous lawsuits have also attempted to draw KPMG into the case. Victims' lawyers hope they can prove KPMG bares some of the blame for the massive losses so they can tap into the firm's huge net worth.

Lawyers for victims of the Enron collapse used the same strategy against Arthur Anderson leading to the collapse of the huge firm.

In addition to Yim and KPMG, the suit also accuses various Madoff business associates and family members, including Bernie's sons Andrew, Mark and his brother Peter of knowing about the fraud because of all the "red flags surrounding them on a daily basis." So far, no criminal charges have been filed against Madoff's sons or brother, whose attorneys maintain they were not involved in Madoff's scheme.

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