Moammar Gadhafi Turned Down Bernie Madoff, Allen Stanford
Cable: Libya turned down offers to invest with accused con men.
Feb. 23, 2011 -- As hundreds of leaked U.S. diplomatic cables have shown, Libya's Gadhafi regime is linked in curious ways to some surprising figures -- from A-list American celebrities to shady former-Soviet arms manufacturers -- but there is one association Gadhafi is likely happy he never made: investment partners with convicted con man Bernie Madoff and alleged fellow Ponzi schemer Allen Stanford.
The head of Libya's Investment Authority, Mohamed Layas, told U.S. officials in a meeting in January 2010 that the LIA had been approached separately by both Madoff and Stanford about potential investments in the past, but had declined both men, according to a document posted on the website Wikileaks.
Madoff and Stanford were arrested for allegedly orchestrating investment fraud on a grand scale. Stanford, who is currently in jail and awaiting trial, approached the LIA "in the middle of his crisis" and offered a 7 to 8 percent share in his scheme, Layas told the U.S. ambassador to Libya according to the cable.
The billionaire was indicted in 2009 for allegedly bilking his investors out of $8 billion in a Ponzi scheme. In an interview with ABC News in the months before his arrest, Stanford said the accusation was "baloney."
CLICK HERE to watch a Brian Ross exclusive interview with Stanford before his arrest.
Madoff also approached the LIA with a deal, but Layas said, "We did not accept."
Also in 2009, Madoff was convicted and sentenced to 150 years in prison for the nearly $70 billion fraud scam, the largest in Wall Street history.
CLICK HERE for ABC News full coverage of the Madoff Ponzi Scheme and HERE to find out more about the book "The Madoff Chronicles".
In yet another connection to troubled American financial institutions, Layas said the LIA was at the time entangled in a legal battle with Lehman Brothers "due to a major investment that was 'mismanaged,'" the cable said.
Report: Military Out to Destroy Libyan Oil Facilities
Despite not raking in Madoff's "too good too be true" returns, the Gadhafi regime was apparently not hurting for cash the past few years. The nearly $1 million the U.S. gives in aid annually to help dismantle the Libyan nuclear program couldn't cover the cost of just one of the New Years parties one of Gadhafi's sons threw in 2010, according to other leaked documents.
The country is heavily dependent on its oil production, accounting for 25 percent of its total estimated $62 billion gross domestic product, according to the CIA World Factbook and World Bank calculations.
The oil money is so imbued with the country that on Sunday, when Gadhafi's son Saif al-Islam addressed the people in an effort to quell the uprising, the said that oil "has united the whole of Libya."
During the January meeting, Layas said the Investment Authority, which is described in the cable as Libya's sovereign wealth fund, had $32 billion in liquidity. The fund is also using American banks to manage between $300 million and $500 million, the cable said.
But with Gadhafi's future as leader of Libya in question and initial news reports claiming that a faction of the Libyan military is out to destroy the oil production facilities, it is unclear what will happen with the oil money -- the lifeblood of the Libyan economy.