Madoff probe focuses on feeder firms

By Joel Dimmock

LONDON (Reuters) - A British police probe into Bernard Madoff's ponzi scheme is shifting focus to the European firms that fed money to the New York-based fund, a person familiar with the investigation said on Tuesday.

The change in emphasis comes as Britain's Serious Fraud Office (SFO) has found it difficult to find evidence of any wrongdoing at the British arm of Madoff Securities.

The source said a series of investigations into the unit had not found sufficient evidence to justify further inquiry or prosecution.

"(The investigation is) now much more focussed on the feeder funds and less on the activities of people in the UK arm of the Madoff empire," said the source, who asked not to be named.

"It will come to a conclusion in the near future," the source said, adding it was difficult conducting a probe that involved other European jurisdictions. The source would not speculate as to whether prosecutions were likely.

Madoff, serving a 150-year sentence after pleading guilty to running a $65 billion (39.1 billion pounds) Ponzi scheme, has claimed he alone was responsible for the large-scale fraud.

The SFO has attempted to follow a trail of money from New York to the London arm where it was used to make some low-risk trades before sending the money back to the United States.

"Although it's clear that the UK was used as part of the disguising of fraud, there's obviously a difficulty then in extrapolating that to say the people in the UK absolutely knew what was going on," the source said.