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* Banks, hedge funds showed "willful blindness" -Madoff
* Information not shared with prosecutors -Madoff
* New York Mets principals "knew nothing" -Madoff
* Frail Madoff: Never thought crimes would destroy family
By Jonathan Stempel
NEW YORK, Feb 15 (Reuters) - A frail Bernard Madoff, facing the rest of his life in prison, said a variety of banks and hedge funds were complicit in and "had to know" about his epic Ponzi scheme before it was uncovered, The New York Times reported.
In his first interview for publication since his December 2008 arrest, Madoff said banks and hedge funds who dealt with his investment advisory firm demonstrated a "willful blindness" toward his activities, and failed to examine discrepancies between his regulatory filings and other information.
"They had to know," Madoff, described as noticeably thinner and dressed in khaki prison clothing, said in a visiting room in the federal prison in Butner, North Carolina. "But the attitude was sort of, 'If you're doing something wrong, we don't want to know.'"
Madoff, 72, is serving a 150-year prison sentence for what prosecutors called his $65 billion Ponzi scheme, which was uncovered in December 2008.
Irving Picard, a court-appointed trustee seeking money for Madoff victims, has filed lawsuits seeking tens of billions of dollars from companies and individuals he believes benefited from or aided in Madoff's Ponzi scheme.
Among the defendants in these cases is JPMorgan Chase & Co (JPM.N), long Madoff's principal banker and described by Picard as "thoroughly complicit" in the Ponzi scheme.
Other defendants include HSBC Holdings Plc (HSBA.L), UBS AG UBSN.VX, various "feeder funds" that steered money to Madoff, and the owners of the New York Mets baseball team.
A spokesman for Picard did not immediately return a request for comment. Picard declined to comment to the newspaper. He has recovered about $10 billion for victims so far.
Stephen Cutler, JPMorgan's general counsel, at a presentation on Tuesday said Picard "overreached" in his $6.4 billion lawsuit against the bank, and that JPMorgan "did not know about or in any way participate in the fraud."
In the Times interview, conducted in conjunction with a forthcoming book, Madoff acknowledged his guilt and said nothing could excuse his crimes.
He did not assert that any specific bank or hedge fund knew about or was an accomplice in his Ponzi scheme, which Picard said cost investors more than $20 billion.
But in a Dec. 19 email cited in the Times article, Madoff said he had been providing Picard with "information I knew would be instrumental in recovering assets from those people complicit in the mess I put myself into."
Then, 10 days later, he said "the banks and funds were complicit in one form or another and my information to Picard when he was here established this."
As to Mets principals Fred Wilpon and his brother-in-law Saul Katz, Madoff said: "They knew nothing. They knew nothing."
In the Dec. 19 email, Madoff also said he had not shared his information with federal prosecutors working on criminal cases related to the fraud.
Eight people have been criminally charged. Madoff, his right hand man Frank DiPascali, and an outside accountant have pleaded guilty. Five, all of whom used to work for Madoff, have pleaded not guilty.
Madoff also told the Times he never thought the collapse of his Ponzi scheme would cause the kind of fallout that has befallen his family.
Picard has filed lawsuits against Madoff's wife, Ruth, that could bankrupt her, while Madoff's son Mark committed suicide on Dec. 11, 2010, two years after the Ponzi scheme was revealed.
Madoff said prison officials would not let him attend his son's funeral, saying it could pose a "public safety issue." He later said it would be "cruel" to put his family through what could be a "media circus" were he to attend. (Reporting by Jonathan Stempel in New York; Additional reporting by Clare Baldwin; Editing by Gary Hill)