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“Employees at Chase also had concerns about Friehling & Horowitz, the small three-employee accounting firm located in a suburban strip mall in New City, N.Y., that audited Madoff’s lucrative investment management business. “Let’s go see Friehling and Horowitz the next time we’re in NY,” one of the bankers wrote,.” to see that the address isn’t a car wash at least.”

It was not until early 2006 that JPMorgan Chase performed even minimal due diligence on Friehling, according to the lawsuit. One JPMorgan Chase employee noted in an e-mail that “a quick check found that they [Friehling] are not registered with the Public Company Accounting Oversight Board, nor are they subject to peer reviews from the American Institute of Certified Public Accountants. Additionally, they have no website to provide background on their organization.”

“Another employee noted that the choice of Friehling & Horowitz was an “odd choice” and questioned whether such a small firm was even competent to conduct an audit of an investment firm with “$650m in shareholder capital.”

LOL! The phony CPA was always the biggest red flag. No one at the SEC could drive to New City, NY? Walter Noel the big feeder fund could not jump in the Range Rover and drive down from Greenwich, CT? Too busy getting his daughters in the society pages so their hubbies could keep finding suckers in South America, Europe and Asia.

The phony CPA was a tip off to anyone and everyone. 3 person CPA? Well the old man had retired so it was one CPA. And the younger one rarely showed up. They had one part time lady at the office.

Two questions:

1. Did Madoff really pay $1 billion in fees for his checking account at Chase? He must have made a lot of wire transfers, but I think he could have got a better deal than that.

2. Were the investment bankers who decided no to invest in Madoff on behalf of their clients aware that Madoff had his checking account at Chase? After all, they weren’t exactly working in the transaction processing department.