updated 9/10/2009 12:50:01 PM ET 2009-09-10T16:50:01

Disgraced financier Bernard Madoff coached a potential witness about fooling federal regulators, saying "you don't have to be too brilliant" to get away with it, according to a newly released transcript of a 2005 telephone call.

The transcript was made public Wednesday by Massachusetts Secretary of State William Galvin, whose office reached an $8 million settlement this week with New York-based Fairfield Greenwich Advisors, a Madoff feeder fund, to fully refund state investors.

During the call, Madoff is preparing someone from Fairfield who was about to be interviewed by the Securities and Exchange Commission about the investment firm and its strategies. According to the transcript, Madoff began the call by saying, "Obviously, first of all, this call never took place."

During the call, "you basically have him coaching" the Fairfield employee, Galvin told The Associated Press late Wednesday.

"And it's an admission that basically Madoff knew it was a scam and it's really how he conned the Securities and Exchange Commission," Galvin said.

The 71-year-old Madoff was sentenced in June to 150 years in prison for masterminding a multibillion-dollar Ponzi scheme that spanned decades and defrauded thousands of investors.

During the recorded call, Madoff was asked what to say if SEC investigators asked about how shares of a trade are distributed.

"You know, you don't have to be too brilliant with these guys because you don't have to be, you're not supposed to have that knowledge and, you know, you wind up saying something which is either wrong, or, you know, it's just not something you have to do," Madoff said, according to the transcript.

At another point in the conversation, Madoff counsels: "You don't want them to think you're concerned about anything. You're best off, you just be casual."

Madoff dismissed an SEC investigation as a "fishing expedition" and highlighted how investigators develop cozy relationships with firms they are supposed to regulate.

"The guys ... ask a zillion different questions and we look at them sometimes and we laugh, and we say are you guys writing a book?" Madoff said. "These guys they work for five years at the commission then they become a compliance manager at a hedge fund now."

The SEC's failure to uncover Madoff's massive scheme has led the agency to beef up enforcement efforts as it moves to restore investor confidence.

"It is a failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors," SEC Chairman Mary Schapiro said in a statement last week.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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