Most damning may be Galvin’s allegations that Madoff prepared top executives at Fairfield in 2005 on how they should respond to federal securities regulators‘ questions about him. The move came after a whistleblower told officials that he suspected Madoff was running a fraud.

“Obviously, first of all, this conversation never took place, Mark, OK?” Madoff told Fairfield Greenwich General Counsel Mark McKeefrey and Chief Risk Officer Amit Vijayvergiya, according to a transcript Galvin included in his complaint.

At one point on the call Madoff tells the men: “I mean, the idea is that it’s — is that we’re not the one that’s making the decision how much to — I mean, you know – you know, we’re not the one that’s operating the fraud.”

A spokesman for Fairfield Greenwich said the firm is reviewing the complaint and has no immediate comment.

“These are obviously very serious allegations when one starts accusing parties of colluding with respect to coordinating testimony to give to the Securities and Exchange Commission,” said Brenda Sharton, who works on Madoff-related cases as a partner at law firm Goodwin Procter.

Galvin, one of the first state regulators to pursue the Madoff case aggressively, has long been concentrating on the so-called feeder funds and said he was looking at others as well.

His lawsuit came one day after a Connecticut judge froze the assets of Madoff’s sons and five top hedge fund industry officials, including three Fairfield Greenwich executives.

Also on Wednesday, U.S. officials seized Madoff’s 56-foot fishing yacht, named “Bull,” in Florida…”

More here.