Just when the advisory community was hoping that it had put Bernie Madoff behind it, federal authorities announced that two of the disgraced financier’s lieutenants have been indicted on criminal charges and are also facing a civil complaint from the Securities and Exchange Commission.

Meanwhile, the Internal Revenue Service announced earlier this week that it has withdrawn the John Doe summons in the UBS AG scandal in which the U.S. demanded that the company hand over the names of Americans with secret offshore accounts.

While that sounds like good news for UBS, it unfortunately also dredges up the old problem about the tax evasion case. And, that will happen every time a former client gets hit with tax evasion charges based on that case.

As for the Madoff debacle, the government will be unwinding the damage from the Ponzi scheme for quite a while.

The result of all this is a lingering stain that financial advisors can’t wash away.  Scandals will always be with Wall Street and its advisors because greed is a natural human trait. The challenge is to minimize the actions of bad actors and then win back the confidence of clients—which is no easy task.

IRS Commissioner Doug Shulman said Tuesday in a press statement, that while the case against UBS is essentially over, information on clients is still coming in.

There are now more than 18,000 people who have made voluntary disclosures of offshore funds. “We are finding that many of these voluntary disclosure cases involve significant amounts of previously unpaid tax,” he said. As part of the UBS AG agreement between the United States and Switzerland reached in August 2009, the IRS has received approximately 4,000 UBS treaty-request accounts so far. More are expected after appeals have been decided by the Swiss Federal Administrative Court, Shulman said. 

In fact, the IRS expects the final count of UBS AG accounts received from various sources to exceed 7,500. And, Shulman warned: “This issue is not going away, and those who try to skirt U.S. tax laws by hiding assets and income offshore, and the banks and advisors who help them do it, will find themselves increasingly at risk due to our efforts in this area.”

Meanwhile, the feds are just warming up in the Madoff scandal. Madoff’s former personal secretary and another woman, were indicted Thursday on fraud and conspiracy charges related to his multibillion-dollar Ponzi scheme.

So, there are now eight people charged in the Madoff scheme. The two women were charged with executing fictitious trades in clients’ accounts to achieve predetermined investment returns set by the now-imprisoned Madoff. He is serving a 150-year prison sentence. The two women who worked for him were also accused of earning millions of dollars from the Ponzi scheme.

No one is naïve enough to think that all rogue brokers or advisors can be rooted out of the system. But, Wall Street has to do whatever it takes to regain client trust. Top management needs to reinforce its commitment to supervisory controls and a culture of true compliance.