Posted by Brad A. Greenberg
Bernard Madoff had his day in court this morning, and he plead guilty to all—count ‘em, all—charges. The NYT reports:
Standing before Judge Denny Chin in United States District Court in Manhattan, Mr. Madoff was asked, “How do you now plead to the information, guilty or not guilty?”
“Guilty,” he responded.
The hearing on Thursday marks the first time since he was arrested by federal agents on Dec. 11 that Mr. Madoff has spoken publicly about how he ran what was perhaps the largest fraud in Wall Street history, a global scheme that ensnared hedge funds, nonprofit groups and celebrities, and devastated the life savings of thousands of people.
Dressed in a gray suit, Mr. Madoff, 70, stood up in a courtroom packed with journalists, lawyers and some of his victims and pleaded guilty to 11 counts of fraud, money laundering, perjury and theft — charges whose maximum sentences total 150 years. Mr. Madoff then answered questions about how he sustained a 20-year fraud whose collapse erased as much as $65 billion that his customers thought they had in their accounts.
His immediate fate remained in the balance. The judge is expected to rule later Thursday on whether Mr. Madoff will remain free on bail and return to his apartment on Manhattan’s Upper East Side, or whether he will be immediately jailed as he awaits sentencing.
* Update: A newer version of this story reports that the judge has revoked Madoff’s freedom on bail and ordered that he begin his yet-undetermined sentenced immediately.
“He has incentive to flee, he has the means to flee, and thus he presents the risk of flight,” Judge Chin said. “Bail is revoked.”
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March 11, 2009 | 7:37 pm
Posted by Rob Eshman
Swindler Bernard Madoff will appear in Federal court Thursday morning in Manhattan, where he will plead guilty to multiple counts of fraud. A Federal judge is expected to sentence Madoff to up a prison sentence of up to 150 years. Here’s the New York Times report on the eve of Bernie’s long goodbye:
March 11, 2009
Madoff Faces Life in Prison for Vast Swindle
By DIANA B. HENRIQUES
Bernard L. Madoff is facing life in prison for operating a vast Ponzi scheme that began at least 20 years ago and consumed billions of dollars of other people’s money.
While his fate will not be certain until he is sentenced, his lawyer told a federal judge on Tuesday that he intended to plead guilty on Thursday to all the criminal charges that federal prosecutors had filed against him — a list that could yield a prison sentence of 150 years.
Mr. Madoff was arrested Dec. 11 at his Manhattan home by federal agents who accused him of running what was perhaps the largest fraud in Wall Street’s history. The scheme zigzagged across the world, drawing in foreign banks, hedge funds, charities, celebrities and ordinary retirees who had entrusted their savings to his investment firm.
The charges, made public late Tuesday, offered a few fresh details about how Mr. Madoff conducted his long-running fraud. And they raised its price tag from his own estimate of $50 billion to nearly $65 billion, the total amount that thousands of customers were told they had in their accounts at his firm.
But left unanswered were questions about the involvement of family members and employees and the treatment of favored investors.
To sustain his fraud, prosecutors said, Mr. Madoff assembled an ill-trained and inexperienced clerical staff, directed them to “generate false and fraudulent documents,” told lies and supplied false records to regulators, and shuffled hundreds of millions of dollars from bank to bank to create the illusion of active trading. The government said Mr. Madoff ordered multimillion-dollar bank transfers in part “to give the appearance that he was conducting securities transactions in Europe on behalf of the investors, when, in fact, he was not.”
And, in an accusation that extends his crime’s shadow to the edges of the business where his brother and sons worked, prosecutors accused Mr. Madoff of using some of the money he gathered through his Ponzi scheme to support the supposedly legitimate wholesale stock trading operation that made his name on Wall Street.
Specifically, prosecutors said that Mr. Madoff “caused more than $250 million” he collected through his Ponzi scheme from at least 2002 through 2008 “to be directed, through a series of wire transfers, to the operating accounts that funded the operations of these businesses.”
The government also charged that he had money transferred from his firm’s London office “to purchase property and services for the personal use and benefit” of himself, his family members and his associates.
Finally, prosecutors said that Mr. Madoff — whose investors prized his steady single-digit annual returns — actually had promised select clients extraordinarily high returns, as much as 46 percent, to lure them in.
In all, Mr. Madoff was charged with 11 felony counts, including securities fraud, money laundering and perjury. Under federal sentencing guidelines, those crimes would yield a life sentence for the 70-year-old trader.
As that sentence suggests, Lev L. Dassin, the acting United States attorney in Manhattan, emphasized that prosecutors did not negotiate an agreement that traded Mr. Madoff’s guilty plea for more lenient treatment.
Moreover, Mr. Dassin disclosed that the government intended to seek at least $170 billion in forfeited assets from Mr. Madoff, a remarkable figure that apparently counts all the money that moved through Madoff bank accounts during the years of the fraud as the proceeds of illegal activities.
Although the forfeiture laws allow the government to seize any property it can trace as the proceeds of illegal activity, investigators have so far found no sign that Mr. Madoff or anyone connected with his business has anything like that amount of money.
And Mr. Madoff’s lawyers have filed a letter with the court disputing that outsize figure, saying it represents all the money ever deposited in Madoff bank accounts over the years without distinguishing either legitimate business operations or the billions that were paid out to investors as part of the Ponzi scheme.
Mr. Dassin said on Tuesday that his staff was still unraveling the fraud to determine who besides Mr. Madoff might have helped keep it running. “The filing of these charges does not end the matter,” Mr. Dassin said in a statement.
But as the criminal case against Mr. Madoff moved toward a resolution, Judge Denny Chin of Federal District Court said on Tuesday that it was not yet time for the court to hear from those who say they were defrauded.
Mr. Madoff has been free on $10 million bail, but confined to his apartment, since his arrest in December. It is not clear whether the government will seek to have his bail revoked if he pleads guilty on Thursday.
If Mr. Madoff does plead guilty, the judge cautioned, he will not be sentenced for several months, giving his victims ample time to submit their comments to the court and ask to be heard.
Dozens of private messages have already reached the court, many of them echoing a letter from a California man who urged the judge to jail Mr. Madoff “for the rest of his life, in conditions that are worthy of someone who has destroyed and raped so many people.”
Alexandra Penney, one of Mr. Madoff’s victims in New York, said she was still dissatisfied with the information that had come out about his crime. “He is gaming the system once again,” she said. “We know nothing — all he has given up is his disgusting, loathsome self.”
As Ms. Penney noted, despite the fresh details in the formal charges, substantial questions remain unanswered.
The government accuses Mr. Madoff of assembling an inexperienced staff to generate “false and fraudulent documents” for customers, but it does not indicate whether those staff members were aware of Mr. Madoff’s allegedly fraudulent activity.
Marc L. Mukasey, a lawyer for Frank DiPascali, who oversaw Mr. Madoff’s clerical staff, had no comment on the government’s allegations.
The document also accuses Mr. Madoff of luring new investors by promising some of them returns as high as 46 percent, well above the steady 8 to 10 percent most investors reported. But it does not explain how much those preferred investors may have known about their special status.
The government specifically accuses Mr. Madoff of taking in $10 million from approximately 35 labor union pension plans last September and, rather than investing it, converting the money “to his own use and the use of others” — but then does not identify the “others,” even in general terms.
The government has still given no indication of whether any members of Mr. Madoff’s family knew about his fraud or participated in it. Lawyers for those relatives have all said their clients did not know about the scam until Mr. Madoff’s confession — and, indeed, most of them lost millions of dollars entrusted to him.
But the document released on Tuesday does confirm the unyielding arithmetic that has wiped out so much wealth and created such hardship for those who trusted Mr. Madoff.
At the end of November, Mr. Madoff had 4,800 client accounts that were supposed to contain a total of $64.8 billion in customer savings. In fact, the government said, Mr. Madoff’s spurious advisory business “held only a small fraction of that balance.”
William K. Rashbaum and Zachery Kouwe contributed reporting.
The Times also has an excellent Q & A with the implications of the sentencing, including insights into what it means for his victims and his immediate family members.
March 10, 2009 | 6:49 pm
Posted by Brad A. Greenberg
These reports are coming from everywhere. Here’s one from the LA Times:
Bernard Madoff will plead guilty Thursday to 11 criminal counts including money laundering, perjury and securities, mail and wire fraud and will do so without a plea deal, knowing it carries a potential prison term of 150 years, lawyers said today in court.
Lawyers outlined the plea arrangement for the 70-year-old former Nasdaq chairman that was set to unfold later this week after Madoff waived several potential conflicts of interest between Madoff and his lawyer, Ira Sorkin.
Asked by the judge if Madoff would plead guilty Thursday, Sorkin said: “I think that’s a fair expectation.”
In papers filed after Tuesday’s proceeding, prosecutors outlined the case against Madoff, who quietly spoke in court, answering the questions of U.S. District Judge Denny Chin.
Prosecutors said in the papers that Madoff operated a massive Ponzi scheme in which his clients’ funds were misappropriated and converted to the use of Madoff, his business and others.
Chin said he will not sentence Madoff for several months after Thursday’s proceedings.
March 6, 2009 | 3:08 pm
Posted by Rob Eshman
The New York Times reports today that prosecutors say they are close to a guilty plea agreement with Bernard Madoff. See story below:
March 7, 2009
Agreement Sets Stage for Madoff Plea
By DIANA B. HENRIQUES
Taking one step closer to his day in court, the money manager Bernard L. Madoff has agreed to waive his right to a formal grand jury review of accusations that he conducted a worldwide Ponzi scheme, according to a new filing Friday in a federal court in Manhattan.
The agreement sets the stage for a plea bargain between Mr. Madoff and federal prosecutors, who have been negotiating with his lawyers since his arrest on Dec. 11. Criminal charges filed against him at that time and subsequent court filings indicated that he confessed to his crime both to his family members and to the F.B.I agent who arrested him at his apartment.
Further, Mr. Madoff agreed last month to a partial settlement of regulatory charges filed against him by the Securities and Exchange Commission. In that settlement, he essentially agreed that he would not contest the accusations the agency made against him — a step that would have greatly complicated any effort by his lawyers to assert his innocence at a trial.
Still pending on the court calendar, however, is a hearing to review potential conflicts of interest by Mr. Madoff’s lead lawyer, Ira Lee Sorkin, whose parents had maintained investments with Mr. Madoff before their death several years ago. That hearing, originally scheduled for Wednesday, was adjourned to next week. It is not clear whether the federal courts will allow Mr. Madoff to plead guilty to the charges he faces until that issue has been resolved.
Mr. Sorkin could not be reached immediately for comment, but his colleague Daniel Horwitz, said: “The filing speaks for itself. He has waived his right to an indictment.”
Yusill Scribner, a spokeswoman for the United States attorney’s office in Manhattan, had no comment.
As the case plays out, the number of claims from Madoff clients has nearly doubled in the last two weeks.
The court-appointed trustee, Irving Picard of Baker & Hostetler, who has been working to identify and sell assets of the estate, has received 4,300 claims as of Wednesday, according to a spokesman, Kevin McCue.
At a hearing on Feb. 20, Mr. Picard said he had received about 2,350 claims, mostly from smaller investors, totaling $1 billion. Mr. McCue would not comment on the dollar value of the number of claims. The Securities Investor Protection Corporation has mailed more than 14,000 claim forms to Madoff clients since the beginning of January.
William K. Rashbaum and Zachery Kouwe contributed reporting.
March 5, 2009 | 6:06 pm
Posted by Adam Wills
Sherman Oaks-based mortgage banker Bruce Friedman, whose Friedman Charitable Foundation committed $10 million to the Children’s Museum of Los Angeles and $1 million to Brandon’s Village, a special-needs park in Calabasas, was indicted on securities fraud charges today by the Securities and Exchange Commission.
The SEC alleges Freidman, along with his two companies—Diversified Lending Group (DLG) and Applied Equities, Inc. (AEI)—perpetrated a $216 million real estate investment fraud, raising money from hundreds of investors nationwide, many of whom are seniors, promising guaranteed high returns via real estate investments.
The complaint alleges that Friedman diverted substantial investor money to ventures unrelated to real estate, and misappropriated at least $17 million to support his lavish lifestyle, including purchases of a luxury home, cars, vacations, jewelry, and designer clothing for himself and an alleged girlfriend.
The SEC has frozen DLG’s, AEI’s and Friedman’s assets.
March 4, 2009 | 5:49 pm
Posted by Rob Eshman
“Why is he not in prison?”
“How can he be allowed to sit on his couch in his penthouse while the rest of us are scrambling?”
Vanity Fair unleashed on Bernie Madoff this month, with a chilling look at how he betrayed his closest friends, and, online, a video documentary that looks at the stories of several of his victims.
The anger, loss, shame and despondency are apparent in their testimonies. Last week, when Madoff victim Elie Wiesel said the only fitting punishment for the man would be to sit in a jail cell the rest of his life watching video-taped testimony of the people whose lives he devastated, must have had something like this in mind.
In the introduction Rabbi Marc Gellman reflects that perhaps what the Madoff crime all came down to was the desire on the part of Madoff and his victims to be part of the in group. This may be rabbinic reductionism—when he says it it sounds much more profound—but his last line is particularly resonant:
“The only valid way of understanding who is in and who is out is this: Who is kind and who is not?”
March 4, 2009 | 5:28 pm
Posted by Rob Eshman
Love this moving op-ed piece by Melvyn Bloom, executive vice president of the American Technion Society, which supports Israel’s Technion Institute:
Community can reshape future marred by Madoff
By Melvyn H. Bloom
NEW YORK (JTA)—Bernard Madoff almost stole the future.
He stole the financial future of many decent, philanthropic individuals. He stole the future of some organizations that have been forced to shut their doors. He stole the future of bright, eager students dependent on financial aid from universities whose financial future Madoff also stole. (All this is in addition to the serious damage he inflicted upon the Jewish community.)
When Madoff stole millions from my organization, the American Technion Society, he lifted some of the glow off the future of science, technology and medicine. It’s as if he had blundered on to the Technion campus and proceeded to wreck the laboratories where the future was being forged. And moved destructively into classrooms, scattering the students and professors. And stomped through the campus, where he laid waste to the library and synagogue, the student dormitories and theater, the fitness center and cafeteria, damaging the people and facilities that are at the center of Israel’s future.
How, I continue to wonder, is it possible for a single individual to perpetrate so much evil, to destroy so much? Could we have done anything to stop him, to curtail the damage?
By now I have given up on finding rational answers. While there is always some element of trust and human judgment involved in retaining financial managers, and while processes can be tightened, nothing can guarantee safety from a massive, well-planned fraud like this one.
Now it is time for the Jewish community to move past these unanswerable questions. Despite the considerable damage he inflicted, Madoff failed to steal our future. He left it damaged surely, but our strong foundation is still standing, certainly more than enough to serve as the basis for a swift and sure comeback. And we are in a place to reshape the future.
Jewish parents used to encourage their children’s learning by repeating the age-old truism that no one can ever take away your education. Now I say that no one, not even a hundred Bernard Madoffs, can steal the Jewish community’s future because no one can injure the confidence in our ability to shape and reshape that future.
I am greatly encouraged by early proof of this thinking. Already a number of our supporters have—on their own—called to make large, unscheduled gifts. This is likely the case in other organizations and institutions. When I ask what prompted their unsolicited decision, their words echo my thoughts: We must move beyond this and forward; we must take back the future; we must ensure that Israel has what it needs to not only survive but thrive.
These conversations leave me wondering: If one awful individual can wreak such havoc, how much power does one committed, brilliant, energetic individual have to undo the damage? Or a dozen? Or hundreds of thousands? In fact, we could do so much more; we could change the world!
We have, in fact, already done so. Jewish history, our mere presence in the world today, is itself a miracle, not only of survival but of astounding achievements against what surely must have looked like insurmountable odds. This latest affair, by comparison, is merely a blip, well below those many defining moments in our history. Bernard Madoff almost stole the future. Now it is up to all of us to restore it.
In May, a hundred or more of us will be on the Technion campus for our annual mission. During those days we will be rushed and sometimes tired. But we know from past missions that we won’t mind and no one will complain because we’ll be busy dedicating new buildings, expanded dormitories, impressive laboratories. We’ll be listening to professors and students explain the research and the studies they conduct with our support. We’ll visit them in their homes and dorms, and share their meals and not care when we get to sleep.
We’ll be seeing the future unfold before our eyes, and we’ll know that it’s theirs, ours and the world’s, too.
(Melvyn H. Bloom is the executive vice president of the American Technion Society.)