Posted by Brad A. Greenberg
Breaking news from Reuters:
Lawyers for confessed swindler Bernard Madoff on Friday appealed the decision by a U.S. Judge to revoke his bail when he pleaded guilty to running the biggest fraud in Wall Street history, a court official said.
No details were immediately available of the filing in the U.S. Court of Appeals for the Second Circuit in New York, one day after Madoff, 70, admitted to running a worldwide fraud involving as much as $65 billion over many years.
At Thursday’s plea proceeding, U.S. District Court Judge Denny Chin revoked Madoff’s $10 million bail, removing him from house arrest in his luxury Manhattan apartment and sending him to jail pending sentencing on June 16.
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March 13, 2009 | 4:47 pm
Posted by Rob Eshman
Everything you need to know about the Bernie Madoff scandal in three great stories.
March 12, 2009 | 2:09 pm
Posted by Rob Eshman
KNX-AM Radio showed up at my home at 5:41 am to interview me about Bernie Madoff. Yes, they had given me a warning phone call, and even promised I only had to stumble out in my pajamas. I put on pants.
At the end of the interview, the incredibly awake reporter thrust a mike closer to my face—in the morning darkness, dogs barking, street deserted—and asked if I had anything else to add. My mind drew a perfect, decaffeinated blank. Now, three cups of yerba mate later, the answer arrives:
I have two things to add. One, people need to understand that this man Madoff, as heinous as he is, didn’t cause the economic meltdown. His scheme simply fell apart because the economy collapsed. It’s unfair and unwise to make this crook the poster boy for a recession or depression that so many people—from our political leaders to our regulators to our speculators and over-borrowers—had a hand in.
Second, his sentencing must in no way deter prosecutors from finding out who else among his family and friends was involved, and making certain they pay for their crimes as well.
Finally, no, I do not forgive Bernie Madoff. I know that will be the inevitable question now that he expressed remorse to a judge in Federal court. He’s welcome to ask God for forgiveness, but good luck with that, too.
For the complete Bernie Madoff update, read this excellent New York Times summary of the morning’s breaking news.
March 12, 2009 | 2:00 pm
Posted by Rob Eshman
March 12, 2009 | 1:45 pm
Posted by Dean Rotbart
Wall Street loves leverage. But by pleading guilty today to 11 criminal charges, Bernard L. Madoff eliminates the main leverage that federal investigators might have used to get him to cooperate with their ongoing investigation, especially concerning who else may have been involved in the massive Ponzi scheme.
Madoff’s guilty plea means he will face no criminal trial, and he has little to fear from civil trials, since the Feds will seize all his assets anyway. He will not have to be a cooperating witness. He will not have to say a word about where he may have hidden funds. He won’t have to implicate his brother, wife, sons or anyone else—if they were part of the scheme. So far, none of his family members has been charged in connection with the fraud.
Keep in mind, as Madoff himself told the judge today, “...as the years went by I realized that my arrest and this day would inevitably come.” Translation? Madoff had plenty of time to craft a strategy for what he would do when he was exposed. Today we are seeing his strategy play out.
March 12, 2009 | 11:33 am
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.”
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.