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Madoff undertook charity work for the [[Gift of Life Bone Marrow Foundation]] and made philanthropic gifts through The Madoff Family Foundation, a $19 million private foundation, which he managed along with his wife.<ref name="Appelbaum" /> They donated money to hospitals and theaters.<ref name=nytsa /> The foundation has also contributed to many educational, cultural, and health charities, including those later forced to close because of Madoff's fraud.<ref name="sherwell">{{cite news|url=http://www.telegraph.co.uk/finance/3742427/Bernie-Madoff-Profile-of-a-Wall-Street-star.html|title=Bernie Madoff: Profile of a Wall Street star |publisher=Telegraph|accessdate=December 14, 2008|last=Sherwell | location=London | date=December 13, 2008}}</ref> After Madoff's arrest, the assets of the Madoff Family Foundation were frozen by a federal court.<ref name="Appelbaum" />
Madoff undertook charity work for the [[Gift of Life Bone Marrow Foundation]] and made philanthropic gifts through The Madoff Family Foundation, a $19 million private foundation, which he managed along with his wife.<ref name="Appelbaum" /> They donated money to hospitals and theaters.<ref name=nytsa /> The foundation has also contributed to many educational, cultural, and health charities, including those later forced to close because of Madoff's fraud.<ref name="sherwell">{{cite news|url=http://www.telegraph.co.uk/finance/3742427/Bernie-Madoff-Profile-of-a-Wall-Street-star.html|title=Bernie Madoff: Profile of a Wall Street star |publisher=Telegraph|accessdate=December 14, 2008|last=Sherwell | location=London | date=December 13, 2008}}</ref> After Madoff's arrest, the assets of the Madoff Family Foundation were frozen by a federal court.<ref name="Appelbaum" />


[[Mark Madoff]] owed his parents $22 million, and Andrew Madoff owes $9.5 million. There were two loans in 2008 from Bernard Madoff to Andrew Madoff: $4.3 million on October 6, and $250,000 on September 21.<ref>{{cite news |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=aj6f7pk8l_00&refer=home |title= Madoff Prosecutors Seek to Take Businesses, Loans |publisher = Bloomberg |date = March 17, 2009 |accessdate = March 29, 2009}}</ref><ref>{{cite web|url=http://www.usdoj.gov/usao/nys/madoff/madoffbailpendingsentencing.pdf |title=Department of Justice |format=PDF |date= |accessdate=March 18, 2010}}</ref> Andrew owns a Manhattan apartment and a home in [[Greenwich, Connecticut]], as did Mark<ref name="VFair" /> prior to his death on the second anniversary of his father's arrest.<ref>{{cite web|url=http://www.cnn.com/2010/US/12/11/new.york.madoff.son.suicide/index.html?eref=mrss_igoogle_cnn|title=Madoff son found dead of apparent suicide|accessdate=11 December 2010}}</ref>
Mark Madoff owed his parents $22 million, and Andrew Madoff owes $9.5 million. There were two loans in 2008 from Bernard Madoff to Andrew Madoff: $4.3 million on October 6, and $250,000 on September 21.<ref>{{cite news |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=aj6f7pk8l_00&refer=home |title= Madoff Prosecutors Seek to Take Businesses, Loans |publisher = Bloomberg |date = March 17, 2009 |accessdate = March 29, 2009}}</ref><ref>{{cite web|url=http://www.usdoj.gov/usao/nys/madoff/madoffbailpendingsentencing.pdf |title=Department of Justice |format=PDF |date= |accessdate=March 18, 2010}}</ref> Andrew owns a Manhattan apartment and a home in [[Greenwich, Connecticut]], as did Mark<ref name="VFair" /> prior to his death on the second anniversary of his father's arrest.<ref>{{cite web|url=http://www.cnn.com/2010/US/12/11/new.york.madoff.son.suicide/index.html?eref=mrss_igoogle_cnn|title=Madoff son found dead of apparent suicide|accessdate=11 December 2010}}</ref>


Following a divorce from his first wife in 2000, Mark withdrew money from an account. Both sons used outside investment firms to run their own private philanthropic foundations.<ref name="VFair" /><ref name="independent1">{{cite news|url=http://www.independent.co.uk/news/business/analysis-and-features/the-madoff-files-the-man-behind-the-most-audacious-fraud-in-history-1518939.html|title=The Madoff files: Bernie's billions |work=The Independent|accessdate=January 29, 2009|date=March 29, 2009 | location=London}}</ref><ref>{{cite news|url=http://online.wsj.com/article/SB123275697375711899.html?mod=todays_us_money_and_investing|title=Sons' Roles in Spotlight |work=[[The Wall Street Journal]]|accessdate=January 23, 2009|date=March 29, 2009 | first1=Aaron | last1=Lucchetti | first2=Tom | last2=Lauricella}}</ref> In March 2003, Andrew was diagnosed with [[mantle cell lymphoma]] and eventually returned to work. He became chairman of the Lymphoma Research Foundation in January 2008, but resigned shortly after his father's arrest.<ref name="VFair" />
Following a divorce from his first wife in 2000, Mark withdrew money from an account. Both sons used outside investment firms to run their own private philanthropic foundations.<ref name="VFair" /><ref name="independent1">{{cite news|url=http://www.independent.co.uk/news/business/analysis-and-features/the-madoff-files-the-man-behind-the-most-audacious-fraud-in-history-1518939.html|title=The Madoff files: Bernie's billions |work=The Independent|accessdate=January 29, 2009|date=March 29, 2009 | location=London}}</ref><ref>{{cite news|url=http://online.wsj.com/article/SB123275697375711899.html?mod=todays_us_money_and_investing|title=Sons' Roles in Spotlight |work=[[The Wall Street Journal]]|accessdate=January 23, 2009|date=March 29, 2009 | first1=Aaron | last1=Lucchetti | first2=Tom | last2=Lauricella}}</ref> In March 2003, Andrew was diagnosed with [[mantle cell lymphoma]] and eventually returned to work. He became chairman of the Lymphoma Research Foundation in January 2008, but resigned shortly after his father's arrest.<ref name="VFair" />

Revision as of 21:06, 11 December 2010

"Madoff" redirects here. For other people with the same surname, see Madoff (surname).
Bernard Lawrence Madoff
U.S. Department of Justice photograph, 2008
Born (1938-04-29) April 29, 1938 (age 86)
Queens, New York, U.S.
NationalityAmerican
EducationHofstra University (1960)
Occupation(s)Former stock broker,
financial adviser, and
Chairman of NASDAQ
EmployerBernard L. Madoff Investment Securities
Known forPonzi scheme, Chairman of NASDAQ (prior)
Criminal statusFederal Bureau of Prisons Register #61727-054, scheduled date of release: 11-14-2139; at Butner Federal Correctional Institution.[1][2]
Spouse(s)Ruth Alpern Madoff
(1959–present)
ChildrenMark Madoff (ca. 1964–2010),
Andrew Madoff (ca. 1966)
Criminal chargeSecurities fraud, investment advisor fraud, mail fraud, wire fraud, money laundering, false statements, perjury, making false filings with the SEC, theft from an employee benefit plan
Penalty150 years imprisonment and forfeiture of $17.179 billion

Bernard Lawrence "Bernie" Madoff (Template:Pron-en;[3] born April 29, 1938) is an incarcerated former American stock broker, investment advisor, non-executive chairman of the NASDAQ stock market, and the admitted operator of what has been described as the largest Ponzi scheme in history.

In March 2009, Madoff pleaded guilty to 11 federal crimes and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1980s, and that the investment operation may never have been legitimate.[4] The amount missing from client accounts, including fabricated gains, was almost $65 billion.[5] The court-appointed trustee estimated actual losses to investors of $18 billion.[4] On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed.[6][7]

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008.[8][9] The firm was one of the top market maker businesses on Wall Street,[10] which bypassed "specialist" firms by directly executing orders over the counter from retail brokers.[11]

On December 10, 2008, Madoff's sons told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme, and quoted him as describing it as "one big lie."[12][13][14] The following day, FBI agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted investigations into Madoff's business practices, but did not uncover the massive fraud.[10]

Personal life

Madoff was born into a Jewish home in the New York City borough of Queens, on April 29, 1938, and is the son of Ralph and Sylvia (née Muntner) Madoff. Ralph Madoff was a plumber before becoming a stockbroker.[15][16] His grandparents came to the United States from Poland, Romania and Austria.[17] Madoff graduated from Far Rockaway High School in 1956,[18] attended the University of Alabama for one year, where he became a brother of the Tau Chapter of the Sigma Alpha Mu fraternity,[19] then transferred to and graduated from Hofstra College in 1960 with a B.A. in political science.[20] The following year, he attended Brooklyn Law School, but did not continue.

In 1959, Madoff married Ruth Alpern, who graduated from Queens College and worked in the stock market in Manhattan.[21] She later worked in Madoff's firm, and founded the Madoff Charitable Foundation.[22] Several family members worked for Madoff. His younger brother, Peter, an attorney, was Senior Managing Director and Chief Compliance Officer, and Peter's daughter, Shana, also an attorney, was the compliance attorney. Madoff’s sons, Mark and Andrew, worked in the trading section, along with Charles Weiner, Madoff’s nephew.[23][24]

Madoff lived in Roslyn, New York, in a ranch house through the 1970s and after 1980 owned an ocean-front residence in Montauk.[25] His primary residence was on Manhattan's Upper East Side,[26] and he was listed as chairman of the building's co-op board.[27] He also owned a home in France and a mansion in Palm Beach, Florida, where he was a member of the Palm Beach Country Club.[28] Madoff owned a 55-foot (17 m) sportfishing yacht named Bull,[27][29] All three homes were auctioned by the U.S. Marshals Service in September 2009.[30][31]

According to a March 13, 2009, filing by Madoff, he and his wife were worth up to $126 million, plus an estimated $700 million for the value of his business interest in Bernard L. Madoff Investment Securities LLC.[32] Other major assets included securities ($45 million), cash ($17 million), half-interest in BLM Air Charter ($12 million), a 2006 Leopard yacht ($7 million), jewelry ($2.6 million), Manhattan apartment ($7 million), Montauk home ($3 million), Palm Beach home ($11 million), Cap d' Antibes, France property ($1 million), and furniture, household goods, and art ($9.9 million).

Madoff was a prominent philanthropist,[14][23] who served on boards of nonprofit institutions — many of which entrusted his firm with their endowments.[14][23] The collapse and freeze of his personal assets and those of his firm affected businesses, charities, and foundations around the world, including the Chais Family Foundation[33], the Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT Foundation which were forced to close.[14][34] Madoff donated approximately $6 million to lymphoma research after his son Andrew was diagnosed with the disease.[35] He and his wife gave over $230,000 to political causes since 1991, with the bulk (88%) going to the Democratic Party,[36] and 12% to the Republican Party.

Madoff served as the Chairman of the Board of Directors of the Sy Syms School of Business at Yeshiva University, and as Treasurer of its Board of Trustees.[23] He resigned his position at Yeshiva University after his arrest.[34] Madoff also served on the Board of New York City Center, a member of New York City's Cultural Institutions Group (CIG).[37] He served on the executive council of the Wall Street division of the UJA Foundation of New York which declined to invest funds with him because of the conflict of interest.[38]

Madoff undertook charity work for the Gift of Life Bone Marrow Foundation and made philanthropic gifts through The Madoff Family Foundation, a $19 million private foundation, which he managed along with his wife.[14] They donated money to hospitals and theaters.[23] The foundation has also contributed to many educational, cultural, and health charities, including those later forced to close because of Madoff's fraud.[39] After Madoff's arrest, the assets of the Madoff Family Foundation were frozen by a federal court.[14]

Mark Madoff owed his parents $22 million, and Andrew Madoff owes $9.5 million. There were two loans in 2008 from Bernard Madoff to Andrew Madoff: $4.3 million on October 6, and $250,000 on September 21.[40][41] Andrew owns a Manhattan apartment and a home in Greenwich, Connecticut, as did Mark[21] prior to his death on the second anniversary of his father's arrest.[42]

Following a divorce from his first wife in 2000, Mark withdrew money from an account. Both sons used outside investment firms to run their own private philanthropic foundations.[21][43][44] In March 2003, Andrew was diagnosed with mantle cell lymphoma and eventually returned to work. He became chairman of the Lymphoma Research Foundation in January 2008, but resigned shortly after his father's arrest.[21]

Peter and Andrew Madoff remain the targets of a tax fraud investigation by federal prosecutors, according to The Wall Street Journal. David Friehling, Bernard Madoff's tax accountant, who pleaded guilty in a related case, is reportedly assisting the investigation. According to a civil lawsuit filed in October 2009, trustee Irving Picard alleges that Peter Madoff deposited $32,146 into his Madoff accounts and withdrew over $16 million; Andrew Madoff deposited almost $1 million into his accounts and withdrew $17 million; Mark Madoff deposited $745,482 and withdrew $18.1 million.[45]

Sheryl Weinstein, former chief financial officer of Hadassah, disclosed in a book written to recoup her investment losses that she and Madoff had an affair more than 20 years ago. As of 1997, when Weinstein left, Hadassah had invested a total of $40 million. By the end of 2008, Hadassah had withdrawn $140 million from an account valued at $90 million. At the victim impact sentencing hearing, Weinstein testified, calling him a "beast". [46][47]

On the morning of December 11, 2010, exactly two years after Bernard's arrest, his son, Mark Madoff, was found dead in his New York City apartment. The initial ruling is a suicide. [48]

Early career

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960. He was its chairman until his arrest on December 11, 2008.[8]

The firm started as a penny stock trader with $5,000 ($51,000 in current dollar terms) that Madoff earned from working as a lifeguard and sprinkler installer.[43] He further secured a loan of $50,000 from his father-in-law which he also used to set up Bernard L. Madoff Investment Securities LLC. His business grew with the assistance of his father-in-law, accountant Saul Alpern, who referred a circle of friends and their families.[49] Initially, the firm made markets (quoted bid and ask prices) via the National Quotation Bureau's Pink Sheets. In order to compete with firms that were members of the New York Stock Exchange trading on the stock exchange's floor, his firm began using innovative computer information technology to disseminate its quotes.[24] After a trial run, the technology that the firm helped develop became the NASDAQ.[50]

The firm functioned as a third-market provider, which bypassed exchange specialist firms, by directly executing orders over the counter from retail brokers.[11] At one point, Madoff Securities was the largest market maker at the NASDAQ and in 2008 was the sixth largest market maker on Wall Street.[24] The firm also had an investment management and advisory division, which it did not publicize, that was the focus of the fraud investigation.[51]

Madoff was "the first prominent practitioner"[52] of payment for order flow, in which a dealer pays a broker for the right to execute a customer's order. This has been called a "legal kickback."[53] Some academics have questioned the ethics of these payments.[54][55] Madoff has argued that these payments did not alter the price that the customer received.[56] He viewed the payments as a normal business practice: "If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow is an issue that attracted a lot of attention but is grossly overrated."[56]

Madoff was active in the National Association of Securities Dealers (NASD), a self-regulatory securities industry organization and has served as the Chairman of the Board of Directors and on the Board of Governors of the NASD.[9]

Government access

Since 1991, Madoff and his wife have contributed about $240,000 to federal candidates, parties and committees, including $25,000 a year from 2005 through 2008 to the Democratic Senatorial Campaign Committee. The Committee has returned $100,000 of the Madoffs' contributions to Irving Picard, the bankruptcy trustee who oversees all claims. Senator Charles E. Schumer returned almost $30,000 received from Madoff and his relatives to the trustee, and Senator Christopher J. Dodd donated $1,500 to the Elie Wiesel Foundation for Humanity, a Madoff victim.[57]

The Madoff family gained access to Washington's lawmakers and regulators through the industry's top trade group. The Madoff family has long-standing, high-level ties to the Securities Industry and Financial Markets Association (SIFMA), the primary securities industry organization.[58] Bernard Madoff sat on the Board of Directors of the Securities Industry Association, which merged with the Bond Market Association in 2006 to form SIFMA.[59]

Madoff's brother Peter then served two terms as a member of SIFMA’s Board of Directors. He stepped down from the Board of Directors of SIFMA in December 2008, as news of the Ponzi scheme broke.[58] From 2000 to 2008 the two Madoff brothers gave $56,000 to SIFMA, and tens of thousands of dollars more to sponsor SIFMA industry meetings.[60] Bernard Madoff's niece Shana Madoff was active on the Executive Committee of SIFMA's Compliance & Legal Division, but resigned her SIFMA position shortly after her uncle's arrest.[61]

In 2004 Genevievette Walker-Lightfoot, a lawyer in the SEC's Office of Compliance Inspections and Examinations, informed her supervisor branch chief Mark Donohue that her review of Madoff found numerous inconsistencies and recommended further questioning. However, because of agency pressure to investigate the mutual fund industry, she had to conclude work on the probe. Donohue's boss, Eric Swanson, an assistant director of the department,[62] married Shana Madoff, after the investigation concluded in 2005.[63] A spokesman for Swanson, who has left the SEC, said he "did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship" with Shana Madoff.[64]

While awaiting sentencing, Madoff met with the SEC's Inspector General, H. David Kotz, who is conducting an investigation into how regulators failed to detect the fraud despite numerous red flags.[65] Madoff said he could have been caught in 2003, but bumbling investigators acted like "Lt. Colombo" and never asked the right questions.

"I was astonished. They never even looked at my stock records. If investigators had checked with the Depository Trust Company, a central securities depository, it would've been easy for them to see. If you're looking at a Ponzi scheme, it's the first thing you do." Madoff said in the June 17, 2009, interview that SEC Chairman Mary Schapiro was a "dear friend," and SEC Commissioner Elisse Walter was a "terrific lady" whom he knew "pretty well."[66]

Since Madoff's arrest, the SEC has been criticized for its lack of financial expertise and lack of due diligence, despite having received complaints from Harry Markopolos and others for almost a decade. The SEC's Inspector General, H. David Kotz, found that since 1992, there were six botched investigations of Madoff by the SEC, either through incompetent staff work or neglecting allegations of financial experts and whistle-blowers.[67][68][69]

Investment scandal

Main article: Madoff investment scandal

Concerns about Madoff's business surfaced as early as 1999, when financial analyst-whistleblower Harry Markopolos informed the U.S. Securities and Exchange Commission (SEC) that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. He was ignored by the Boston SEC in 2000 and 2001, as well as by Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented further evidence. He has since published a book, No One Would Listen, about the frustrating efforts he and his team made over a ten-year period to alert the government, the industry, and the press about the Madoff fraud.

Others also contended it was inconceivable that the growing volume of Madoff accounts could be competently and legitimately serviced by his documented accounting/auditing firm, a three-person firm with only one active accountant.[70]

The Federal Bureau of Investigation complaint says that during the first week of December 2008, Madoff confided to a senior employee, identified by Bloomberg News as one of his sons, that he said he was struggling to meet $7 billion in redemptions.[12] According to the sons, Madoff told Mark Madoff on Dec. 9 that he planned to pay out $173 million in bonuses two months early.[71] Madoff said that “he had recently made profits through business operations, and that now was a good time to distribute it."[12] Mark told Andrew Madoff, and the next morning they asked their father to explain how he could pay bonuses if he was having trouble paying clients. They went to Madoff's apartment, with Ruth Madoff nearby. Madoff told them he was “finished,” that he had “absolutely nothing” left, that his investment fund was “just one big lie” and “a giant Ponzi scheme.”[71] According to their attorney, Madoff's sons then reported their father to federal authorities.[12] On December 11, he was arrested and charged with securities fraud.[14]

Madoff posted $10 million bail in December 2008 and remained under 24-hour monitoring and house arrest in his Upper East Side penthouse apartment until March 12, 2009, when Judge Denny Chin revoked his bail and remanded him to the Metropolitan Correctional Center. Chin claimed Madoff was a flight risk, because of his age, wealth, and the prospect of spending the rest of his life in prison.[72] Prosecutors filed two asset forfeiture pleadings which include lists of valuable real and personal property as well as financial interests and entities.[73]

Madoff's lawyer, Ira Sorkin, filed an appeal, and prosecutors responded with a notice of opposition. [73] On March 20, 2009, an appellate court denied Madoff's request to be released from jail and returned to home confinement until his June 29, 2009 sentencing. On June 22, 2009, Sorkin hand-delivered a customary pre-sentencing letter to the judge requesting a sentence of 12 years, because of tables cited from the Social Security Administration that his life span is predicted to be 13 years.[65][74]

On June 26, 2009, Chin ordered Madoff to forfeit $170 billion in assets. Prosecutors asked Chin to sentence Madoff to the maximum 150 years in prison.[75][76][77] Irving Picard indicated that "Mr. Madoff has not provided meaningful cooperation or assistance."[78]

In settlement with federal prosecutors, Madoff's wife Ruth agreed to forfeit her claim to US$85 million in assets, leaving her with $2.5 million in cash.[79] The order allowed the SEC and Court appointed trustee Irving Picard to pursue Ruth Madoff's funds.[78] Massachusetts regulators also accused her of withdrawing $15 million from company-related accounts shortly before he confessed.[80]

In February 2009, Madoff reached an agreement with the SEC, banning him from the securities industry for life.[81]

Picard has sued Madoff's sons, Mark and Andrew, his brother Peter, and Peter's daughter, Shana, for negligence and breach of fiduciary duty, for $198 million. The defendants had received over $80 million in compensation since 2001 and "used the bank account at BLMIS like a personal piggy bank." The trustee believes they knew about the fraud because of their personal investments in the scheme, the longevity of the fraud, and because of their work at the company including roles as corporate and compliance officers. Since 1995, Peter Madoff had invested only $14, but withdrew over $16 million. Mark and Andrew Madoff withdrew more than $35 million from a small original investment.[82][83]

Mechanics of the fraud

According to the Securities and Exchange Commission indictment against Annette Bongiorno and Joann Crupi, two back office workers who worked for Madoff, they created false trading reports based on the returns that Madoff ordered for each customer.[84] For example, once Madoff determined a customer's return, one of the back office workers would enter a false trade from a previous date and then enter a false closing trade in the amount of the required profit, according to the indictment.[85] Prosecutors allege that Bongiorno used a computer program specially designed to backdate trades and manipulate account statements. They quote her as writing to a manager in the early 1990s "I need the ability to give any settlement date I want."[84] In some cases returns were allegedly determined before the account was even opened.[85]

Madoff admitted during his March 2009 guilty plea that the essence of his scheme was to deposit client money into a Chase account, rather than invest it and generate steady returns as clients had believed. When clients wanted their money, "I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds," he told the court.[86]

Affinity fraud

Affected institutions include Yeshiva University, the Women's Zionist Organization of America, the Elie Wiesel Foundation and Steven Spielberg's Wunderkinder Foundation. Jewish federations and hospitals have lost millions of dollars, forcing some organizations to close.[87] The Lappin Foundation, for instance, was temporarily forced to halt operations because it had invested its entire $8 million endowment with Madoff.

Size of loss to investors

David Sheehan, chief counsel to trustee Picard, stated on September 27, 2009, that about $36 billion was invested into the scam, returning $18 billion to investors, with $18 billion missing. About half of Madoff's investors were "net winners," earning more than their investment. The withdrawal amounts in the final six years are subject to "clawback" (return of money) lawsuits.[4]

Former SEC Chairman Harvey Pitt has estimated the actual net fraud to be between $10 and $17 billion.[88] Erin Arvedlund, who publicly questioned Madoff's reported investment performance in 2001, stated that the actual amount of the fraud will never be known, but is likely between $12 and $20 billion.[89] [90] As of September 2010 approximately $1.5 billion have been recovered for distribution to the net losers that were invested in BLMIS directly. Mr. Picard currently has approved approximately $5.6 billion in claims.

Plea, sentencing, and prison life

On March 12, 2009, Madoff pleaded guilty to 11 federal offenses, including securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC.[91] The plea was the response to a criminal complaint filed two days earlier, which stated Madoff had defrauded his clients of almost $65 billion in the largest Ponzi scheme in history. Madoff insisted he was solely responsible for the fraud.[5][67] Madoff did not plea bargain with the government. Rather, he pleaded guilty to all charges. It has been reported that he did so because he refused to cooperate and name any conspirators.[92] [93]

On November 3, 2009, David Friehling, Madoff's accounting front man plead guilty to securities fraud, investment adviser fraud, making false filings to the Securities and Exchange Commission, and obstructing the IRS. Madoff's right hand man, Frank DiPascali pleaded guilty in August, 2009, and is awaiting bail.[94]

Madoff's plea allocution stated he began his Ponzi scheme in 1991. He admitted he had never made any legitimate investments with his clients' money during this time; instead, he deposited the money into his business account at Chase Manhattan Bank. Chase and its successor, JPMorgan Chase, may have earned as much as $483 million from his bank account.[95][96] He was committed to satisfying his clients' expectations of high returns, despite an economic recession. He admitted to false trading activities masked by foreign transfers and false SEC filings. He told the Court his intention had always been to resume legitimate trading activity, but it proved "difficult, and ultimately impossible" to reconcile his client accounts. In the end, Madoff said, he realized that his scam would eventually be exposed.[72][97]

On June 29, 2009, Chin sentenced Madoff to the maximum sentence of 150 years in federal prison.[6][98] Madoff's lawyers originally asked the judge to impose a sentence of 7 years because of Madoff's old age.

Madoff apologized to his victims, saying, "I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This is something I will live in for the rest of my life. I'm sorry." He added, "I know that doesn't help you," after his victims recommended to the judge that he receive a life sentence. Chin had not received any mitigating letters from friends or family testifying to Madoff's good deeds. "The absence of such support is telling," he said.[99]

Chin also said that Madoff had not been forthcoming about his crimes. "I have a sense Mr. Madoff has not done all that he could do or told all that he knows," said Chin, calling the fraud "extraordinarily evil," "unprecedented" and "staggering," and that the sentence would deter others from committing similar frauds.[100] Chin also agreed with prosecutors' contention that the fraud began at some point in the 1980s, and also noted that Madoff's crimes were "off the charts" since federal sentencing guidelines for fraud only go up to $400 million in losses.[101]

Ruth did not attend court but issued a statement, saying "I am breaking my silence now because my reluctance to speak has been interpreted as indifference or lack of sympathy for the victims of my husband Bernie's crime, which is exactly the opposite of the truth. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years." [102]

Incarceration

FCI Butner Medium, where Madoff is incarcerated

Madoff's attorney asked the judge to recommend that the Federal Bureau of Prisons place Madoff in the Federal Correctional Institution, Otisville, which is located 70 miles (110 km) from Manhattan. The judge, however, only recommended that Madoff be sent to a facility in the Northeast United States.[103] Madoff was transferred to the Federal Correctional Institution Butner Medium near Butner, North Carolina, about 45 miles (72 km) northwest of Raleigh; he is Bureau of Prisons Register #61727-054.[1][104] Jeff Gammage of the Philadelphia Inquirer said "Madoff's heavy sentence likely determined his fate."[103]

Madoff's projected release date is November 14, 2139.[2][104] The release date, described as "academic" in Madoff's case, reflects a reduction for good behavior.[105] On October 13, 2009, it was reported that Madoff experienced his first prison yard fight with another senior citizen inmate. [106] When he began his sentence, Madoff's stress levels were so severe that he broke out in hives and other skin maladies soon after.[107] On December 18, 2009, Madoff was moved to Duke University Medical Center in Durham, North Carolina, and was treated for several facial injuries. A former inmate later claimed that the injuries were received during an alleged altercation with another inmate.[108] Other news reports described Madoff's injuries as more serious and including "facial fractures, broken ribs, and a collapsed lung."[107][109] The Federal Bureau of Prisons said Madoff signed an affidavit on December 24, 2009, which indicated that he had not been assaulted and that he had been admitted to the hospital for hypertension. [110]

See also

References

  1. ^ a b Chuchmach, Megan; Esposito, Richard; Katersky, Aaron (July 14, 2009). "Bernie Madoff 'Hit the Inmate Lottery' with Butner Prison, Consultant Says". ABC News. Retrieved July 14, 2009.
  2. ^ a b Kouwe, Zachery (July 14, 2009). "Madoff Arrives at Federal Prison in North Carolina". The New York Times. Associated Press. Retrieved July 14, 2009.
  3. ^ "Voice of America pronunciation guide". Voice of America. Retrieved March 18, 2010.
  4. ^ a b c Safer, Morley (September 27, 2009). "The Madoff Scam: Meet The Liquidator". 60 Minutes. CBS News. pp. 1–4. Retrieved September 28, 2009. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
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