Victims of Madoff scam fear guilty plea will protect accomplices
Bernard Madoff went from a $7 million US penthouse to a tiny prison cell with cinderblock walls and linoleum floors after confessing Thursday that he carried out what may be the biggest fraud in Wall Street history.
The change in lifestyle for the 70-year-old financier was welcomed by angry investors who packed into a federal courtroom Thursday to watch Madoff plead guilty to cheating nearly 5,000 investors out of billions of dollars.
"I am painfully aware that I have deeply hurt many, many people, including the members of my family, my closest friends, business associates and the thousands of clients who gave me their money," he told U.S. District Judge Denny Chin.
"I cannot adequately express how sorry I am for what I have done," he said just before Chin ordered him to prison while he awaits a June 16 sentencing hearing at which he will face up to 150 years in prison.
His lawyers filed a notice of appeal to a federal appeals court to get it to reconsider Chin's decision.
Defence attorney Ira Sorkin argued Madoff deserved to stay out of jail because other high-profile financial criminals accused in multi-billion-dollar frauds were not jailed while awaiting sentencing. Chin disagreed, telling prosecutors he did not even need to hear their bail arguments.
"In light of Mr. Madoff's age, he has an incentive to flee, he has the means to flee, and thus, he presents a risk of flight," Chin said.
Madoff said "guilty" repeatedly to 11 felony counts, including securities fraud and perjury. He could also be fined and ordered to pay restitution to his victims and forfeit any ill-gotten gains.
In a long, detailed statement delivered in a soft but steady voice, Madoff implicated no one but himself in the vast Ponzi scheme. He said he started it as a short-term way to weather the early-1990s recession and was unable to extricate himself as the years went by.
"I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," Madoff said in his first public comments about his crimes since the $65 billion US scandal broke in early December 2008 after he confessed to his sons.
The court appearance disappointed many Madoff investors, who hoped he would say who helped him pull off the scam and where the money went.
Because Madoff pleaded guilty without a deal with prosecutors, he is under no obligation to co-operate. Some legal experts and investors, like Judith Welling, have speculated that he is sacrificing himself to protect his wife, his family and friends.
"He's trying to save the rest of his family," Welling said. "We need to find out who else was involved, and we need, obviously, to freeze the assets of all those people involved to help the victims."
Acting U.S. Attorney Lev Dassin said in a statement that the government made no deal, "public or otherwise," with Madoff over his plea, his sentence or whether it will pursue more charges against him or anyone else.
"So he spends the rest of his life in jail — is that justice? People's lives are ruined," said Adriane Biondo of Los Angeles, one of five members of her family who lost money with Madoff.
"He's sitting in jail? That's awesome," she said sarcastically. "Where's the money, Bernie?"
Prosecutors gave assurances they are investigating Madoff's wife, other family members and employees to determine what role, if any, they played in the scam.
In court documents, prosecutors say Madoff reported he oversaw $64.8 billion US. However, experts said that the actual loss was probably much less and that the higher number reflects the false profits Madoff told investors they were making. So far, authorities have located only about $1 billion for investors.
Prosecutors have already said low-level employees in Madoff's New York offices participated by mailing out tens of thousands of phony monthly statements and trading confirmations to make it look as if customers were making money in the market.
Some investors suspect their money ended up in the hands of Madoff's wife, Ruth. She was not in court Thursday, but the mere mention of her name drew jeers and laughter.
Madoff's thousands of victims included individuals, trusts, pension funds, hedge funds and non-profit organizations. The scheme wiped out people's fortunes, ruined charities and foundations and apparently pushed at least two investors to commit suicide.
Burt Ross, a lawyer from Englewood, N.J., who lost $5 million US in Madoff's swindle, said of Thursday's hearing: "It's a little bit like seeing the devil."
Investors big and small were swindled, from Florida retirees to celebrities such as Hollywood director Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax. Those cheated included Nobel Peace Prize winner and Holocaust survivor Elie Wiesel.
In Washington, White House spokesman Robert Gibbs said: "The president is glad that swift justice will happen."
Gibbs said the Obama administration will do everything possible to ensure strict enforcement of securities regulations "and hope that through those actions that that kind of greed and irresponsibility and that kind of criminal activity never happens again."