Madoff guilty

Financier apologizes for fraud, then is sent to prison

March 13, 2009|By Walter Hamilton and Erika Hayasaki | Walter Hamilton and Erika Hayasaki,Tribune Washington Bureau

NEW YORK -Even as Bernard L. Madoff was sent to prison yesterday after confessing to an epic Ponzi scheme, the intrigue over his case deepened as victims pressed the government to find out who might have helped him and where the money went.

After a 75-minute court hearing at which he pleaded guilty to 11 criminal counts and said that he was "deeply sorry and ashamed," Madoff was led away in handcuffs for a future that will differ vastly from the opulent Manhattan lifestyle that he has led for years.

"I realized that my arrest and this day would inevitably come," Madoff told a packed courtroom in his first public comments since his scheme was revealed in December. "I am painfully aware that I have hurt many, many people."

That was little consolation to the more than two dozen investors who squeezed into the federal courtroom for a glimpse of the man who bilked many out of their life savings, while assuring them last fall that their investments were worth $65 billion.

"It's about time he went to jail," said Mark Labianca, who invested with Madoff. "He should have been in jail from the get-go."

The guilty plea and incarceration represented a milestone in one of history's largest and most brazen investment frauds.

Almost 5,000 investors - including director Steven Spielberg, actor Kevin Bacon and baseball legend Sandy Koufax - were ensnared by the smooth-talking financier who boasted of steady investment returns through even the most treacherous markets.

The revelation in December that Madoff had crafted a huge Ponzi scheme hit investors like a thunderclap and immediately transformed him into the most visible symbol of the global financial crisis.

Madoff faces a maximum term of 150 years in prison, though experts predict that his sentence will be closer to 20 years - essentially a life term for the 70-year-old man.

Investors applauded as U.S. District Judge Denny Chin rejected Madoff's request to continue living at his Manhattan apartment until his scheduled sentencing on June 16.

Yet many victims bridled at the lack of information about how he pulled off the elaborate crime and whether there is any cash left to repay them.

"Investors want some money back," said Sharon Lissauer, a New York model who entrusted her life savings to Madoff. "Even if he spends the rest of his life in jail, that doesn't help me."

Legal experts said the pressure is mounting on federal prosecutors to retrace Madoff's steps and get answers for investors.

"This was the unfolding of the final chapter of a story where the early part of the book has yet to be told," said Robert Mintz, a white-collar defense lawyer in New Jersey. "We know who the villain is. What we don't know is how we got here and who may have helped him along the way."

Digging that out will require far more grueling spadework than was needed to nab Madoff.

The financier has steadfastly claimed that he acted alone and hired inexperienced underlings who lacked the sophistication to detect his fraud.

Madoff has argued that his wife should be allowed to keep almost $70 million in assets, including the couple's Upper East Side apartment. He went out of his way in court to say that his company's stock-trading unit, where his brother and two sons worked, was separate from his scam.

Some legal experts doubt that prosecutors will be able to piece together the details of a fraud of such magnitude.

Madoff's decision to plead guilty despite the lack of a plea deal with prosecutors is rare, and a move that experts said was taken to curry favor with the judge. By obviating the need for a lengthy trial, Madoff hopes to shorten what could otherwise amount to a life sentence, attorney Steven D. Feldman said.

"This is to get 15 [years] instead of 25," he said.

With an automatic 15 percent sentence reduction for good behavior, that could free Madoff within 13 years, or by roughly his 83rd birthday.

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