Madoff faces 150-year sentence after guilty plea
Bernard Madoff, whose $50-billion fraud devastated individual and institutional investors worldwide, could spend the rest of his life in prison after pleading guilty later this week.business Updated: Mar 11, 2009 12:19 IST
Bernard Madoff, whose $50-billion fraud devastated individual and institutional investors worldwide, could spend the rest of his life in prison after pleading guilty later this week.
In a court hearing Tuesday, defence lawyer Ira Sorkin said that Madoff would plead guilty Thursday in federal court in New York. The news confirmed recent reports that Madoff was expected to enter a guilty plea.
At the hearing, Assistant US Attorney Marc Litt said that Madoff faces 11 criminal counts including securities fraud, mail fraud, wire fraud, three counts of money laundering and filing false statements with the Securities and Exchange Commission (SEC).
Litt said that Madoff faces up to 150 years in prison on the charges under federal sentencing guidelines, The Wall Street Journal reported online.
The focus of Tuesday's hearings was a separate issue, involving whether Sorkin had a conflict of interest in the case because of the lawyer's late father's investments in Madoff's firm.
Madoff, who was in the courtroom, waived the possible conflict of interest with his lawyer, meaning his case can go forward with Sorkin as his legal advocate.
Madoff, 70, is under house arrest at his Upper East Side Manhattan home on $10 million bail. His wife, who has taken a separate lawyer, is claiming that tens of millions of dollars in her name cannot be touched to pay victims of the swindle.
Madoff was arrested in December for allegedly running a $50-billion Ponzi scheme - a pyramid racket where people paid into fake investments. Instead, the money from new investors was used to pay handsome dividends to earlier investors.
At the end of November, Madoff's fake balance sheets showed $64.8 billion in holdings from 4,800 clients. Prosecutors were convinced that he had collaborators who helped him falsify the documents sent regularly to his clients, but charges have not been filed against anyone other than Madoff.
Prosecutors are claiming damages of $170 billion from Madoff's assets.
Despite several questions and tips about Madoff's operations since he started the fund in the 1970s, the SEC, which regulates financial markets, failed to pursue an investigation. Critics say his background as former chairman of Nasdaq, the high-tech stock market, won him the sort of insider credibility that fended off such probes.
Congress has grilled SEC officials over their failure to halt Madoff's scheme, which started unravelling in December as investors hard-pressed by the global recession tried to pry loose their money from Madoff.
Under the pressure of Wall Street's massive selloff late last year, Madoff, a leading trader on the New York exchange for 50 years, told his senior employees that the part of his business which served individual clients was a fraud and he was "finished". He was turned in to federal agents by his sons for running what they said he called a giant "Ponzi scheme".
At least one suicide is blamed on the unravelling of the scheme. Rene-Thierry Magon de la Villehuchet, 65, a founder of the hedge fund Access International Advisors, was found dead in December in the New York offices of a $1.4-billion Luxembourg-based hedge fund that was heavily invested in the soured Madoff firm.
Spanish, French, Austrian and British investment firms and banks have suffered billions of dollars in losses, piled on top of sharply lower asset values amid the global recession.
Top entertainment personalities have been hit hard. Actress Zsa Zsa Gabor, 91, and her ninth husband, Frederic von Anhalt, who is in his 60s, lost as much as $10 million, her attorney has confirmed.
The list also includes director Steven Spielberg, DreamWorks Animation SKG Inc chief executive Jeffrey Katzenberg, and actor Kevin Bacon.
The Jewish Community Foundation of Los Angeles lost $18 million.