Bernard Madoff Gets 150 Years in Jail for Epic Fraud

June 29 (Bloomberg) -- Bernard Madoff was sentenced to 150 years for masterminding the largest Ponzi scheme in history, six times longer than the penalties meted out to the chief executives of WorldCom Inc. and Enron Corp.

Madoff appeared in court today before U.S. District Judge Denny Chin for the first time since his March 12 guilty plea for an epic swindle that may have reached $65 billion.

“I don’t ask for any forgiveness,” Madoff, 71, told Chin. He said he deceived his brothers, his two sons and his wife, none of whom was in the court. The courtroom burst into applause as Chin imposed the sentence.

Madoff pleaded guilty to securities fraud, mail fraud, wire fraud, investment adviser fraud, three counts of money laundering, false statements, perjury, false filings with the SEC and theft from an employee benefit plan.

Madoff today was led into the 11th floor courtroom in Manhattan federal court wearing a suit and flanked by federal marshals. Seated beside defense attorney Ira Sorkin, Madoff sat silently as nine former investors assailed him for a fraud that cost many their life savings.

Madoff has shown “no remorse,” said victim Carla Hirschhorn, of Manalapan, New Jersey, at the hearing. She told Chin her life is a “living hell,” her mother is dependent on social security and her daughter works two jobs to pay tuition. “Don’t fail us,” she told the judge.

Dreams Shattered

Sharon Lissauer, a model who lives in Manhattan, said the money manager “shattered my dreams” and lost her mother’s inheritance. Miriam Siegman, of Stamford, Connecticut, told Chin Madoff “discarded me like road kill,” and that she now relies on food stamps, collecting recyclable bottles and digging through dumpsters.

Madoff apologized to his victims in a statement to the court, saying he “left a legacy of shame,” and that he lives “in a tormented state now.” He couldn’t admit his error in judgment, he said, and thought he could “work his way out” of the fraud.

Hundreds of onlookers and dozens of television cameras were outside the lower Manhattan courthouse where Madoff was sentenced.

Sorkin told the court after the victims spoke that his client is a “deeply flawed human being.”

Claim Challenged

Sorkin challenged the government’s claim that his client’s fraud has so far led to $13.3 billion in losses. He said the amount should be offset by $1.3 billion held by the trustee for Bernard L. Madoff Investment Securities LLC; by $1.3 billion already recovered by the trustee; and by letters sent by the trustee, Irving Picard, seeking to “claw back” $735 million from Madoff investors.

Sorkin also cited the $10 billion demanded in various other “clawback” lawsuits as an offset, in a letter filed with the court yesterday.

“Thus, if the trustee is successful in his lawsuits, losses will be substantially reduced,” Sorkin wrote. “The media hysteria that the Ponzi scheme was approximately $65 billion and that Mr. Madoff lined his pockets with billions is simply not correct.”

Chin said no other fraud case is comparable to Madoff’s. He added that no letters were submitted to vouch for Madoff’s character, and that the “symbolism” of the 150-year sentence is “important.”

Picard, tasked with unwinding Madoff’s firm said in another letter filed with the court today that the former money manager hasn’t provided “any meaningful cooperation” since his arrest.

David Sheehan, a lawyer for trustee Picard, disputed a claim by Madoff’s attorney that his client had cooperated.

Downfall

Madoff’s sentencing caps the downfall of an acclaimed investment adviser who told the world his fortune came through an eponymous firm that specialized in making markets, trading securities and advising wealthy clients.

Over three decades, he built a reputation as a brilliant stock picker who delivered steady returns through both bull and bear markets. He attracted an international client roster that included celebrities including filmmaker Steven Spielberg, fund managers such as J. Ezra Merkin, charities, universities, friends and even European royalty.

Big Lie

His facade shattered on Dec. 11, as Madoff confessed to authorities that his firm, Bernard L. Madoff Investment Securities LLC, was “one big lie.” Under immense pressure from a rush of investor redemptions, he admitted he used money from new investors to pay old ones. Regulators later said that his investment advisory business hadn’t made a trade in at least 13 years.

Some of his thousands of investors lost their life savings. Thierry Magon de La Villehuchet, chief executive officer of Access International Advisors, which managed $3 billion, was driven to suicide because of his firm’s Madoff-related losses, his brother, Bertrand Magon de la Villehuchet, said in January.

Madoff received the maximum sentence on the 11 fraud charges to which he pleaded guilty. Before his sentencing, he consulted with Herbert Hoelter of the National Center on Institutions and Alternatives, a prisoner advocacy group, according to court records.

Stewart and Vick

Other Hoelter clients have included lifestyle doyenne Martha Stewart, who was jailed for obstructing justice, and football player Michael Vick, who served time for helping to run a dog-fighting ring.

The U.S. Bureau of Prisons will now decide where Madoff serves his term. Since being locked up in March, he’s been housed in the maximum security Metropolitan Correctional Center next door to the courthouse.

Other aging white-collar convicts are in low-security prisons. Former WorldCom Inc. Chief Executive Officer Bernard Ebbers, 67, is housed at the Federal Correctional Institution in Oakdale, Louisiana. John Rigas, 84, the ex-CEO of Adelphia Communications Corp., is imprisoned at the Federal Correctional Institution in Butner, North Carolina.

At his guilty plea in March, Madoff said that in the early 1990s, with the U.S. in a recession, he felt “compelled” to provide the returns his investors expected and began stealing investor money. He said the proprietary trading and market- making units of his business, both run by his sons, were “legitimate,” and his U.K.-based affiliate, Madoff Securities International Ltd., was an “honestly run” business.

Criminal Deeds

“I am actually grateful for this opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed,” Madoff said in court at the time. “I knew what I was doing was wrong, indeed criminal.”

The case doesn’t end with the sentencing. Investigators have seized control of Madoff offices at the lipstick-shaped building at 885 Third Avenue in Manhattan, where Madoff Securities operated out of three floors.

Prosecutors are probing whether his subordinates helped him swindle investors. A central issue is whether employees knew of the fraud. Madoff’s accountant, David Friehling, has been indicted on federal charges of lying to Madoff investors about whether he audited the firm.

No one else at the firm has been charged, and Madoff has not publicly implicated others. His sons Andrew and Mark Madoff ran the proprietary trading operations at Madoff’s firm. They turned their father in to authorities on Dec. 10 after he confessed to them, their attorney, Martin Flumenbaum, has said.

Civil Litigation

There has been a burst of civil litigation as well. Stephen Harbeck, president of the Securities Investor Protection Corp., which is liquidating Madoff Securities, said in May that it may take longer than 10 years to finish locating the company’s assets and paying back victims.

Investors have filed lawsuits against funds that invested with Madoff and were wiped out, including Fairfield Greenwich Group and Gabriel Capital LP. SIPC has also filed “clawback” suits against the feeder funds. Fairfield Greenwich is being sued for the $3.5 billion it withdrew before the fraud unraveled.

The case is U.S. v. Madoff, 09-cr-00213, U.S. District Court for the Southern District of New York (Manhattan).

Source: bloomberg.com