Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

A 'sorry and ashamed' Bernard Madoff pleads guilty

Send a link to a friend

[March 13, 2009]  NEW YORK (AP) -- Bernard Madoff went from a $7 million penthouse to a tiny jail cell with cinderblock walls and linoleum floors after confessing he carried out what may be the biggest fraud in Wall Street history to escape the pain of a recession.

The change in lifestyle for the 70-year-old financier was welcomed Thursday by angry investors who packed into a federal courtroom 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 to await a June 16 sentencing when 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.

Defense attorney Ira Sorkin argued Madoff deserved to stay out because other high-profile financial criminals accused in multi-billion-dollar frauds were not jailed until sentencing, but 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 scandal broke in early December after he confessed to his sons.

His Dec. 11 arrest turned a well-respected investment professional -- Madoff was once chairman of the Nasdaq exchange -- into a symbol of Wall Street greed amid the economic meltdown. The public fury toward him was so great that he sometimes wore a bulletproof vest to court.

The court appearance disappointed many Madoff investors, who hoped he would say who might have 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 cooperate. 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.

There was a smattering of applause after the judge announced Madoff would go directly to jail -- the drab, windowless high-rise Metropolitan Correctional Center next door to the courthouse -- to await sentencing. But that did not lessen his victims' anger or satisfy their desire for retribution.

"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 and other family members and employees to determine what role, if any, they played in scam.

In court documents, prosecutors say Madoff reported he oversaw $64.8 billion. 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.

[to top of second column]


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.

His thousands of victims included individuals, trusts, pension funds, hedge funds and nonprofit organizations. The scheme wiped out people's fortunes, ruined charities and foundations, and apparently pushed at least two investors to commit suicide.

Investors big and small were swindled, from Florida retirees to celebrities such as Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax. Many of Madoff's victims were Jews and Jewish charities, which trusted him because he is Jewish. Those cheated included Nobel Peace Prize winner and Holocaust survivor Elie Wiesel.

In court Thursday, Madoff -- clad in a charcoal-gray suit, with swept-back, wavy gray hair -- said he began the scheme during the last recession, when "I felt compelled to satisfy my clients' expectations, at any cost." He did not put his investors' money into the market, as he claimed. Instead, it was a Ponzi scheme, or a pyramid, in which early investors are paid off with money taken in from later ones.

"When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme," he said. "However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come."

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."


"I wanted him to see some of the faces of the people he lied to and destroyed," said Cynthia Friedman, 59, of Jericho, N.Y. She and her husband, Richard, said Madoff defrauded them of their life savings of $3 million. They learned it was gone months before Richard Friedman was supposed to retire -- a plan now on hold.

Madoff did not look at any of the three investors who spoke at the hearing.

Madoff told the court that he falsely told investors he was employing a "split strike conversion strategy": He claimed he invested their money in a batch of stocks from the Standard & Poor's 100 that closely tracked the price movements of the index. He also told investors that he would periodically pull their money out of the market and put it in Treasury bills. And he claimed he bought stock options to hedge against losses. All of that was false.

Madoff also said that to fool his clients into thinking he was buying and selling stocks, he transferred money from his fraudulent operations into his wholesale stock-trading firm, which he otherwise described as an honest, legitimate business.

Afterward, Burt Ross, a lawyer from Englewood, N.J., who lost $5 million in Madoff's swindle, said: "It's a little bit like seeing the devil."

[Associated Press; By TOM HAYS and LARRY NEUMEISTER]

Associated Press writers Jennifer Peltz and David B. Caruso contributed to this report.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


< Recent articles

Back to top


News | Sports | Business | Rural Review | Teaching & Learning | Home and Family | Tourism | Obituaries

Community | Perspectives | Law & Courts | Leisure Time | Spiritual Life | Health & Fitness | Teen Scene
Calendar | Letters to the Editor