Ponzi scheme, Bernard Madoff, Bernie Madoff, Madoff plea deal
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Bernard Madoff

Madoff Goes Directly to Jail

March 12, 2009 01:45 PM
by Anne Szustek
Bernard Madoff pleaded guilty to 11 charges made in connection to his multi-billion dollar Ponzi scheme. He was sent directly to jail to await sentencing.

Bernard Madoff Thought Scheme "Would End Shortly"

Ponzi scheme mastermind Bernard Madoff pleaded guilty to 11 federal charges Thursday. He faces a combined sentence of up to 150 years. Formal sentencing is scheduled for June 16. In the meantime, Madoff was sent directly to jail, rather than to his Upper East Side luxury apartment.

“He has incentive to flee, he has the means to flee, and thus he presents the risk of flight,” Judge Denny Chin said in U.S. District Court in Manhattan. “Bail is revoked.”

The fallen financier spoke publicly for the first time on how he created and maintained the 20-year-ruse that bilked charities, celebrities, retirees and close friends out of as much as $65 million. “I believed it would end shortly and I would be able to extricate myself and my clients from the scheme," Madoff said in court. He conceded that he was operating “a Ponzi scheme through the investment advisory side of my business,” although maintained that other facets of his company, such as those run by his sons and brother, were legal.

Madoff backed out of a plea deal with federal prosecutors on Wednesday because he would not admit to a conspiracy charge. His refusal to admit to conspiracy means that the government will have to investigate the identities of Madoff’s alleged co-conspirators without his assistance.

“The information crafted by the government does not contain a conspiracy charge, and you can read what you like into that,” Madoff attorney Mauro Wolfe told Bloomberg on Wednesday in reference to a court document outlining Madoff’s pending charges. “The information speaks for itself.”

Madoff’s reticence “most likely will be quite unsatisfying for those who want to hear him explain what he did and whether he feels even the slightest remorse,” writes Wayne State law professor Peter J. Henning in The New York Times’ Deal Professor blog.

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Madoff’s sons and brother Peter, who held positions in the firm, have not been charged in connection with the scheme. However, the assets of Madoff’s wife Ruth have come under the microscope. Mr. Madoff’s defense lawyer, Ira Sorkin, has argued that $70 million in assets held under Ruth Madoff’s name are separate from that of her husband and are unrelated to the alleged Ponzi scheme. Mrs. Madoff, previously represented by Sorkin, is now seeking her own legal counsel.

Background: The Madoff scandal

Bernie Madoff faced 11 charges in connection with a multi-billion Ponzi scheme at his investment firm, Bernard L. Madoff Investment Securities. The charges include allegations of securities fraud, perjury, mail and wire fraud, theft from an employee retirement plan and money laundering.

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