Wednesday, 22 February 2017
Last updated 4 min ago
Mar 11 2009 | 2:53am ET
Bernard Madoff, the New York financier and hedge fund manager accused of orchestrating a $50 billion Ponzi scheme, will plead guilty this week to fraud charges, his lawyer said yesterday.
At a hearing in Manhattan, Madoff waived potential conflicts of interest involving his attorney, Ira Sorkin. Sorkin then told U.S. District Judge Denny Chin that Madoff would plead guilty to the 11 counts of fraud in the criminal information filed today by prosecutors. There is no plea agreement, and the 70-year-old faces up to 150 years in prison.
“I gather it is the expectation that he will plead guilty,” Chin asked Sorkin. Sorkin responded, “That’s a fair expectation, your honor.”
Madoff will be back in court tomorrow, when Chin will decide whether to accept Madoff’s plea and whether the accused fraudster, who has remained free on bail, confined to his New York apartment, since his arrest in December, should be sent directly to prison. Madoff’s victims, who were originally told they would be invited to address the court tomorrow, were told they will not have to wait for the sentencing hearing.
“I understand that emotions are high,” Chin said.
Madoff, who had originally been charged with just a single count of securities fraud, saw 10 new charges added yesterday: investment adviser fraud, adviser fraud, mail fraud, wire fraud, false statements, perjury, false filings with the Securities and Exchange Commission, theft from an employee benefit plan and three counts of money laundering. Madoff is not charged with conspiracy, likely to reignite the debate on whether he could have run so massive a fraud without help.
The criminal information also offered new details of Madoff’s alleged fraud. According to prosecutors, Madoff promised investors returns as high as 46% a year, and set up a back-office infrastructured, staffed by employees with “little or no prior pertinent training or experience,” to create the appearance of “a legitimate investment advisory business in which client funds were actively traded.” In another misleading move designed to make investors think he was legitimate, Madoff set up accounts in London to make it appear that he was trading European securities. The court-appointed receiver for Madoff’s firm said recently that he had found no evidence that Madoff ever bought securities with client funds.
“The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years,” Lev Dassin, acting U.S. Attorney for the Southern District of New York, said in a statement. “The size and scope of Mr. Madoff’s fraud are unprecedented.”
Dassin added that his office’s investigation in the Madoff fraud is continuing.
The criminal information alleges that Madoff “repeatedly lied” to the S.E.C. and his clients, telling the latter of “fictitious returns.” He is also charged with using some $250 million of client funds from his investment advisory to finance his market-making and proprietary trading businesses, which were run separately from the investment advisory.
Prosecutors also demand that Madoff forfeit a whopping $177 billion in proceeds and property, a figure more than three times as high as the highest estimates of the size of the fraud—estimates that have recently come into question as being too high.
Another lawyer for Madoff, Daniel Horowitz, called the $177 billion figure “grossly overstated.”
“We respectfully suggest that the amount of the government’s forfeiture is grossly overstated—and misleading—even for a case of this magnitude,” Horowitz wrote to Chin.