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Disgraced Wall Street financier Bernard Madoff arrives at a Manhattan federal court Thursday for a hearing at which he pleaded guilty to 11 criminal charges. Prosecutors have said Madoff could be facing up to 150 years in prison.
Disgraced Wall Street financier Bernard Madoff arrives at a Manhattan federal court Thursday for a hearing at which he pleaded guilty to 11 criminal charges. Prosecutors have said Madoff could be facing up to 150 years in prison. Stephen Chernin/Getty Images
Former New York money manager Bernard Madoff pleaded guilty Thursday to masterminding one of the largest swindles in Wall Street history and was led away from a Manhattan courthouse in handcuffs.
U.S. District Judge Denny Chin accepted Madoff's plea and immediately revoked his bail. Madoff, 70, has been living under house arrest in his Manhattan penthouse apartment since December — and his ability to live in that luxury rankled many of the people who literally lost their life savings and homes to his scheme.
"He has incentive to flee, he has the means to flee, and thus he presents the risk of flight," Chin said. "Bail is revoked."
Some spectators in the courtroom applauded the ruling. Madoff pleaded guilty to 11 counts of fraud, money laundering, perjury and theft and faces a maximum of 150 years in prison. Sentencing was scheduled for June 16.
Madoff, a former chairman of the Nasdaq exchange, has become a symbol of all that has gone wrong with the financial industry in recent years. He is so hated by the people who invested with him that he hired his own security firm and has worn a bulletproof vest when traveling to and from the courthouse.
He told Chin that he started falsifying account statements in the 1990s because he felt compelled to meet investor expectations. He built a giant Ponzi scheme to ensure that those expectations would not be dashed. He ended up taking new clients' money to both finance a lavish lifestyle and pay off established clients when they asked for redemptions from their accounts.
Madoff said that when he started falsifying the statements he "believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible. ... As the years went by I realized this day, and my arrest, would inevitably come."
He said he was painfully aware that he had hurt many people. "I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," Madoff said.
Madoff's scheme ensnared a roster of different investors — hedge funds, philanthrophic organizations, celebrities, Palm Beach retirees — all of whom were wiped out by a man who had made clients feel that investing with him was somehow a privilege. Clients came to him by recommendation, and he turned many people away. He promised his clients steady returns and, on paper, that is what they seemed to be getting.
It is unclear exactly how much money Madoff funneled through his scheme and what happened to that money. Prosecutors say the government is looking for some $170 billion in forfeited assets from Madoff which, they say, is equal to all the money that ran through accounts linked to the scheme.
So far a court-appointed trustee has been able to find only about $1 billion in assets. Federal prosecutors say Madoff had 4,800 client accounts by the end of November 2008 that were supposed to contain some $64.8 billion in customer funds. The government said Madoff's business had only "a small fraction" of that money.
There had been some talk last week of a possible plea agreement, but in the end those negotiations collapsed after prosecutors refused to protect Madoff's family from prosecution. Ruth Madoff, his wife, has now retained a lawyer. People familiar with the discussions, who asked not to be named because an investigation is ongoing, said the talks had been contentious from the start. When Madoff was arrested, officials said he appeared to be helpful to investigators. But when they began following up on the information, a lot of it was false or incomplete.
Because Madoff has made no plea agreement, he is under no obligation to name names or tell investigators where the billions of dollars he stole from investors actually went.