Madoff Pleads Guilty, Goes To Jail

Disgraced financier Bernard Madoff appeared in federal court in New York Thursday and pleaded guilty to running a multibillion dollar Ponzi scheme. The judge denied a request from Madoff's lawyer that he remain free until sentencing in June, sending Madoff to jail.

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A federal judge has ordered disgraced money manager Bernard Madoff to jail. The order came minutes after Madoff stood in a crowded federal courtroom in New York this morning and pleaded guilty to 11 fraud and perjury charges. In a statement, Madoff said he was deeply ashamed and sorry for all the people who were hurt by the Ponzi scheme he'd operated. But his remorse was not enough to satisfy his former investors.

People in the courtroom applauded when the judge ordered Madoff jailed. NPR's Jim Zarroli was there.

JIM ZARROLI: Over the past three months, as Bernie Madoff became one of the most reviled men in the country, he never once spoke about his crimes. Today, the public finally got to hear him do so. Madoff sat at the defense table in a dark-gray suit staring down at his folded hands. When it came time to speak, he stood and read a statement in a voice so soft the judge had to ask him to speak up.

He said his Ponzi scheme began during the recession of the early 1990s. Madoff said at first, he figured the situation would right itself eventually. But he soon realized he'd built a house of cards, and would end up in a courtroom just like this one. When he was finished, his lawyer tried to persuade Judge Dennis Chin to let him stay out on bail until his sentencing in June. But Chin said no and ordered the 70-year-old Madoff to jail, where he's likely to spend the rest of his life.

Outside the courthouse, some of Madoff's investors stood in the bright, cold sunlight and talked about what had happened. Brian Felsen came from Minneapolis representing his family, who'd lost a lot of money in Madoff's firm. He wouldn't say how much, but Felsen seemed resigned to the fact that much of the money was probably gone.

Mr. BRIAN FELSEN: It's such a heartbreaking situation for everybody that it's hard to be satisfied, but he is now where he deserves to be. He should have been there a long time ago, and hopefully it will begin the grieving process for people, to know that he is going to be held accountable for his actions.

ZARROLI: Many of Madoff's victims remain convinced that he has squirreled away some of the money he made over the years. They point to reports that his wife, Ruth, withdrew $15 million from an account at Madoff's firm in the days before his arrest. Sharon Lissauer was near tears as she explained to reporters that she'd lost all her money to Madoff.

Ms. SHARON LISSAUER: I put all my savings in, stupidly, and - because I trusted him so much and, I mean, I just wish that he would divulge where some of his hidden assets were to make things a little better for the victims.

ZARROLI: But just how much money Madoff had, where it went, and how much of it can be recovered is something the bankruptcy court is still sifting through. Jeffrey Servin is a Philadelphia attorney who came to the hearing on behalf of some clients. He pointed out that Madoff has not always cooperated with federal investigators, and he could well be concealing some assets.

Mr. JEFFREY SERVIN (Attorney): Somebody who's been able to do something like this for this long a period of time and this much detail, probably thought the downside through very well, too. Do I think there's money somewhere hidden? Yeah. Are we ever gonna find it? Who knows.

ZARROLI: Another question that a lot of investors are asking is how Madoff could possibly have carried out such a big fraud by himself. Madoff stressed in his statement that the fraud was limited to the investment advisory arm of his firm, and that the broker dealer business operated by his sons, among others, had nothing to do with it. But U.S. officials said today that they are still investigating the case, leaving open the possibility that one of Madoff's employees or relatives could be in the government's sights. Jim Zarroli, NPR News, New York.

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Madoff Pleads Guilty To Fraud, Sent To Jail

Disgraced Wall Street financier Bernard Madoff arrives at a Manhattan federal court Thursday. i

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 hide caption

itoggle caption Stephen Chernin/Getty Images
Disgraced Wall Street financier Bernard Madoff arrives at a Manhattan federal court Thursday.

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.

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