Madoff Waits In Jail For June Sentencing

Bernard Madoff has gone from a $7 million penthouse to a tiny jail cell in Manhattan. Madoff pleaded guilty in federal court Thursday, but implicated no one but himself. Investigators continue to pore over records, trying to figure out, among other things, who helped Madoff engineer the $64 billion fraud that may be the largest in U.S. history. Madoff will be sentenced on June 16.

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This is MORNING EDITION from NPR News. I'm Linda Wertheimer.

Bernard Madoff woke up this morning in a Manhattan jail cell, the first day of what is expected to be a life prison sentence. Madoff admitted yesterday he was guilty of defrauding thousands of investors in the Ponzi scheme, but he didn't answer all the questions in the case. NPR's Robert Smith reports.

ROBERT SMITH: If the Madoff scandal were a movie, it would end with yesterday's scene in the federal courthouse. The financier stands to address the packed courtroom. He admits he's a criminal. Then he says he is deeply sorry and ashamed. The handcuffs click, the victims applaud, roll the credits. But as the audience left the courthouse, no one looked like they had just seen a happy ending. Judith Welling says it's hard to cheer when you still don't know where your million dollars went.

Ms. JUDITH WELLING: I mean, I think he should be in jail for the rest of his life, and I certainly approve of whatever is being done, but it's not giving me any particular satisfaction. Satisfaction would be if we all get our money back.

SMITH: The Madoff case wasn't a whodunit murder mystery. It was more like a financial kidnapping. Until someone can locate what remains of the money, investor Eileen Kent says the case is not closed.

Ms. EILEEN KANT: Because there's still a lot more to uncover. The US attorney has a lot more work to do, and he knows it, and I have faith in him.

SMITH: But it won't be easy. Madoff pleaded guilty without any sort of deal with prosecutors. He is under no obligation to lift a finger to help his former clients out. Instead, investigators will have to decipher an office full of fake documents. The investments statements that Madoff sent to his clients total $65 billion. Most of that is thought to be fiction. Another large chunk was certainly paid out by Madoff to early investors who withdrew their money. So far, investigators have only been able to locate about a billion dollars. The investigators who showed up to watch the guilty plea can't believe that's all there is. Jeffrey Servin is a lawyer from Philadelphia who represents three people cheated by Madoff.

Mr. JEFFREY SERVIN (Attorney): Anybody who has the ability to pull this off for as long as he did knew this day was coming at some point, and it just seems logical that they made provision that when this day did come, that there was a backup plan somewhere.

SMITH: Perhaps in offshore accounts or under a very, very large mattress. While the search is on, the competition between investors to get the money back in heating up. Some lawyers are filing early lawsuits to get the first in line for any money that might be found. Brad Friedman represents over a hundred victims. He doesn't want the government trying to take that money first.

Mr. BRAD FRIEDMAN (Attorney): There's assets hidden all over the world. His family members obviously have assets that are the product of this scheme, and all of those assets should be made available for the benefit of the victims.

SMITH: Until then, frustrated and angry investors are looking for who else they can go after. Eileen Kent, who lost 80 percent of her savings to Madoff, says the government needs to take some of the blame.

Ms. KENT: You know, we trusted him because the SEC trusted him, the Securities and Exchange Commission. The SEC turned a blind eye time and time and time again.

SMITH: Others outside the courthouse wanted to know when the government was going to pursue Madoff's wife and his two sons.

Ms. MIRIAM SEIGMAN: I strongly suspect that this was not a solo operation. This is a family business.

SMITH: Miriam Seigman is 65 years old. She says she never had a lot of money, but all that she hoped to live on was invested with Madoff. With the money gone, Seigman was forced to go on food stamps. She came to court to try to figure out what happened to her life, but she was leaving now without closure.

Ms. SEIGMAN: I mean, there's all this vindictiveness, and I don't feel that, oddly enough. I know. I don't share Elie Wiesel's notion that we should lock him in a cell and flash pictures of his victims. What good will that do? The good that can come out of this is the truth, and so far we've had precious little of it.

SMITH: There will be another chance to hear the truth from Madoff's mouth. He'll return to the courthouse on June 16th to receive his sentence. Many of the investors say they'll be back, too, looking for some for of satisfaction.

Robert Smith, 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 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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