Judge Condemns Bernie's "Evil" Crime
Judge Denny Chin says Madoff “will get what he deserves” before sentencing him to 150 years in prison. Below, read his full statement to the court.
I take into account what I have read in the presentence report, the parties' sentencing submissions, and the emails and letters from victims. I take into account what I have heard today. I also consider the statutory factors as well as all the facts and circumstances in the case. In his initial letter on behalf of Mr. Madoff, Mr. Sorkin argues that the unified tone of the victims' letters is a desire for mob vengeance. He also writes that Mr. Madoff seeks neither mercy nor sympathy, but justice and objectivity.
“The symbolism is important because the message must be sent that in a society governed by the rule of law, Mr. Madoff will get what he deserves, and that he will be punished according to his moral culpability.”
Despite all the emotion in the air, I do not agree with the suggestion that victims and others are seeking mob vengeance. The fact that many have sounded similar themes does not mean that they are acting together as a mob. I do agree that a just and proportionate sentence must be determined, objectively, and without hysteria or undue emotion.
Objectively speaking, the fraud here was staggering. It spanned more than 20 years. Mr. Madoff argues in his reply letter that the fraud did not begin until the 1990s. I guess it's more that the commingling did not begin until the 1990s, it is clear that the fraud began earlier. And even if it is true that it only started in the 1990s, the fraud exceeded 10 years, still an extraordinarily long period of time. The fraud reached thousands of victims.
As for the amount of the monetary loss, there appears to be some disagreement. Mr. Madoff disputes that the loss amount is $65 billion or even $13 billion. But Mr. Madoff has now acknowledged, however, that some $170 billion flowed into his business as a result of his fraudulent scheme. The presentence report uses a loss amount of $13 billion, but as I understand it, that number does not include the losses from moneys invested through the feeder funds. That's what the PSR states. Mr. Madoff argues that the $13 billion amount should be reduced by the amounts that the SIPC trustee may be able to claw back, but that argument fails. Those clawbacks, if they happened, will result in others who suffered losses. Moreover, Mr. Madoff told his sons that there were $50 billion in losses. In any event, by any of these monetary measures, the fraud here is unprecedented.
Moreover, the offense level of 52 is calculated by using a chart for loss amount that only goes up to $400 million. By any of these measures, the loss figure here is many times that amount. It's off the chart by many fold.
Moreover, as many of the victims have pointed out, this is not just a matter of money. The breach of trust was massive. Investors—individuals, charities, pension funds, institutional clients—were repeatedly lied to, as they were told their moneys would be invested in stocks when they were not. Clients were sent these millions of pages of account statements that the government just alluded to confirming trades that were never made, attesting to balances that did not exist. As the victims' letters and emails demonstrate, as the statements today demonstrate, investors made important life decisions based on these fictitious account statements—when to retire, how to care for elderly parents, whether to buy a car or sell a house, how to save for their children's college tuition. Charitable organizations and pension funds made decisions based on false information about fictitious accounts. Mr. Madoff also repeatedly lied to the SEC and the regulators, in writing and in sworn testimony, by withholding material information, by creating false documents to cover up his scheme.
It is true that Mr. Madoff used much of the money to back investors who asked along the way to withdraw their accounts. But large sums were also taken by him, for his personal use and the use of his family, friends, and colleagues. The PSR shows, for example, that Mr. Madoff reported adjusted gross income of more than $250 million on his four tax returns for the 10-year period from 1998 through 2007. On numerous occasions, Mr. Madoff used his firm's bank accounts contained customer funds to pay for his personal expenses and those of his family, including, for example, the purchase of a Manhattan apartment for a relative, the acquisition of two yachts, and the acquisition of four country-club memberships at a cost of $950,000. Billions of dollars more were paid to individuals who generated investments for Mr. Madoff through these feeder funds.
Mr. Madoff argues a number of mitigating factors but they are less than compelling. It is true that he essentially turned himself in and confessed to the FBI. But the fact is that with the turn in the economy, he was not able to keep up with the requests of customers to withdraw their funds, and it is apparent that he knew that he was going to be caught soon. It is true that he consented to the entry of a $100 billion order and has cooperated in transferring assets to the government for liquidation for the benefit of victims. But all of this was done only after he was arrested, and there is that he could have done to fight the forfeiture of these assets. Moreover, the SIPC trustee has advised the Court Mr. Madoff has not been helpful, and I simply do not get the sense that Mr. Madoff has done all that he could or told all he knows.
Mrs. Madoff has stipulated to the transfer of some $80 million in assets to the government for the benefit of victims, but the record also shows that as it became clear that Mr. Madoff's scheme was unraveling, he made substantial loans to family members, he transferred some $15 million of firm funds into his wife's personal accounts, and he wrote out the checks that the government has just described.
I have taken into account the sentences imposed in other financial fraud cases in this district. But, frankly, none of these other cases is comparable to this case in terms of the scope, duration and enormity of the fraud, and the degree of the betrayal.
In terms of mitigating factors in a white-collar fraud case such as this, I would expect to see letters from family and friends and colleagues. But not a single letter has been submitted attesting to Mr. Madoff's good deeds or good character or civic or charitable activities. The absence of such support is telling.
We have heard much about a life-expectancy analysis. Based on this analysis, Mr. Madoff has a life expectancy of 13 years, and he therefore asks for a sentence of 12 years or alternatively 15 to 20 years. If Mr. Sorkin's life-expectancy analysis is correct, any sentence above 20 or 25 years would be largely, if not entirely, symbolic.
But the symbolism is important, for at least three reasons. First, retribution. One of the traditional notions of punishment is that an offender should be punished in proportion to his blameworthiness. Here, the message must be sent that Mr. Madoff's crimes were extraordinarily evil, and that this kind of irresponsible manipulation of the system is not merely a bloodless financial crime that takes place just on paper, but that it is instead, as we have heard, one that takes a staggering human toll. The symbolism is important because the message must be sent that in a society governed by the rule of law, Mr. Madoff will get what he deserves, and that he will be punished according to his moral culpability.
Second, deterrence. Another important goal of punishment is deterrence, and the symbolism is important here because the strongest possible message must be sent to those who would engage in similar conduct that they will be caught and that they will be punished to the fullest extent of the law. Finally, the symbolism is also important for the victims. The victims include individuals from all walks of life. The victims include charities, both large and small, as well as academic institutions, pension funds, and other entities. Mr. Madoff's very personal betrayal struck at the rich and the not-so-rich, the elderly living on retirement funds and Social Security, middle-class folks trying to put their kids through college, and ordinary people who worked hard to save their money and who thought they were investing it safely, for themselves and their families.
I received letters, and we have heard from, for example, a retired forest worker, a corrections officer, an auto mechanic, a physical therapist, a retired New York City school secretary, who is now 86 years old and widowed, who must deal with the loss of her retirement funds. Their money is, leaving only a sense of betrayal.
I was particularly struck by one story that I read in the letters. A man invested his family's life savings with Mr. Madoff. Tragically, he died of a heart attack just two weeks later. The widow eventually went in to see Mr. Madoff. He put his arm around her, as she describes it, and in a kindly manner told her not to worry, the money is safe with me. And so not only did the widow leave the money with him, she eventually deposited more funds with him, her 401(K), her pension funds. Now, all the money is gone. She will have to sell her home, and she will not be able to keep her promise to help her granddaughter pay for college. A substantial sentence will not give the victims back their retirement funds or the moneys they saved to send their children or grandchildren to college. It will not give them back their financial security or the freedom from financial worry. But more is at stake than money, as we have heard. The victims put their trust in Mr. Madoff. That trust was broken in a way that has left many—victims as well as others—doubting our financial institutions, our financial system, our government's ability to regulate and protect, and sadly, even themselves.
I do not agree that the victims are succumbing to the temptation of mob vengeance. Rather, they are doing what they are supposed to be doing—placing their trust in our system of justice. A substantial sentence, the knowledge that Mr. Madoff has been punished to the fullest extent of the law, may, in some small measure, help these victims in their healing process.
Mr. Madoff, please stand. It is the judgment of this Court that the defendant, Bernard L. Madoff, shall be and hereby is sentenced to a term of imprisonment of 150 years, consisting of 20 years on each of Counts 1, 3, 4, 5, 6, and 10, five years on each of Counts 2, 8, 9, and 11, and 10 years on Count 7, all to run consecutively to each other. As a technical matter, the sentence must be expressed on the judgment in months. 150 years is equivalent to 1,800 months. Although it is academic, for technical reasons, I must also impose supervised release. I impose a term of supervised release of three years on each count, all to run concurrently. The mandatory, standard, and special conditions are imposed, as set forth on pages 58 and 59 of the PSR.
I will not impose a fine, as whatever assets Mr. Madoff has, as to whatever assets may be found, they shall be applied to restitution for the victims. As previously ordered, I will defer the issue of restitution for 90 days. Finally, I will impose the mandatory special assessment of $1,100, $100 for each count.