Bernard Madoff took little more than a minute to say “guilty” 11 times to charges that he ran the biggest Ponzi scheme ever for at least three decades. As he stood unbowed, he spoke calmly and clearly while his eyes betrayed him, surrendering to a half dozen involuntary twitches.
It was a picture begging to be taken. If there ever was an argument for allowing televised federal court proceedings to prove to the public that justice still functions, today was the day. The media crowd outside the federal court at 500 Pearl Street numbered in the hundreds, exceeding the previous mob drawn by the Martha Stewart prosecution in 2004.
When Sorkin mentioned that Bernie’s wife Ruth was paying for private security guards “with her own money” victims of Madoff who were on hand broke into peals of derisive laughter.
“You have lost the presumption of innocence,” said U.S. District Judge Denny Chin after accepting Madoff’s plea and ordering him imprisoned immediately. Moments later, U.S. government agents put Madoff’s hands behind his back, clapped on the metal cuffs and hauled him out of the court, bound for the short trip to the Metropolitan Correctional Center.
Judge Chin had not even waited for the prosecutors to request that Madoff be remanded before he brought up the subject. As Ira Lee Sorkin, Madoff’s lead attorney, tried to convince the judge that the 70-year-old is not a flight risk, the reality of life in prison for Madoff made that argument unconvincing to say the least. Prosecutor Marc Litt and the judge said sentencing guidelines put Madoff’s time at a possible 150 years, while Sorkin meekly suggested another reading of the guidelines would yield a measly 60 years.
Sorkin cited the freedom enjoyed on bail before sentencing by some of the other American giants of fraud—Worldcom CEO Bernard Ebbers, Adelphia cable CEO John Rigas and Enron kingpins Jeffrey Skilling and Kenneth Lay as proof that Bernie deserved to rest in his $7 million penthouse under house arrest for the three months leading up to the judge’s scheduled June 16th sentencing. When Sorkin mentioned that Bernie’s wife Ruth was paying for private security guards “with her own money” victims of Madoff who were on hand broke into peals of derisive laughter before the judge ordered them quiet. Downstairs, in a ground floor room that usually holds as many as 400 potential jurors, a crowd of hundreds of victims, spectators and media folks watched on closed circuit as Bernie—again in a gray suit and white shirt but with a silver tie, reviewed his crimes.
The victims on hand—and there were a dozen or more in the crowd of about 150 people inside courtroom 24B—had been invited to speak about whether the judge should accept the plea. Several objected on the grounds that Madoff had not been charged nor pleaded to a conspiracy count. When the first victim spoke, he demanded that Madoff look at the victims, a move that prompted Madoff to swivel in his chair for a brief stone-faced glance.
Earlier, Judge Chin had instructed: “Mr. Madoff, tell me what you did…what did you do?” Reading a prepared statement that had been reviewed by the defense and prosecutors, Madoff stood as he delivered his 11-minute allocution of the charges. In it, he did offer an apology—saying he was “deeply sorry and ashamed” for his thousands of victims, who, according to the criminal information used in court today, in total believed they had $64.8 billion in his trusted hands.
Without putting a date on its inception, he said that when he started the Ponzi scheme he had “hoped I would be able to extricate myself…” But it did not work out that way and was soon out of control as he “deeply hurt” his family, friends, etc. “I can not express how sorry I am,” he said.
Although the prosecutors noted they did not agree with Madoff’s characterization of the facts, they said only the investigation continues. With one exception, the prosecution did not attack Madoff’s courtroom assertions that only his investment advisory business was crooked and that his firm’s market-making and proprietary trading operations were “legitimate” and “profitable in all respects.”
Bernie’s intent clearly was to separate his brother Peter, sons Andrew and Mark, and wife Ruth’s responsibilities at Bernard L. Madoff Investment Securities from the crimes. Assistant U.S. Marc Litt did note that at one point, the allegedly legitimate businesses were kept alive, only with money funneled from the accounts held by the investment advisory service at the heart of the Ponzi scheme.
Now squadrons of federal investigators will pour over thousands of records and ratchet up the pressure on Madoff’s relatives. Proving whether they will turn out to be like the so-called “families” in the Mafia—all involved in interwoven lives of crime—will be in the forefront of the investigation. And in the meantime, there are bound to be efforts by the government to collect the $62 million that Ruth Madoff claims belongs to her—free and clear of her husband’s crimes. It will be a tough sell for her new defense team, which she is now assembling apart from her husband’s lawyers.
Allan Dodds Frank is a business investigative correspondent who specializes in white collar crime.