The Madoff Message
An extraordinary jail term for an “extraordinarily evil” fraud isn’t just for Bernie Madoff, writes Allan Dodds Frank from the courthouse. It’s a signal to all of Wall Street.
When Bernard “The Beast” Madoff finally looked at his victims for 10 seconds in court Monday, his insincerity was compelling. “I apologize to my victims. I will turn and face you,” the 71-year swindler in a Savile Row-tailored charcoal-gray suit said flatly: “I am sorry. I know that doesn’t help you.”
Unruffled, except perhaps for missing collar stays in his pale blue Charvet shirt set off with a dark tie, Madoff talked for a little more than five minutes. His theme: “I cannot offer an excuse for my behavior… I don’t ask any forgiveness.” Madoff added: “How do you excuse lying and deceiving a wife who stood by you for 50 years and still stands by you?”
Their collective message to Wall Street and the rest of the financial industry is crystal clear: Cut it out.
Eight minutes later, Madoff barely moved as U.S. District Judge Denny Chin sentenced him to 150 years in prison. The front two rows of victims cheered and applauded. Ira Lee Sorkin, Madoff's lawyer, told The Daily Beast his client seemed impassive to the 150-year sentence because "he was expecting the worst." Sorkin declined to discuss anything Madoff said to him, but conceded Madoff has lost some weight in prison. Asked whether Bernie had ever shed a tear, had cried in court or in custody, Sorkin said only: "At some time in the last seven months, he did. I can't say when or where."
Many of the reporters and lawyers in the crowd of 250 people jammed into the court’s ceremonial ninth-floor courtroom had predicted a sentence between 30 to 40 years, not the full 150 years sought by the Justice Department.
Madoff’s insincerity already had sunk in with the judge, who dismissed the defense's contention the swindler has offered meaningful cooperation to investigators. “I simply do not get the sense that Mr. Madoff has done all he could,” he said, “or told all he knows.”
Judge Chin also scoffed at the defense notion that a harsh sentence (officially categorized as 1,800 months) would amount to succumbing to the “mob vengeance” being urged some of Madoff’s 8,000-plus victims.
“The message must be sent that Mr. Madoff’s crimes were extraordinarily evil,” Chin said. “In a society governed by the rule of law, Mr. Madoff will get what he deserves.”
In the modern era, the stiffest white-collar crime sentences have been around 25 years, including former WorldCom CEO Bernard Ebbers and former Exxon executive Jeffrey Skilling.
Regardless of whether it survives appeal, Judge Chin’s willingness to give Madoff a sentence 11 times longer than he is expected to live should set the pants on fire of the white-collar criminal-defense bar. Especially since the Obama Justice Department had sought the 150-year maximum, which the judge embraced without hestitation.
Their collective message to Wall Street and the rest of the financial industry is crystal clear: Cut it out. And assuming he is still reading the newspapers—the great nobleman of Antigua, “Sir" Allen Stanford—should be praying that the federal judges in the district where he will be tried do not feel as though they have to measure up to the big guys on the bench in the Southern District of New York.
Madoff confessed his “$50 billion Ponzi scheme” last December 10 to his brother Peter and his sons Andrew and Mark, and was arrested last December 11. He was criminally charged March 10 and has been behind bars since pleading guilty March 12. Judge Chin said his sentence—officially “1800 months”—was for 11 felony counts to be served consecutively. Six of the 11 counts carry 20-year maximums, four carry five years each and one is 10 years.
Saying the sentence is based on “objective factors,” including financial harm, the judge said losses are conservatively estimated at $13 billion, because that number does not include billions more dollars invested indirectly in Madoff through so-called feeder funds.
“Objectively speaking, the fraud here was staggering,” said Judge Chin. “This was not merely a bloodless financial crime that occurred on paper, but one that takes a staggering toll.”
Madoff was labeled “The Beast” by the ninth and final victim who testified—Sheryl Weinstein. Trembling with rage, she had urged Judge Chin to keep Madoff “in a cage behind bars.”
Weinstein, a Certified Public Accountant, seemed to know Madoff better than the other victims did, saying she met him 21 years ago while serving as the chief financial officer of Hadassah, a Jewish charity which lost millions with Madoff. Her son Eric even interned at Bernard L. Madoff Investment Securities several years ago. Just last week, Weinstein said, she and her husband Ronald were forced to sell their Manhattan apartment.
Other victims told other horror stories, including one Manhattan woman who said she has been reduced to dumpster diving to find cans and bottles to redeem. Another urged the judge to make sure that Madoff’s “cell becomes his coffin.”
Symbolically speaking, the judge said, the need for an unprecedented sentence for the biggest financial crime ever was threefold. Chin said the 150-year sentence needed to be retribution, deterrence, and a restoration of belief by the victims and others in the legal system.
Madoff, uncuffed, was escorted out of the court and back to the Metropolitan Correctional Center, where he’ll await assignment to a new cell—almost certainly in a high-security prison. Madoff’s lawyer, Ira Lee Sorkin, asked that Madoff be assigned to a facility in the Northeast.
While a rally of victims took place in Foley Square a block from the courthouse, Ruth Madoff’s lawyers released a six-paragraph statement that confirmed what her husband had said in court about sleepless nights she spent worrying about his victims.
Released by her lawyer Peter Chavkin, the statement said:
“I am breaking my silence now, because my reluctance to speak has been interpreted as indifference of lack of sympathy for the victims of my husband Bernie’s crime, which is exactly the opposite of the truth…”
After outlining the damage done to Madoff family and friends, she continued: “I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known all these years. In the end, to say that I feel devastated for the many my husband has destroyed is truly inadequate. Nothing I can say seems sufficient.”
Ruth’s statement made no mention of the court order, which was part of Bernie’s sentence, that stripped her of claims to more than $80 million and forced her to move out of the couple’s $7 million penthouse apartment on Manhattan's Upper East Side.
Allan Dodds Frank is a business investigative correspondent who specializes in white-collar crime.