Madoff to Plead to 11 Counts, No Sentence Concession

Details of Bernard Madoff's expected guilty plea emerged today when he appeared in court for a hearing to waive any conflict of interest his lawyer might have from past representation of other clients.

Madoff will plead straight-up -- no plea agreement-- to 11 charges in the Criminal Information.

“There is no plea agreement,” Assistant U.S. Attorney Marc Litt said at the hearing, meaning Madoff must plead guilty to 11 counts that he now faces in a criminal information filed today.

Madoff is charged with securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission and theft from an employee benefit plan, Litt said.

The Government filed a letter with the Court today outlining its sentencing guideline calculations. (Available on PACER) [More....]

  • Count 1: Securities Fraud, 20 years max
  • Count 2: Investor Relations Fraud, 5 years max
  • Count 3: Mail Fraud, 20 years max
  • Count 4: Wire Fraud, 20 years max
  • Count 5: International Money Laundering (to promote fraud in the sale of securities, mail fraud, wire fraud, and theft from an employee benefit plan), 20 years max
  • Count 6: International Money Laundering (to conceal the proceeds of fraud in the sale of securities, mail fraud, wire fraud, and theft from an employee benefit plan), 20 years max
  • Count 7: Money Laundering, 10 years max
  • Count 8: Making a False Statement, 5 years max
  • Count 9: Perjury, 5 years max
  • Count 10: Making a False Filing with the SEC, 20 years max
  • Count 11: Theft From an Employee Benefit Plan, 5 years max.

Total maximum penalties: 150 years. There are also two forfeiture allegations, and a request that if the assets to be forfeited have been sold or no longer exist, that substitute assets be forfeited in their place.

By the Government's calculations, the combined offense level under the U.S. Sentencing Guidelines is a whopping 54 -- even after giving Madoff his 3 level reduction for acceptance of responsibility and timely notice of his intent to plead. With a criminal history category of I (no prior convictions), Madoff's guideline range is life in prison.

Because the defendant is not charged with any offense that carries a maximum term of life imprisonment, the Guideline sentence is computed by adding the applicable statutory maximum sentences on all counts of conviction, which results in a Guideline sentence of 150 years' imprisonment. See U.S.S.G. § 5G1.2.

There is no parole in the federal system. A life sentence means exactly that, Madoff would leave prison when he dies.

The Government will seek criminal forfeiture of more than $170 billion as property or proceeds traceable to the SUA offenses and $799 million involved in the money laundering offenses.

Madoff's lawyers also filed a letter (available on PACER). In it, they say they disagree with the Government's monetary calculations:

[I]t is important for us to inform the Court at this early stage that it disagrees with the government's theory as to what constitutes the "proceeds" of the specified unlawful activity in this case.

Madoff's argument:

The government has informed us that the purported $177,000,000,000 of "proceeds traceable to the commission of SUA offenses" represents the total amount of money deposited in the Bernard L. Madoff Investment Securities, LLC ("BLMIS") bank account related solely to Mr. Madoff s investment advisory business.

Even assuming the accuracy of that number, however, the government's theory of the proceeds of SUA - in this case securities fraud, mail fraud, wire fraud and theft from an employee benefit plan - fails to account for or offset the substantial amounts of money that Mr. Madoff paid from the aforementioned account to investors in the form of redemptions, a number likely in the billions.

Madoff's lawyers are seeking a lot of documents in discovery for sentencing. That indicates sentencing could be several months away. Which brings us to another issue to be decided Thursday: Will Madoff be allowed to remain free on bond pending sentencing? Bloomberg reports:

U.S. District Judge Denny Chin said at today’s proceeding that there will be only two issues at the March 12 hearing -- whether he will accept the guilty plea and whether Madoff will be sent to jail that day.

As to whether victims will be heard on Thursday, the answer is "no."

Chin said victims who wish to speak about the jail term Madoff receives will have to wait until sentencing.

Good call by the Judge. There's no plea agreement, no sentence concessions and Madoff is pleading guilty to every charge against him. All victims will have a chance to weigh in on his sentence before it is imposed, even if by letter. Flogging Madoff verbally at the plea hearing serves no purpose other than perhaps emotional satisfaction -- which is not the function of a court proceeding.

My prediction: Madoff will go to jail Thursday, never to be released again. And, no matter how much money the government forfeits, not every victim will be made whole.

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  • Display: Sort:
    Very happy there's no agreement (5.00 / 1) (#1)
    by nycstray on Tue Mar 10, 2009 at 06:26:00 PM EST

    He's 71 (5.00 / 1) (#15)
    by MrConservative on Tue Mar 10, 2009 at 09:53:40 PM EST
    Even under the most lenient terms imaginable he probably wouldn't have ever gotten out of prison.

    Doing it to protect his family (5.00 / 1) (#6)
    by Saul on Tue Mar 10, 2009 at 08:08:07 PM EST

    If he quietly (5.00 / 0) (#21)
    by Inspector Gadget on Wed Mar 11, 2009 at 09:41:46 AM EST
    dies without a funeral just in time to make sure his wife gets to keep everything they stole, I'll be putting up "Have You Seen These Men" posters of him and Ken Lay in all the most exotic places in the world.

    Why wasn't there any deal (none / 0) (#2)
    by samtaylor2 on Tue Mar 10, 2009 at 06:31:17 PM EST
    With all those high powered lawyers you would think he could get something.  

    Maybe he's hoping they (5.00 / 1) (#4)
    by Anne on Tue Mar 10, 2009 at 07:52:56 PM EST
    leave his wife - and her almost-$70 million - alone?

    Maybe the charges could have been worse?

    Maybe he knows he's scum and deserves to die in prison?

    Who knows?


    Any Possibility That Prison ... (none / 0) (#3)
    by santarita on Tue Mar 10, 2009 at 06:59:13 PM EST
    might just be the safest place for Mr. Madoff?

    150 years? (none / 0) (#5)
    by Steve M on Tue Mar 10, 2009 at 08:00:34 PM EST
    Be careful.  With this guy, he might try to serve the same year 150 times.

    heh (none / 0) (#8)
    by andgarden on Tue Mar 10, 2009 at 08:43:28 PM EST
    I don't know if it's allowed (none / 0) (#7)
    by andgarden on Tue Mar 10, 2009 at 08:43:15 PM EST
    but I would check him for cyanide.

    Makes me wonder what kind (5.00 / 1) (#9)
    by Anne on Tue Mar 10, 2009 at 08:50:28 PM EST
    of estate plan he has...and let's also hope the government remembers the Ken Lay debacle.

    Kind of odd. (none / 0) (#10)
    by LarryInNYC on Tue Mar 10, 2009 at 09:10:34 PM EST
    It doesn't sound like he has much chance of getting off, but they probably could have kept a trial going for what -- a year?  Two years?

    Hint of a possible conflict of interest (none / 0) (#11)
    by oculus on Tue Mar 10, 2009 at 09:27:09 PM EST
    re his attorney.  Looks like Madoff thought only this particular attorney could adequately represent him/  Or maybe the attorney, who may be worried about his state bar card, wanted to wrap this up ASAP with an on the record Madoff waiver of any possible conflict.

    A story (none / 0) (#12)
    by Steve M on Tue Mar 10, 2009 at 09:36:17 PM EST
    I had a case involving a federal prisoner who had a rather unusual fee agreement with his first defense counsel.  The deal was basically that in exchange for the representation, the lawyer would get to run the guy's business if he went to prison.  Even setting aside that this contract incentivized the lawyer to lose rather than win, it was obviously unethical for a host of reasons.

    Was the business a Mexican (none / 0) (#13)
    by oculus on Tue Mar 10, 2009 at 09:38:16 PM EST
    drug cartel?

    As I recall (5.00 / 1) (#14)
    by Steve M on Tue Mar 10, 2009 at 09:39:36 PM EST
    they made Muhammad Ali brand shoe polish or something.

    Not to be too technical about it (none / 0) (#17)
    by Peter G on Tue Mar 10, 2009 at 10:49:16 PM EST
    ... but the reason the "guideline sentence" is 150 years is that a life sentence would be illegal in this case.  As the govt's letter states, a life sentence is different in kind from any term of years, and is not authorized by any of the counts.  (I'm actually a little surprised they didn't find a way to charge him under 18 USC 225 ("continuing financial crimes enterprise"), which does allow a life sentence.  Only applies if you victimize a "financial institution," however; maybe Madoff somehow neglected to do that.  Or did he fail to take in at least $5 million in any 2-year period?)  Anyway, a sentence that is not authorized in the law he is convicted of violating cannot be imposed.  He has to be sentenced to a specific term of years.  A term exceeding his possible life expectancy would presumably be lawful, however, so long as it was not "greater than necessary" to achieve the legitimate aims of punishment.  18 USC 3553(a).

    Why not stall and keep living in the penthouse? (none / 0) (#18)
    by Mitch Guthman on Tue Mar 10, 2009 at 10:52:01 PM EST
    Okay, now I'm totally confused.  Assuming that he doesn't have some kind of "a wink and a nod" tacit understanding with the government, could someone out there explain what was the point of pleading guilty?  He gets no consideration for himself or his family, the government is free to pursue charges against them, he gets basically nothing under the guidelines for pleading guilty and even if the guidelines are most favorably applied he's old and will surely die in prison anyway.

    What's the point of pleading now?  Why not go through motions or even trial?  With luck, a few continuances and a couple of writs, he probably wouldn't be convicted until 2010 or maybe 2012.  Again, with luck, he could stay out on bail until 2012 or 2014 while his appeal worked it's way through the system.   If it was me, that'd be a very big deal:  Living in a swank Park Avenue penthouse, sleeping in my own bed on Frette sheets, showering alone, eating good food, living like a king and, of course, not being beaten up and extorted by ones fellow cons is priceless.

    I don't know how he thinks he's going to be living in Federal slam, but without belaboring the point, I think it's safe to say that he's going to be missing his penthouse real soon.

    So, again, why plead now?  I am the first to admit that I was neither a highly skilled defense lawyer nor a true believer (like Jeralyn) but I just can't see any potential upside for Madoff.  Again, in the absence of at least a tacit understanding, I think this guy just got seriously malpracticed. Which actually bothers me very little---because, as I say, I'm not a true believer----but it is baffling.  There just has to be a deal.  Otherwise, this makes no sense.

    Please, if one of you defense types knows the answer, please tell me.  Because it looks to me like his lawyer just got $900K worth of payback.

    Maybe he was just sick (none / 0) (#19)
    by Amiss on Tue Mar 10, 2009 at 11:23:15 PM EST
    of looking at his wife all the time? /snark

    Upon indictment, if he made no deal, (none / 0) (#20)
    by Peter G on Wed Mar 11, 2009 at 12:14:01 AM EST
    maybe he figured the bail was kaput.  Two years of Metropolitan Correctional Center for an inevitable conviction isn't worth it.  Could be, no indictment of wife, and chance to argue for voluntary surrender to federal prison.  (But I predict, in agreement with TL, that Judge Chin will jail him Thursday.) That's all I can think of.