Judge Jails Madoff, Accepts Guilty Plea

Final Update: Here's the statement Madoff made in court today (pdf). Here's the transcript of today's plea hearing (pdf)

Update: 11:16 am: Sentencing will be June 16. The Government asked for immediate jailing. CNBC and CNN report the Judge said he intends to grant the request and order Madoff into custody immediately. It's done.

Update 10:55 am: The Judge has accepted the guilty plea. The Government is telling the judge how the scheme operated. The victims who object to the plea are now being heard. Next issue should be bail.

Update: 10:47 am ET: CNBC Updates: [More...]

"The victims of my schemes included individuals, charities, pension funds and hedge funds."....Madoff made a distinction between his investment business which was the fraud and the other businesses which he said were legit. "The other businesses were legitimate, profitable ...in all respects and those businesses were run by my brother and my sons," said Madoff.

Madoff also said he "knowingly gave false testimony under oath" to the SEC, and admitted "my fraud was (submitting) audited reports to the SEC." And Madoff said "My clients ... receiving account statements had no way of knowing ..." what he was doing.

Update: 10:35 am ET: Via AP Twitter: Madoff says the Ponzi scheme began in the early 1990s in response to a recession. Via Reuters Twitter:

Madoff says for many years he operated a Ponzi scheme and tells court he is "deeply ashamed for my crimes"

Update: 10:11 am ET: The hearing is underway. He's pleading guilty as expected.

Bump and Update: 9:30 a.m. ET: The hearing begins at 10:00 am. Here is the Judge's press release on how it will proceed. The DOJ's webpage for Madoff with lots of links is here. The transcript of Tuesday's hearing is here (pdf.) As to who is live-blogging from the courthouse: AmLaw is one. I'm also following others on Twitter.

Update 7:36 am ET: Madoff has arrived at court. Here's a live video of his arrival.


Grim Choices Await Madoff If Jailed Today

7:20 am ET: At this early hour, it's still not known whether the Government will seek to have Bernard Madoff's bail revoked when he pleads guilty this morning. Bloomberg has this rundown of possible institutions Madoff may end up at if jailed today:

Until sentencing: MCC New York or MDC Brooklyn.

Both house criminals from “swindlers to murderers".... The “bleak” MCC is “horrendous,” according to defense attorney Sam Schmidt, who visits the jail several times a week..... Conditions are worse at the Brooklyn jail, according to a court filing by Flora Edwards, a lawyer for fund manager Raffaello Follieri ...Edwards’ filing described the MDC as having an “intolerable” stench and free-roaming rats.

After sentencing: Probably a medium or low security prison (not a camp right away) like Federal Correctional Institution in Oakdale, Louisiana, FCI Butner, North Carolina or F.C.I. Otisville, New York. The low security facility next to the camp at Fort Dix, N.J. is another possibility. Alan Ellis, attorney and author of the Federal Prison Guidebook says:

The addition of money-laundering charges “may make this a life sentence” and push Madoff into a medium-security prison, at least at first, Ellis said. “Where you end up has as much to do with where the BOP has a bed open as your sentence.”

I still don't understand why a 70 year old man who has never been behind bars is going to plead guilty so early in the process and willingly submit to what all experts agree is a life sentence. Could there be an agreement to let him stay out until sentencing? That's about the only thing that makes sense to me -- other than him not showing up at all. Stay tuned.

Related Posts:

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  • Display: Sort:
    The question of why he is (5.00 / 1) (#1)
    by Anne on Thu Mar 12, 2009 at 07:14:20 AM EST
    seemingly just giving up may be as elusive as the answer to the question about why he swindled so many people out of so much money for so long.

    I still think he's hoping that the fall he is taking will be enough to keep his family out of the clutches of the legal system, but I have to think that whatever civil actions are undertaken will bring all the ugly details to the surface and the media will eventually get its circus.

    As inexplicable as it all is, I think there's an element of the public - and maybe especially those who were his victims - feeling they are being denied the pleasure a trial would provide of seeing Medoff and his family publicly humiliated day after day after day for weeks.

    Is it possible he's relieved to have finally been caught and is just plain willing to start doing a penance he knows will never be enough to equal the damage and pain and hardship he's caused?  

    As for the "so long" question (none / 0) (#21)
    by Fabian on Thu Mar 12, 2009 at 10:34:38 AM EST
    the problem with a Ponzi scheme is that there is no way to gracefully end one.  Once you start one, you need to keep feeding the beast.  If you run out of new "investors", the scheme collapses.  Once the scheme collapses, the scheme is usually exposed as the fraud it was and the perpetrators are punished.

    Madoff did it "so long" because his choices were to continue the fraud (and benefit from it) or stop and most likely be exposed, ruined and prosecuted.  If he really did have a conscience, he would have taken his medicine years ago.


    re (5.00 / 1) (#5)
    by Bemused on Thu Mar 12, 2009 at 08:53:10 AM EST
      I'd advise against believing you can read people's minds by analyzing facial expressions on TV. I'd also suggest that a medium security FCI (which is the best he can hope for given the length of sentence he will receive is nothing like you apparently believe. Even camps are hardly "Club Fed" where pampered guests recline at leisure in comfortable surroundings, and he will be at least two steps above that in the system. It will be a prison, where he sleeps in a cell and he will be assigned duties to work at during most of his waking hours.

    I'm starting to lean towards... (5.00 / 1) (#6)
    by kdog on Thu Mar 12, 2009 at 09:17:56 AM EST
    the government being afraid of how bad the SEC and our financial system in general will look if all the dirty laundry were to be aired at trial.

    There has gotta be a backroom deal of some sort cooking here.

    re (5.00 / 1) (#7)
    by Bemused on Thu Mar 12, 2009 at 09:29:30 AM EST
      Why?  Even if the government had decided it wouldn't file an information with 11 charges and instead indicted him for 1000 counts, he could still simply plead guilty, or he could force the expenditure of large sums of money for a trial, even though the trial would not result in greater real punishment.  If he's getting what is effectively a life sentence for this, what public good is served by not doing it this way?

      The government can still investigate, still has subpoena power and can still put people under oath at grand juries. A trial is probably less likely to serve investigative purposes because that is not its purpose and a criminal defendant has the right to a fair trial with only evidence relevant to the charges he faces-- and he has a lawyer present to help make that happen. At a grand jury the government has far greater legal and practical power to gather evidence.

       What conceivable reason would Holder (Obama) have for cutting a deal to protect others either in the SEC, other agencies or the private sector? This didn't happen on his watch and unless we reach for the assumption people close to this Administration would be implicated why wouldn't this administration want to hide anything?  

    I don't think he cares (5.00 / 1) (#8)
    by SOS on Thu Mar 12, 2009 at 09:50:59 AM EST
    The whole American system has been exposed for what it is.

    "It's all one big lie"

    A confidence game we've managed to keep together the past 50 years.

    This may be why. (5.00 / 1) (#9)
    by Radix on Thu Mar 12, 2009 at 09:56:27 AM EST
    "The other businesses were legitimate, profitable ...in all respects and those businesses were run by my brother and my sons,"

    It may well be Madoff is trying to shelter his family, as much as possible, from his crimes.

    Yes (5.00 / 1) (#12)
    by Makarov on Thu Mar 12, 2009 at 10:02:24 AM EST
    this plea agreement has to protect his family from criminal prosecution. He may be doing it to protect other employees as well.

    It's worth noting I find it impossible to believe he was the only person that knew this particular fund was a complete fraud.


    Agreed. (5.00 / 1) (#13)
    by Radix on Thu Mar 12, 2009 at 10:05:24 AM EST
    I find it impossible to believe he was the only person that knew this particular fund was a complete fraud.

    There had to be staff (none / 0) (#34)
    by BarnBabe on Thu Mar 12, 2009 at 01:48:42 PM EST
    Even if Bernie was giving them figures after he tweeked them, monthly/qtrly statements and IRS statements, etc. had to be sent out for the fund to seem legitimate. I can't picture Bernie burning the midnight oil running Quicken. So the staff knew and were loyal, the family knew, including wife, and assisted him, or Bernie was working overtime. This snake oil salesman's actions make me distrust even more. You would think the once head of NASDAQ would be trustworthy. I am astounded that even his closest friends were taken to the cleaners.  

    As a bookkeeper (5.00 / 2) (#35)
    by Natal on Thu Mar 12, 2009 at 02:15:47 PM EST
    for her husband it would have been impossible for Ruth Madoff to not know or suspect fraud.  There would not have been any statements from brokerage houses. Also in doing the tax filings with the IRS there would not have been any documents from investment dealers documenting end-of-year distributions that the IRS requires.



    That's rightttttttttt (none / 0) (#36)
    by BarnBabe on Thu Mar 12, 2009 at 02:44:39 PM EST
    If she was the whole staff than she was aware of what was happening.

    there is no plea agreement (none / 0) (#16)
    by Jeralyn on Thu Mar 12, 2009 at 10:21:56 AM EST
    according to both the Government and Madoff.

    Does the US Attorney (none / 0) (#25)
    by Makarov on Thu Mar 12, 2009 at 11:00:46 AM EST
    or DoJ in general ever make "off the book" plea agreements?

    I'm talking about things that wouldn't be in a plea agreement because they likely wouldn't be legal or binding anyhow. Such as, "if you plead guilty, we'll consider the investigation into this offense closed." It's the kind of thing you see in movies. I don't know how realistic it is.


    ya (none / 0) (#27)
    by connecticut yankee on Thu Mar 12, 2009 at 11:19:36 AM EST
    Yeah, he's hoping to take it all on himself and absorb all charges.   It's like WeeBay on the Wire confessing to every murder in Baltimore. ;)

    re (5.00 / 1) (#19)
    by Bemused on Thu Mar 12, 2009 at 10:30:42 AM EST
      Courts can and have allowed for freezing assets of defendants which limit or eliminate the ability to finance one's own defense. The defendant is still entitled to an adequate defense but an attorney will be appointed (sometimes the one retained, sometimes not) and paid the CJA rate. As for expenses, a court must approve reasonable and necessary expenses of the defense, but courts may have a very different idea of what is reasonable and necessary than would a wealthy defendant and his private counsel. You also must request approval from the court (ex parte) in advance for expenses over a very low dollar amount.

    Thanks for the information. (none / 0) (#22)
    by Fabian on Thu Mar 12, 2009 at 10:38:02 AM EST
    With something like this, I could see the possibility that people facing prosecution might be so financially enmeshed that most of their assets are frozen, at least temporarily.

    re (5.00 / 1) (#26)
    by Bemused on Thu Mar 12, 2009 at 11:09:53 AM EST
    Such as, "if you plead guilty, we'll consider the investigation into this offense closed."

      Sometimes, various informal understandings exist. But, in a case like this it is highly doubtful. Such thing are obviously easier in cases that have no, let alone intense international,  coverage.

    Fabian (5.00 / 1) (#32)
    by Bemused on Thu Mar 12, 2009 at 12:11:47 PM EST
      Deterring everyone is not going to happen, but this sort of calculated criminal conduct is much more likely to be deterred among some than more impulsive criminal behavior.

      Some people do commit crimes because they're simply greedy and  think that they won't get caught or that if they do the punishment won't be severe and, after a fashion,  perform something akin to a rational cost-benefit analysis. Others might be sociopathic or at least have severe personality disorders which make them less likely to be deterred.   Some of the former group might well be deterred. The problem is that as with all social problems the ones who don't conform can still cause a lot of trouble.

    In Ohio (5.00 / 1) (#38)
    by Fabian on Thu Mar 12, 2009 at 03:28:06 PM EST
    we've had at least three recent big white collar busts - one was a health insurance outfit which went bust while cheating its clients and enriching its management and one was a investment type who swindled his clients for millions.

    Madoff is just in the wrong place at the wrong time.  He's become a symbol of what people think is wrong with the financial system.  They are wrong, of course.  The systemic problem has nothing to do with a single confidence trickster.

    The real problem is all the white collar criminals that we won't be able to prosecute.


    He's not "relieved" to have been caught (none / 0) (#2)
    by tokin librul on Thu Mar 12, 2009 at 08:21:41 AM EST
    He's pissed.

    You can see it in his face, in his eyes. He's furious. He hthinks he so rich and was soo influential he should have gotten a pass...

    The judge won't revoke bail. No WAY Madoff';; spend a night in the Tombs.

    But he'll end up and some Club Fed, working on his tennis game.

    Well, it was just a question; (none / 0) (#3)
    by Anne on Thu Mar 12, 2009 at 08:30:06 AM EST
    I haven't been watching much of the coverage, so haven't paid any attention to what Madoff's demeanor is - and since I would have no frame of reference for it from "happier" times, it might not mean anything even if I was watching.

    You could be right, but if he is that angry at being caught, why isn't he fighting it by going to trial?

    None of it makes any sense to me.


    He's lived the life. (none / 0) (#18)
    by Fabian on Thu Mar 12, 2009 at 10:26:18 AM EST
    It may well be that Madoff tried to call in every favor he was owed only to find out there's a difference between being rich and powerful and a radioactive bum.

    please keep your anger in check (none / 0) (#4)
    by Jeralyn on Thu Mar 12, 2009 at 08:38:59 AM EST
    This is a criminal defense site and I'm not interested in hosting rants by people filled with hate.

    The evidence was jus over whelming (none / 0) (#10)
    by Saul on Thu Mar 12, 2009 at 09:58:33 AM EST
    against him.  Other than an insane defense there was no good defense possible.   Plus he is doing it to protect his family.  

    All thats left now (none / 0) (#11)
    by SOS on Thu Mar 12, 2009 at 10:01:07 AM EST
    is controlling the masses in the case they go totally berserk when reality really sinks in.

    Bernie's just the tip of berg.

    re (none / 0) (#14)
    by Bemused on Thu Mar 12, 2009 at 10:12:34 AM EST
      That would help explain the straight-up plea versus a plea agreement, but it doesn't really explain why he rejected the other option of going to trial. I can't imagine he believes (and I'm sure his lawyer would dissuade him of the notion) that his pleas will end the investigation. With either this approach or a trial he wouldn't be turning on family, family, friends, associates or whomever, but in both situations it's a safe bet the government will continue to pursue it without his help.

    The investigation will go on... (none / 0) (#15)
    by Fabian on Thu Mar 12, 2009 at 10:20:23 AM EST
    and information will be discovered and people convicted.

    I just wonder which ones will fight and which will fold.

    BTW - they can probably freeze certain assets - but can they literally freeze so many assets that someone couldn't pay for their own defense?  (Assuming that a competent and effective defense isn't going to be cheap for the top dogs.)


    I still think this guy (none / 0) (#17)
    by Lil on Thu Mar 12, 2009 at 10:22:55 AM EST
    may actually be a little sorry and "ashamed" and just decided to give it up and pleadd guilty. If so, he is a rare one and because that is rare, many of us are skeptical as to his and the gov't's motives.

    Hi ho hi ho (none / 0) (#20)
    by SOS on Thu Mar 12, 2009 at 10:32:59 AM EST
    AP -  2 minutes ago

    NEW YORK - Bernard Madoff has been ordered to jail after pleading guilty to an epic financial fraud scheme.

    Lil (none / 0) (#23)
    by Bemused on Thu Mar 12, 2009 at 10:38:03 AM EST
      The problem I with at is that there is nothing stopping him from telling where all the remaining money is and executing transfer documents so it can be used for restitution. to believe this is all about remorse and shame, we have to believe that almost all of money or whatever has been purchased with it is no longer somewhere he can disclose. I know his lawyer is disputing the amounts tossed around by prosecutors and the media, and I have no reason to suspect those amounts might overstate it, even substantially, but even if "only" 10 billion in losses resulted, it would seem he should have information on a bit more than what the government has currently identified.

    Wow (none / 0) (#24)
    by joanneleon on Thu Mar 12, 2009 at 10:54:34 AM EST
    This is not how I thought it would play out.  I guess I can say now that I was convinced that he was going to "cash it in" before having to go to jail.  I think he feels a deep sense of shame and guilt because he thinks he should feel that way.  But if he could have kept this going without getting caught, he would have.  So, IMHO, the guilt wasn't deep enough to stop him before he was exposed, and it wasn't deep enough to stop him from trying to grab money and jewelry, and it wasn't deep enough to cause him to vacate his Park Ave. penthouse.  In other words, I don't think it's genuine but instead, he's cornered, and it's what he thinks he has to do and how he thinks he should be behaving.  

    And, I really thought the judge was going to let him remain under house arrest until sentencing.  I figured this had been arranged before he went to court.  A trial would have been very costly for the government, in more ways than one.  Even at the top levels of government, I believe they do not want the SEC problems to be quite so publicly exposed.  The new SEC chair has been talking about how the SEC is causing a lack of confidence in the market.  

    I thought that his lawyer allowed all of this to happen because Madoff had convinced him that he would not go to trial and risk having all kinds of people testifying, and that he would not live out his life in jail.  The death threats to his lawyer may have had an impact too.  (Geez, I can't believe people are doing that.)

    I did also think that he pled guilty in order to try to save his family and whoever else might have been involved.  I don't believe for a minute that he did this alone.  Possibly, his sons didn't know what was going on, but I doubt it.  His brother and wife had to have known, along with his CFO.  It's being reported that all of them are being investigated aggressively.

    P.S. Jeralyn, I've been watching the goings on with UBS a bit, and how the govt. is pressuring the Swiss banks to disclose identities of American account holders.  They have given up some information.  I wonder if Madoff information was part of the disclosure.

    Maybe (none / 0) (#28)
    by AlkalineDave on Thu Mar 12, 2009 at 11:21:12 AM EST
    a person can be truly sorry and stop thinking about himself for once.  Maybe every defendant isn't totally self serving and doesn't have to think of a way to make their punishment as light as possible.  Maybe he felt he deserved it, and he's ready to pay for his crimes.

    Maybe so (5.00 / 1) (#37)
    by Inspector Gadget on Thu Mar 12, 2009 at 02:50:23 PM EST
    Do you think it is possible to tell from watching that person whether he/she is sorry for what they did to others or if that look of shame is because of what he/she did to him/herself?

    He's very ashamed that the culmination of his life's work has ended this way, you can be fairly certain of that. What he did to others seems he spent decades convincing himself was his right to do. I think it will take more than what he's been through thus far to really cut into the armour of greed and flawed justification he used to protect himself.


    hm (none / 0) (#29)
    by connecticut yankee on Thu Mar 12, 2009 at 11:22:41 AM EST
    The whole clan should have bought land in Florida like OJ did.  IIRC homes their are protected from civil suits, at least.

    A Lesson... (none / 0) (#30)
    by diayn on Thu Mar 12, 2009 at 11:39:47 AM EST
    I think the verdict must be lesson for those who do any such finance related offence.

    Don't think so. (none / 0) (#31)
    by Fabian on Thu Mar 12, 2009 at 11:51:23 AM EST
    There's a lot of white collar crooks and scam artists out there.  Almost none who did it on the scale that Madoff did, but still, plenty who steal from their often willing, if ignorant, victims.

    somtimes going to jail (none / 0) (#33)
    by sancho on Thu Mar 12, 2009 at 12:35:44 PM EST
    is just part of the cost of doing business.