x Abu Dhabi, UAEWednesday 17 January 2018

Lawyer says Madoff to plead guilty

The money manager, on 11 criminal charges, faces a maximum penalty of 150 years in prison.

NEW YORK // Investors who were cheated of their savings may feel some vindication today when Bernard Madoff pleads guilty in court after committing one of the largest financial frauds in history. Mr Madoff's lawyer said he would enter the guilty plea after prosecutors revealed on Tuesday an expanded list of 11 criminal charges, including securities fraud and money laundering, that could put the 70-year-old money manager behind bars for the rest of his life.

"The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years," said Lev Dassin, the acting US attorney in Manhattan. "While the alleged crimes are not novel, the size and scope of Mr Madoff's fraud are unprecedented." Mr Madoff is accused of running a US$64.8 billion (Dh238.01bn) Ponzi or pyramid scheme, in which returns were paid by subsequent investors rather than from profits. Prosecutors raised the size of the fraud from $50bn during Tuesday's hearing.

High-profile investors included many Jewish charities and a host of global financial institutions. As the scope of the alleged fraud unfolded, Mr Madoff quickly became a symbol of greed on Wall Street, which many Americans blame for the worst economic crisis for 50 years. In a New York court on Tuesday, Ira Sorkin, Mr Madoff's lawyer, was asked by Denny Chin, a US district judge, if the money manager would plead guilty to all 11 counts.

"I think that's a fair representation," Mr Sorkin replied. An assistant US attorney said there had been no plea deal, in which a defendant agrees to co-operate and pleads guilty to fewer charges in exchange for a reduced sentence. That would mean Mr Madoff could face a maximum penalty of 150 years. The judge said he would sentence him in the next few months. Mr Madoff, a former chairman of the NASDAQ Stock Exchange, has been under house arrest at his $7 million apartment in Manhattan's Upper East Side since his detention in early December.

About 25 angry investors have asked to speak at his court hearing today when prosecutors may ask the judge to send Mr Madoff to prison until he is sentenced. He wore a bulletproof vest in court on Tuesday, when the judge said he would limit hearings to those who wanted to speak on the issue of whether he should remain on bail. "There is no plea bargain here," said Mr Chin. "Those victims who objected to a plea bargain no longer have a reason to object."

Prosecutors said Mr Madoff had about 4,800 clients as of Nov 30 last year, and he issued statements reporting the client accounts held a total balance of about $64.8bn. But, they said, Mr Madoff's company actually "held only a small fraction" of that balance for clients. The court papers said the alleged fraud lasted from at least the 1980s until the business collapsed last year, one of many casualties in the credit crunch, including the previously venerable Lehman Brothers and Bear Stearns.

Mr Madoff hired numerous employees "with little or no prior pertinent training or experience in the securities industry", according to court documents. No one else has been charged in the case, so far. Mr Madoff also faces mandatory restitution to victims and criminal fines. The government wants him to forfeit all money and property that can be traced back to the alleged fraud, estimated at more than $170.8bn, although prosecutors did not explain how they reached this figure.

A court will also rule on Mr Madoff's claim that his wife should be allowed to keep up to $70m worth of assets held in her name. In court on Tuesday, Mr Madoff waived any potential conflicts of interest concerning Mr Sorkin, his lawyer. The Sorkin family used to have investments with Mr Madoff. And the lawyer once represented two accountants linked to Mr Madoff in a securities action. sdevi@thenational.ae