NEW YORK // Bernard Madoff pleaded guilty today in a federal courtroom and was sent to jail just three months after it was revealed he committed one of the largest financial frauds in Wall Street history. The 70-year-old former money manager faces spending the rest of his life in prison after he stole up to US$65 billion (Dh238.74bn) in a Ponzi, or pyramid, scheme in which returns were paid by subsequent investors rather than from profits. High-profile investors included many Jewish charities and a host of global financial institutions.
He stated "guilty" when asked by Denny Chin, a federal judge, to enter a plea on 11 criminal charges including securities fraud, money laundering, theft from an employee benefit plan and false statements to the US Securities and Exchange Commission. "I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," he told the court about his fraud, which prosecutors believe started in the 1980s.
"As the years went by, I realised my risk, and this day would inevitably come. I cannot adequately express how sorry I am for my crimes." He left the court in handcuffs on his way to prison, pending sentencing on June 16. His guilty plea averted what could have been a lengthy and costly trial, although investigators are still trying to locate the stolen assets. Sentencing was expected in the next several months and he could face a maximum 150 years in jail.
There was no plea deal - whereby a defendant pleads guilty to fewer charges in exchange for a reduced sentence - and victims hope Madoff will co-operate to find their stolen money. Madoff became the symbol of greed and bad faith on Wall Street after his company, Bernard L Madoff Investment Securities, unravelled in the wake of the credit crunch and global financial turbulence starting last year. He has been under house arrest in his luxury Manhattan apartment since early December.
Today's hearing was also expected to determine whether he should await sentencing in prison, and some of his victims were due to speak on the issue of bail. Madoff also faces mandatory restitution to victims, forfeiture of ill-gotten gains and criminal fines. The government wants Madoff to forfeit all money and property that can traced back to the alleged fraud, estimated at more than $170bn, although prosecutors have not explained how they got this figure.
Prosecutors said earlier this week that Madoff had about 4,800 clients as of Nov 30 2008, and that he issued statements reporting the client accounts held a total balance of about $64.8bn. But Madoff's company actually "held only a small fraction" of that balance for clients, they said. The head of the Qatar Investment Authority said Madoff had "killed the hedge fund" because investors would demand greater transparency on where their money goes.
"For the next three years, nobody is going to give money to private equity," the executive director of the fund, Hussain al Abdullah, said at a conference in Dubai. "We should all go for a long holiday and come back in 2010." US media have been awash with stories about the rich and famous who fell for Madoff's supposed charm and financial pedigree. High-profile investors included the film director Steven Spielberg's Wunderkinder foundation, the actors Kevin Bacon and Kyra Sedgwick, and the television host Larry King.
Elie Wiesel, the Nobel Prize winner and another of his victims, said "psychopath" was "too nice a word" to describe Madoff. No one else has been charged in the case so far, although prosecutors said Madoff hired numerous employees "with little or no prior pertinent training or experience in the securities industry". A court must also rule on Madoff's claim that his wife, Ruth, should be allowed to keep up to $70 million worth of assets. @Email:sdevi@thenational.ae
