Madoff Pleads Guilty

MARCH 13, 2009

Bernard Madoff finally entered a guilty plea. Specifically, Madoff pled guilty to 11 different felony charges. Here is the list:

Count 1: Securities fraud. Maximum penalty: 20 years in prison; fine of the greatest of $5 million or twice the gross gain or loss from the offense; restitution.
Count 2: Investment adviser fraud. Maximum penalty: Five years in prison, fine and restitution.
Count 3: Mail fraud. Maximum penalty: 20 years in prison, fine and restitution.
Count 4: Wire fraud. Maximum penalty: 20 years in prison, fine and restitution.
Count 5: International money laundering, related to transfer of funds between New York-based brokerage operation and London trading desk. Maximum penalty: 20 years in prison, fine and restitution.
Count 6: International money laundering. Maximum penalty: 20 years in prison, fine and restitution.
Count 7: Money laundering. Maximum penalty: 10 years in prison, fine and restitution.
Count 8: False statements. Maximum penalth: Five years in prison, fine and restitution.
Count 9: Perjury. Maximum penalth: Five years in prison, fine and restitution.
Count 10: Making a false filing with the Securities and Exchange Commission. Maximum Penalty: 20 years in prison, fine and restitution.
Count 11: Theft from an employee benefit plan, for failing to invest pension fund assets on behalf of about 35 labor union pension plans. Maximum penalth: Five years in prison, fine and restitution.

Not included in this list was a conspiracy charge. This was reported to be the sticking point which blocked a plea deal with prosecutors. This means that Madoff is keeping mum about the potentional role of others in this fraud. None of Madoff's family members have been formally accused of any wrongdoing. The list of denials from attorneys representing people who worked with and are related to Madoff is long:

Madoff's wife (Ruth Madoff) - Hiring her own new attorney. (She is reported to have withdrawn $15.5 million before Bernie's arrest)
Madoff's sons (Mark and Andrew) - Claim they were not involved in the firm's asset management business according to their attorney Martin Flumenbaum
Madoff's CFO (Frank DiPascali, Jr.) - No comment from his lawyer Marc Mukasey (whose father US Attorney General Michael Mukasey has recused himself from the Madoff case)
Madoff's Auditor (David Friehling of Friehling & Horowitz, CPA's) - No comment from his lawyer Andrew Lankler
Madoff's Aide (Annette Bongiorno) - No comment

U.S. District Judge Denny Chin ordered that Madoff should be immediately jailed while awaiting sentencing which is scheduled for June 16. Madoff is now in the Metropolitan Correction Center in lower Manhattan. He faces up to 150 years in prison.
Madoff defense lawyer Ira Sorkin filed notice that he would appeal the jailing of Madoff prior to his sentencing. Incidentially, Mr. Sorkin's two sons had $900,000 invested with Madoff in a trust account set up by their grandfather.

"I never invested the funds in securties as promised," Madoff told Judge Chin at the heading. Madoff said he was "deeply sorry" and knew what he did was criminal. Madoff told Chin that in the early 1990s, when the U.S. was in a recession, he felt "compelled" to provide the returns he promised investors. He said when the Securities and Exchange Commission asked about it, he lied to the SEC.

The full Madoff plea is available here. Madoff's complete client list is available here or a searchable version of the client list is available here.

Click here to discuss this post.

Permalink