150 years in jail for Madoff's 'evil' crime
Some celebrated. Some sobbed. But the victims of the biggest fraudster the world has ever seen were united in satisfaction as the man who stole $65bn was given the maximum sentence
Tuesday 30 June 2009
There would be no mercy for Bernard Madoff. The man who admitted perpetrating history's largest fraud has been handed one of history's longest prison terms for fraud – 150 years for a crime that a New York judge damned as one of "extraordinary evil".
Dressed funereally in a charcoal suit and a black tie, Madoff, 71, stood impassively as Denny Chin handed down a sentence that guarantees he will die in prison. The face-to-face apology that Madoff delivered to his victims, the plea for clemency extended by his lawyers, and the claims that he has been co-operating in the search for his money were all swept away by the judge, who decided to award the absolute maximum he could.
Cheers and whoops of delight went up in the packed ceremonial courtroom in downtown Manhattan. One by one, victims lined up to tell heart-wrenching tales of loss and betrayal at the hands of a man who was once one of the most powerful on Wall Street. These victims, representative of thousands more around the world, sometimes sobbed, sometimes shouted in anger, but mainly they just coolly recounted the devastating financial consequences of learning – on 11 December last year – that Bernard Madoff's entire investment empire had been a $65bn (£39bn) pyramid scheme.
Judge Chin told the swindler that his crimes had hurt not just the rich and famous who have been among his most talked-about victims, but more often people from ordinary working families, whose plans to put their children through college or to care for elderly relatives had been ruined.
"This is not a bloodless crime that took place just on paper, but one that took a staggering human toll," Judge Chin said. He cited the example of a widow, who had visited Madoff two weeks after her husband died and who had put their savings in the hands of the swindler. "He put his arms around her in a kindly manner and told her not to worry, her money was safe with him. Now her money is gone."
Inside the oppressive wood-panelled walls of the courtroom, studded with black marble columns, Madoff had sat mainly impassively through the 90 minute sentencing hearing yesterday morning, but he did address the court and, in dramatic fashion, the victims who had travelled to see him face justice.
Turning almost 90 degrees to face them on the benches behind him, he said: "I apologise to my victims. I will turn and face you. Not that it will make a difference, but I'm sorry."
He said he was tormented by the "legacy of shame" he was leaving for his family.
Ira Sorkin, the attorney defending Madoff, insisted that the fraud had not been perpetrated directly to enrich the swindler or his family. It was a classic pyramid scheme, called a Ponzi scheme in the US, where money coming in from investors was used to pay redemptions by others who wanted to cash out.
Madoff's claims to be running a magical mystery trading strategy that guaranteed double-digit percentage returns every year may have been a lie, but he had created a legitimate share trading business earlier in his career which was still one of the largest working on the New York Stock Exchange and on which his fortune was based.
Madoff claims he began his fraud in the early Nineties after he tried to hide small investment losses, and snowballed after that. He added: "I made an error of judgment. I refused to accept that, for the first time in my life, I had failed. I couldn't admit that failure. That was a tragic mistake."
Madoff has been housed in a Manhattan detention centre since pleading guilty to 11 charges, ranging from fraud and theft to perjury and money laundering, back in March, while a former life of luxury homes, multiple yachts and designer watches is sold off to fund restitution for the victims. His victims came from at least three continents and included celebrities, Steven Spielberg, Kevin Bacon and Zsa Zsa Gabor among them, pension funds, scores of charitable organisations, many of which have been forced to close, and philanthropists such as the Holocaust survivor Elie Wiesel.
Many, though, were anonymous individuals living off their savings, and nine of them travelled to the courthouse yesterday to make sure their voices were heard by the man who betrayed them.
"He stole from the rich. He stole from the poor. He stole from the in-between. He had no values," said Tom Fitzmaurice, describing how he and his wife, both 63, were now working at four jobs between them. "There will be no retirement for us... no trips to California to visit our 1-year-old grandson, no vacations." He urged the judge "not to confuse Madoff's prepared statements with remorse."
Michael Schwartz, a 33-year-old whose family trust had been used not just to pay for him to go to college but was also a lifeline for a mentally disabled brother was still living at home, broke down as he addressed the court. "Every time he wrote a cheque to pay for his decadent lifestyle, he killed dreams. I hope he is in imprisoned for long enough that his jail cell becomes his coffin." The sentencing of Bernard Madoff is hardly the end of the legal matter. Investigators are still not convinced by his claim to have acted alone; the Securities Investor Protection Corp, which is leading the effort to compensate victims, says it does not believe that Madoff is doing all he can to help. So far, the auditor who was supposed to be certifying the accuracy of Madoff's books has been slapped with criminal charges, too, but prosecutors hope to file more.
Many questions remain unanswered. Lisa Baroni, from the US attorney's office in New York, told the court: "It was a calculated, well-orchestrated fraud that went on month after month, year after year, decade after decade. Madoff created literally hundreds of thousands of fake documents. Those account statements contained nothing but lies."
Mr Sorkin, Madoff's lawyer, had appealed for a 12-year prison term, saying that the fraudster could be expected to live just another 13 years, and would be allowed out only under supervision, "impoverished and alone".
But Ms Baroni derided a 12-year sentence as a punishment that might be meted out for "a garden variety fraud case". Madoff's might have been an ordinary fraud if he had stopped it early, but he never did. It took last year's financial meltdown to bring him to the brink of discovery when – just days before he was likely to be unmasked – he confessed to his two sons, Andrew and Mark, who turned him in.
Judge Chin dismissed all the to-ing and fro-ing about whether the money involved was $170bn, the amount prosecutors said rolled into Madoff's coffers over the years, or $65bn, the total his victims believed they had in their accounts. The scale of the fraud is still "off the charts", he said. Even the scale for measuring the severity of a fraud only goes up to $400m. "Objectively speaking, the fraud here is staggering. I do not agree that the victims are seeking 'mob vengeance'," the judge added. "They are not acting together as a mob... They are doing what they are supposed to be doing, which is putting their faith in justice."
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