Madoff to Plead Guilty to 11 Counts, But Not ConspiracyMar 11, 2009 | Parker Waichman LLP
On the heels of Bernie Madoff’s attorney, Ira Sorkin, telling the Washington Post that there is a "fair expectation" that the accused Ponzi scammer will plead guilty tomorrow to cheating investors out of billions in savings, new details about the his plea have emerged. According to Bloomberg.com, because Madoff has refused to plead guilty to a conspiracy charge, he was unable to secure plea bargain from federal prosecutors.
Madoff refused to admit to conspiracy because it would mandate that he would have to admit that he did not work alone in the massive Ponzi scheme—the largest in history, said Bloomberg. This means that the government will be unable to secure Madoff’s assistance in “determining” if “his employees assisted in the fraud,” Bloomberg reported.
So, tomorrow, Madoff - who waived his right to have a grand jury review the allegations against him is scheduled to plead guilty to one count each of securities fraud, investment advisory fraud, mail fraud, wire fraud, perjury, falsifying a filing with the Securities and Exchange Commission (SEC), stealing from an employee benefit plan, making false statements, as well as three counts of money laundering, said the Washington Post. But in light of Madoff’s refusal to admit to conspiracy, he loses any hope of leniency “or anything else in return,” said Bloomberg.
The government is looking to claim $170.8 billion in “forfeiture” from Madoff, said the Washington Post, an amount triple what Madoff acknowledged stealing. Also of note, reported the Washington Post, a judge said that despite some conflicts of interest with Madoff, Sorkin can continue to represent him.
Madoff, 70—once a chairman of the Nasdaq stock exchange—was arrested on a single count of securities fraud on December 11. Formerly a respected figure on Wall Street, Madoff was founder and primary owner of Bernard L. Madoff Investment Securities LLC, a firm known primarily for market-making, or serving as the middleman between buyers and sellers of shares. Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds, and other institutions. Now, Madoff is facing a sentence of up to 150 years in prison.
In December, Madoff confessed to authorities that his fund was, in fact a large Ponzi scheme and that he robbed investors by as much as $50 billion; a government-appointed trustee has recovered about $900 million, to date, said the Washington Post. Federal authorities believe the actual number could be half that figure, it added.
“The information crafted by the government does not contain a conspiracy charge, and you can read what you like into that,” Madoff attorney Mauro Wolfe said today in an interview, referring to a document listing the charges that were filed Tuesday, reported Bloomberg. “The information speaks for itself,” Wolfe added.
Bloomberg explained that, according to the government, Madoff directed staff to develop bogus documents and confirmations of fake returns, including false financial statements; acting Manhattan U.S. Attorney Lev Dassin said that Madoff did not act alone. Madoff is free on $10 million bond, but may be jailed after his plea tomorrow.
A former federal prosecutor told Bloomberg that Madoff might be protecting his former employees. Madoff’s brother Peter was chief compliance officer; his sons Mark and Andrew held senior positions; and his wife, Ruth, was Madoff’s bookkeeper for a time and may be both civilly and criminally culpable for his fraud. None of Madoff’s family members have been charged with any crime, Bloomberg pointed out. Also, senior and key members of Madoff’s team have all claimed they had no knowledge of the fraud and, like Madoff’s family members, have not been accused.
Some investors are particularly concerned about Ruth, who is trying to retain millions of dollars in assets for herself. As we reported last week, Madoff’s lawyers claimed the couple’s $7 million Manhattan penthouse, $45 million in municipal bonds, and another $17 million held in a separate account belonging to Ruth.