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Madoff stands alone, takes blame for Ponzi scheme
BY ANTHONY M. DESTEFANO; Staff writers John Riley and Rocco Parascandola contributed to this story.
March 13, 2009
From bail to jail - in just minutes.
Swindler Bernard Madoff stood all alone yesterday when he took the heat for carrying out the biggest Ponzi scheme in Wall Street history.
"I am so deeply sorry," Madoff told Judge Denny Chin, who revoked his bond and ordered him to the federal Metropolitan Correctional Center, in Manhattan, to await sentencing this summer.
For nearly 10 minutes, the 70-year-old Madoff stood in U.S. District Court in Manhattan as scores of his cheated investors watched. He described how for years he had picked their pockets from the very moment he started his investment adviser business. He implicated no one else in the scam, which he said started in the early '90s.
"Your honor, for many years, up until my arrest on Dec. 11, 2008, I operated a Ponzi scheme through the investment advisory side of my business," Madoff told Chin without a trace of emotion. "As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal."
Then, in his first public act of contrition, with his family nowhere to be seen, Madoff apologized for his crimes "for which I am so deeply sorry and ashamed."
The admissions were a moment of high courtroom drama expected to consign Madoff to the rest of his life in prison when he is sentenced June 16. Madoff said he believed the scheme would end quickly and that he could pull himself and his clients out from under the self-destructive nature of the fraud, which pays off old investors with money taken from new ones.
"However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come," Madoff said.
Although Madoff's three-month period of luxurious house arrest on a $10-million bond since his December bust has been without incident, Chin revoked his bail, to the applause of investors.
At 11:14 a.m., as lead defense attorney Ira Sorkin watched, U.S. marshals handcuffed Madoff with his wrists behind his back and took him to the correctional center adjacent to the courthouse, said officials. Sorkin said he will appeal the bail revocation.
Madoff pleaded guilty to 11 charges - which included securities, mail and wire frauds and money laundering - in a scheme that investigators believe amounts to as much as $65 billion.
Although prosecutors said there is no plea agreement, a source familiar with the case who asked not to be named said Madoff is prepared to meet with special trustee Irving Picard to help his staff locate assets that could be used to pay back customers.
Madoff said his younger brother, Peter, and Madoff's sons, Andrew, 40, and Mark, 42, ran what he said was the "legitimate, profitable and successful" market making operation of his company.
However, law enforcement and legal sources have said investigators have focused some attention on Madoff's family, including his wife, Ruth, who has hired former federal prosecutor Peter Chavkin of Manhattan to represent her in civil lawsuits and regulatory matters.
No Madoff relatives have been accused of wrongdoing, but some employees are being scrutinized by investigators or approached for information.
Chin allowed some investors to speak in court, and one, George Nierenberg, glared at Madoff, stepped away from the lectern and taunted him to turn around and look at the victims. Madoff just stared straight ahead. Chin told Nierenberg to just address the court.
"I don't understand why conspiracy is not part of the plea," said Nierenberg.
Ronnie Sue Ambrosino, of Arizona, objected to the plea because she said it squandered an opportunity to find out who else was involved in the scheme.
Assistant U.S. Attorney Marc Litt told Chin the investigation was continuing and that there was no plea deal or agreement with Madoff, a signal that there is no arrangement to spare anyone.
Still, some lawyers were puzzled why Madoff decided to forgo indictment. Had he not, he could have stayed out on bail many more months, said Gerald Lefcourt, a Manhattan defense lawyer.
Jeffrey Lichtman, another Manhattan lawyer, said it is possible that Madoff is giving some unofficial cooperation.
"Why plead guilty to every single charge unless there is something in place to protect his family?" Lichtman said. "Just because there is no cooperation agreement doesn't mean there hasn't been a proffer [giving of information]."
Staff writers John Riley and Rocco Parascandola contributed to this story.
There will be a number of developments in the
Bernard Madoff case in the coming weeks and months. Here are some:
JAIL TERM BEGINS. Madoff will be processed into the Metropolitan Correctional Center in Manhattan where he is expected to be held until sentencing on June 16. If that center has space problems, he could be sent to the larger Metropolitan Detention Center in Sunset Park, Brooklyn.
PREPARATION FOR SENTENCING. Madoff will be interviewed by probation officials before sentencing, which is scheduled for June 16. Madoff faces a maximum of 150 years - or an effective life term - in prison and fines totaling at least in the millions of dollars.
EXPLORING NEW PROBES. Federal prosecutors will have to decide whether to pursue investigations of Madoff's family members - including his wife and two sons - or his former employees.
COOPERATION, OR NOT. Madoff himself will have to decide how much he wants to cooperate with special trustee Irving Picard, who is trying to locate assets and funds with which to repay investors.
ADDING UP RESTITUTION. Prosecutors and defense attorneys will file opposing papers dealing with the matter of restitution. Assistant U.S. Attorney Marc Litt calculated that $177 billion might be a restitution amount. Defense attorney Ira Sorkin said that number is a gross exaggeration.
CIVIL SUITS. Madoff will have to face numerous civil lawsuits filed by cheated investors. His wife, Ruth, already faces some lawsuits, said her attorney.
Lawyer, MDs Charged in Anna Nicole Smith Case
Two years after Anna Nicole Smith's fatal drug overdose, new developments: Authorities in Los Angeles have charged Smith's lawyer-turned-boyfriend, Howard K. Stern, and two of her doctors with conspiracy to provide the former Playboy Playmate with thousands of prescription pills before her death, the Associated Press reports.
Charges against Stern and physician Sandeep Kapoor -- who were released Thursday on $20,000 bond -- include conspiracy, unlawfully prescribing a controlled substance and prescribing, administering or dispensing a controlled substance to an addict. Investigators found 11 medications in Smith's hotel room at the time of her February 2007 death, some under aliases and others in Stern's name.
The second doctor, Khristine Eroshevich, is expected to surrender to authorities Monday. Her attorney acknowledged Eroshevich wrote some prescriptions using fake names for Smith, but said it was done for privacy reasons, not to commit fraud.
But prosecutors allege that all three "repeatedly and excessively furnished thousands of prescription pills to Anna Nicole Smith, often for no legitimate medical purpose." Stern faces six felony counts, and the doctors face seven each.