Madoff = Done

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[h1]Madoff: 'I knew this day would come'[/h1] [h2]One of Wall Street's biggest swindles ends in guilty plea on 11 charges. Judge orders him to jail.[/h2]
By Aaron Smith, CNNMoney.com staff writer

Last Updated: March 12, 2009: 3:33 PM ET

NEW YORK (CNNMoney.com) -- Bernard Madoff, who stole billions from investment clients, was ordered jailed Thursday after pleading guilty to all 11 criminal counts in one of Wall Street's biggest swindles ever.

"I operated a Ponzi scheme," said Madoff to the packed courtroom, after U.S. District Judge Denny Chin told him to explain his crimes.

"I thought it would end quickly, but it proved impossible," said Madoff, who stole from thousands of victims through his investment firm. "I am ashamed for these criminal acts. I always knew this day would come."

U.S. District Court Judge Denny Chin remanded the 70-year-old to jail following his confession. He was taken to Manhattan Correctional Center, near the courthouse in lower Manhattan.

He could face a maximum 150-year sentence. His sentencing was set for June 16.

Madoff admitted that he never invested his clients' money, and that he deposited the funds into a "Chase Manhattan" bank.

"When money was requested, I paid it out from the Chase account," he said.

As Madoff wrung his hands and made other nervous gestures, the judge suggested that he pour himself a glass of water.

Madoff had successfully avoided detention after his December arrest, posting $10 million bail and cloistering himself with his wife in their $7 million Manhattan apartment.

He was able to remain in his residence, despite accusations from federal prosecutors that he tried to hide his assets from seizure by mailing diamond-studded jewelry to relatives. Only a fraction of the missing money has been recovered.

The investors

Madoff created a decades-long scheme in which new investments were used to fund payoffs to earlier investors, to falsely create the appearance of legitimate returns.

Richard Friedman, an accountant who said he lost $3.1 million to Madoff, told CNN that he hopes Madoff is sentenced to the full 150 years and that he "lives a very long life" in prison.

"The crime is really unimaginable," said Friedman. "It's not just a typical Ponzi scheme. It affects society as a whole. You don't just have to be a Madoff investor to be affected by this."

Friedman also blamed the Securities and Exchange Commission for allowing the scheme to go undetected for so long, and said that Madoff's family members are probably complicit and should go to prison.

"There's no way he could have acted alone," said Friedman. "There had to be other people involved. The whole family, as far as I'm concerned, once proof becomes available, should be thrown in jail."

In Thursday's court proceeding, Madoff faced many of his alleged victims -- with 50 courtroom seats reserved for them. Some of the investors entrusted all their savings to his firm, Bernard L. Madoff Investment Securities LLC.

But not all is lost for these burned investors. They could be eligible for $500,000 from the Securities Investor Protection Corp., a government entity that provides funds to victims of failed brokerage firms, according to Irving Picard, the court-appointed trustee for the liquidation of Madoff assets.

Fuming at the SEC

At a Feb. 20 meeting at the U.S. Bankruptcy Court in Manhattan with several hundred Madoff investors, Picard said that $650 million had been recovered thus far. He said the assets would be divided among the creditors, commensurate to how much they put in.

Many of the investors seem to be angrier with the SEC than with the man who stole their money.

At the Bankruptcy Court hearing, 77-year-old investor Raymond Spungin, who claimed he lost $700,000 to Madoff, yelled, "We're not just the victims of Madoff; we're the victims of the incompetence and irresponsibility of the SEC!"

He was answered with loud applause from the crowd of ripped-off creditors.

The SEC had been alerted to Madoff's fraudulent behavior by whistleblower Harry Markopolos, a Boston accountant who repeatedly contacted the commission but was ignored for his efforts.

"I gift-wrapped and delivered the largest Ponzi scheme in history to them and somehow they couldn't be bothered to conduct a thorough and proper investigation," he said, in testimony to the House Subcommittee on Capital Markets on Feb. 4.

But the times are changing. In January, Mary Schapiro assumed the role of SEC chairwoman, after the former chair, Chris Cox, resigned under severe criticism.

Schapiro on Wednesday requested more funds for the commission to ramp up enforcement and examination staff. Also, the SEC is taking steps to centralize whistleblower tips to better follow leads, rather than have them funneled through separate departments.

Markopolos, in testimony, said he's already alerted to the SEC to two new fraud cases, but provided no further details.

Allan Chernoff CNN senior correspondent and Julian Cummings, Laurie Segall and Deborah Brunswick of the CNN New York bureau contributed to this report.

First Published: March 12, 2009: 7:22 AM ET

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A typical cell at the Metropolitan Correctional Center in New York, where Bernard Madoff will spend the next few months awaiting his sentence.
 
dude had it made for many years though
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i would have definitely left the country if i was him, no way in hell i am going to go to jail when i have enoughmoney to live on a nice sunny beach the rest of my life.
 
I'd take one of those suicide pills and leave a note roasting the entire judicial system and everybody I stole money from.
 
Originally Posted by dreClark

Originally Posted by Illuztrious

I mean dude's 70...he's lived his life.
Exactly.


yep.

he lived a good life at that.

to be real with you i dont wanna live past say 80 my damn self. im real healthy but around 70 imma start eatin w/e i want. do drugs, not follow doctors ordersetc.
 
hes led a rich life...hes 70 even if he gets sentenced if i were a victim it wouldnt mean a damn thing he lived his life...wasting everyones money but hisapparently...honestly i dont know why he never fled before that hammer came down on him..owell...
70 yrs to ball...a few more to die..many would take it
 
we shall see if he really gets punished the way he should be. he'll probably end up doing like a year in one of them plush fed prisons. like the dude said,there's no way he could've done this all alone. and it took 10 years for the SEC to catch on although the boston accountant put them on??

not buyin that.
 
He could have easily ratted on others and gotten very little time (he still might). He is taking the fall for someone.
 
[h1]Victim wishes long life for Madoff in jail[/h1]
  • Story Highlights
  • NEW: State senator says she is almost madder at government than at Madoff
  • Man swindled of $4M: Government has done nothing "to address the victims"
  • Bernard Madoff remanded to jail, faces up to 150 years in prison
  • Victim says IRS should return any taxes paid on "phantom income"
(CNN) -- Richard Friedman lost more than $3 million to Bernard Madoff's investment scheme. Following the disgraced broker's guilty plea Thursday, Friedman said he hopes Madoff lives a long time.

"He is going to be sentenced for 150 years. I hope he lives a very long life," said Friedman, one of several victims who was allowed to sit in the courtroom for Madoff's plea.

Madoff, 70, pleaded guilty to charges that he swindled investors through his firm, Bernard L. Madoff Investment Securities LLC. Investigators said he didn't invest any of his clients' funds into securities for more than 13 years.

A judge accepted his plea on all 11 counts, and Madoff faces up to 150 years in prison. He is scheduled to be sentenced June 16.
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Anatomy of the Ponzi scheme »

Friedman said Madoff isn't the only one who received an undeserved windfall via a Ponzi scheme that is estimated to have bilked thousands of investors out of a collective $65 billion.

"Madoff investors paid in hundreds of millions, if not billions, of dollars in income taxes on phantom income that never existed," he said. "The [Internal Revenue Service] should not be allowed to keep that money."
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Watch Friedman take the IRS and SEC to task »

Bennett Goldworth said he lost 97 percent of his net worth, $4 million, to Madoff's boondoggle. He was retired and living in Florida when he learned of the scam, which forced him to move back to New York to live with his father.

He, too, has qualms with the government, he said.

"They've done nothing in this whole process to address the victims. We've been stripped of everything," Goldworth told CNN before entering the courtroom.
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Watch Goldworth talk about getting closure »

New Jersey state Sen. Loretta Weinberg said some victims don't even know how to file their taxes, and the IRS has offered no guidance.

Weinberg, who lost money through indirect investments to Madoff's scheme, said she is almost angrier at the government than she is at Madoff. Not only did the government allow him to post bail with "ill-gotten gains," but the Securities and Exchange Commission should have realized Madoff was running a scam, she said.

Congress in January criticized the SEC for missing red flags that should've tipped off the agency.

"I don't think you need a master's degree in investigative techniques to figure out that the first thing you would do is find out: Did he make buys? Did he make sells? What's going on here," Weinberg said.
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Watch another victim call Madoff 'deluded' »

Madoff had been free on a $10 million bail following his December arrest, but the judge Thursday ordered him remanded to jail.

Fifty courtroom seats were reserved for some of the estimated 4,000 victims of Madoff's Ponzi scheme. Some placed all their savings in Madoff's firm.

Goldworth said he wanted to attend Thursday's hearing for "closure, to see this through."

"It's turned my life inside-out, upside-down, just really have changed everything," he said.

All AboutBernard MadoffU.S. Markets


http://topics.cnn.com/topics/U_S_Markets
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[h1]The mystery of Ruth Madoff's money[/h1] [h2]Charles Ponzi's wife, Rose, wound up broke, but Madoff's wife may have tens of millions. What's fair?[/h2]
By Mitchell Zuckoff, contributor

March 12, 2009: 11:10 AM ET

NEW YORK (Fortune) -- With Bernard Madoff pleading guilty to federal charges that will likely send him to prison for life, attention has turned toward his wife, Ruth. Or, more specifically, to two questions about her: What did she know of the fraud? And, will she keep the tens of millions of dollars worth of property and assets in her name?

Three months ago, Bernard Madoff described his operation as a Ponzi scheme, bringing new life to the man for whom it was named, Charles Ponzi. Now, the focus on Ruth Madoff should do the same for Ponzi's wife, Rose, though Mrs. Madoff might weep at the comparison, at least financially.

In 1917, Rose Gnecco was 21 when Ponzi spotted her on a trolley platform in Boston. An Italian-American beauty, just under five feet tall, Rose had dark hair, alabaster skin and curves that put the twiggy fashion girls of the day to shame. The 35-year-old Ponzi was smitten, and by a stroke of luck he was accompanied on the platform by his landlady, who had taught Rose to play piano. Introductions were made, and Ponzi spent the trolley ride lost in reverie, staring at the back of Rose's head. He later wrote of that moment: "Time, space, the world, and everything else around me, except that girl, had ceased to exist." Seven months later, they were married.

Rose wanted a simple life built around her husband and a house full of children, and she despaired at Ponzi's endless dreams of riches. He wanted to wait to start a family until they were financially set. "I want you to be able to throw away a hundred dollars," he told her. Ponzi took over Rose's father's failing fruit business, but it was a hopeless cause. He pawned his pocket watch and three of Rose's rings, and struck out on his own. After several false starts, by late 1919 he came upon the idea that would make him and Rose rich, if only briefly, and turn his name into a synonym for swindle.

Ponzi's plan involved a primitive form of arbitrage. He believed that he could earn huge profits by taking advantage of price differences in coupons that could be exchanged for stamps in almost any country in the world. He rounded up investors, but when the plan proved unworkable, rather than return the money, he began using funds from new investors to pay the returns promised to earlier investors. Long known as "robbing Peter to pay Paul," it was the same scheme prosecutors say Madoff used.

By all indications, Rose had no idea what Ponzi was up to. Among other evidence, the records of the bankruptcy proceedings that followed Ponzi's fall are marbled with claims by Gneccos--all members of Rose's extended family who trusted him with their money. On page 363 is Rose herself, entering a claim for a $2,535 investment with her husband's company, money she would never see again. A skeptic might suggest that investments by Rose and her family were beards for Ponzi to hide behind, but when thousands of investors reclaimed their money in a weeks-long run near the end, neither Rose nor her family withdrew a cent. They believed.

When Ponzi pleaded guilty to a federal charge of using the U.S. mails to defraud, one of the same charges against Madoff, he went to prison and Rose was devastated. At first, investors who lost money with Ponzi turned toward Rose with scorn, suggesting that the Ponzis had hidden a fortune. But it soon became apparent that was untrue. Rose watched as an auctioneer disposed of the contents of the gracious home they had bought in Lexington, Mass. She begged lifts or rode the trolley to visit Ponzi in prison when their magnificent Locomobile limousine was repossessed. She moved in with family and found a job.

Rose remained devoted to Ponzi during his five-year federal prison term and throughout the seven years in state prison that followed. During a brief period of freedom in between, photos show Rose beaming at his side. Upon his release, she fought an unsuccessful battle against his deportation to Italy--he had never become an American citizen after immigrating in 1903. Two years after the deportation, unwilling to leave her home and homeland, or the nieces and nephews she loved like the children she would never have, Rose won a trans-Atlantic divorce. Yet for the remaining dozen years of Ponzi's life, they exchanged loving, flirtatious letters that spoke of reuniting.

It's an open question what Ruth Madoff knew of the deeds committed by her husband of nearly 50 years. But already, her actions contrast sharply with those of Rose Ponzi's, causing suspicions to abound. Massachusetts regulators say that in the weeks before Bernard Madoff's arrest, she withdrew $15.5 million from a brokerage partly owned by her husband's company. Earlier this month, answering one of two civil lawsuits that name both Ruth and Bernard Madoff, their lawyer asserted that about $70 million in property and accounts in Ruth Madoff's name are separate from her husband's assets and unrelated to any alleged fraud. Calls to Madoff's lawyers weren't yet returned.

Rose Ponzi walked away from her husband's scheme broke but innocent. Given the pain Bernard Madoff caused by emulating Charles Ponzi, Ruth Madoff might want to consider following the example of Ponzi's wife.

Mitchell Zuckoff is a professor of journalism at Boston University and author of "Ponzi's Scheme: The True Story of a Financial Legend."


http://cnnmoney.printthis.clickabil...ers/ruth.fortune/index.htm&partnerID=2200#TOP
The billionaire who killed himself was a friend of a friend. He still hasn't gotten over it.
 
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