In a sign of the anger that the fraud has stirred, US marshals were positioned behind Madoff, who was dressed in a dark suit and white shirt, in court as a protective measure
The disgraced financier Bernie Madoff has been sentenced to the maximum 150 years in prison for masterminding a $65bn (£38bn) fraud that wrecked the lives of thousands of investors.
The US district judge Denny Chin described the fraud as “staggering” and said the “breach of trust was massive” and that a message was being sent by the sentence. There had been no letters submitted in support of Madoff’s character, he said. Victims in the courtroom clapped as the term was read out.
The sentence, which means the 71-year old fraudster will end his days in prison, was handed down at an emotional hearing in a lower Manhattan courtroom, where victims were given the chance to tell how the fraud had destroyed their livelihoods.
Dominic Ambrosino, an ex-prison officer, said he and his wife Ronnie Sue had their “entire life savings wiped out” by Madoff. Another said Madoff had “cheated so he could lead a life of luxury”; another still said Madoff had “discarded her like roadkill” and that she was now living on food stamps. In passing down the sentence, judge Chin referred to one instance where he had comforted a widow and then taken her money. He will serve his sentence in the US north-east.
In a sign of the anger that the fraud has stirred, US marshals were positioned behind Madoff, who was dressed in a dark suit and white shirt, in court as a protective measure. According to reporters in the courtroom, Madoff sat looking down in front of him as his victims gave vent to their fury.
Standing in front of the judge, Madoff appeared remorseful. “I have left a legacy of shame, as some of my victims have pointed out.” He said he had made a terrible mistake and was tormented by what had happened. “I cannot make an excuse for my behaviour”. He said had deceived his family and that his wife Ruth cried herself to sleep every night. He described reports that he and his wife were unsympathetic to victims as untrue”.
Madoff pleaded guilty in March to 11 counts of fraud, theft and money laundering. The sentencing, in what has been one of the biggest frauds ever seen on Wall Street, was eagerly anticipated. Described by victims in written testimony as a “thief and a monster”, Madoff has become an emblem for the greed that pitched the world into recession. Nearly 9,000 victims have filed claims for losses in Madoff’s corrupt financial empire.
Assistant US attorney, Marc Litt, had been pressing for 150 years, due to the “scope, duration and nature” of the fraud. Madoff’s lawyer, Ira Lee Sorkin, had called for leniency and was hoping to keep the sentence as low as 12 years, asking the judge to “set aside the emotion and hysteria attendant to this case.” He described Madoff in court as a “deeply flawed human being” and said the maximum sentence was “absurd”. He also noted that he had given himself up and was co-operating with authorities, although judge Chin said he had not told everything that he knew about the fraud.
Madoff’s famous victims included the film directors Steven Speilberg and Pedro Almodóvar, actors Kevin Bacon and Zsa Zsa Gabor and the author Elie Wiesel.
Ruined lives
But there were many more anonymous and less wealthy people who had their lives ruined by Madoff, including teachers, famers and mechanics. Many invested in so called “feeder funds”, which often did little to advertise their connection to Madoff, and they had little or no idea that their money had been lost until they received letters from their financial advisors. The scandal has been linked to at at least two suicides, including a British former soldier, he said he could not face the prospect of bankruptcy after losing his savings in the Madoff fraud.
In written statements ahead of the sentencing, more than 100 victims detailed how Madoff had wrecked their lives and in many cases squandered their pensions. Jack Cutter, an 80-year-old from Colorado and former engineer, said he had been forced back to work and taken a job as a meat clerk in a local grocery store. Korean war veteran Allan Goldstein said he and his wife had been forced to sell their home and were living in their daughter’s spare room.
Another, Julie Behar, wrote that Madoff deserved a “sentence befitting a thief and murderer” while a Connecticut doctor said the entire retirement plan of his practice had been wiped out, leaving 140 employees with nothing.
Professional investors were also fooled. A fund managed by Nicola Horlick, described as the City’s “superwoman”, had 9% of its cash invested with Madoff.
The demand for access to the sentencing were so high that two additional rooms were provided for defrauded investors, media and spectators to watch on closed-circuit television.
The focus of the investigation is now expected to shift to Madoff’s wife Ruth and the couple’s two sons, Andrew and Mark, who both worked for the business. They claim they had no knowledge of the fraud and have not faced any charges but many victims are sceptical that Madoff could have managed the scheme on his own. His sons have not visited him in prison.
The only other person to face charges has been an accountant accused of helping to mismanage Madoff’s books.
Fixture on the New York scene
The disgraced financier built his career and his one-time glowing reputation from nothing. He raised money to set up his first investment company by taking summer jobs as a lifeguard on Rockaway Beach, a down at heal neighbourhood in Queens, and later installing sprinkler systems. During the 1990s, he served as chairman of Nasdaq, the electronic share trading marketplace that competes with the New York Stock Exchange. He also became well known for being something of a philanthropist, making multi-million dollar donation to hospitals, cancer charities and Jewish groups.
He became a fixture on the New York social scene and met many of his investors at upmarket parties. He lived with his wife Ruth in a $7m home on New York’s swanky Upper East Side and the couple also owned homes in the Hamptons on Long Island and in Palm Beach, Florida. His wife still lives in their Upper East Side home and recently snapped at tabloid photographers as they pursued her on the New York subway.
Last weeek, a judge issued a preliminary $171bn fofeiture striping Madoff of all his personal property and $80m in assets his wife Ruth claimed was hers. His wife has been allowed to keep $2.5m in cash, according to an agreement with prosecutors.
But six months after his arrest, prosecutors still do not know exactly how much money Madoff took or what his victims might hope to recover. It could months or even years to resolve all of the claims.
When he admitted to the fraud, Madoff said it had begun in the 1990s, as he tried to navigate the recession. He said he had hoped he would be able to extricate himself from the scheme when the markets recovered but instead just got deeper in. As the years went by he realised that the day when his fraud was discovered “would inevitably come”. He told the court at the time that he was “deeply sorry and ashamed”.
Angry with the SEC
He had confessed to his sons late last year that the investment business was a “big lie”.
Madoff masterminded a huge “Ponzi” scheme. Instead of investing client’s money in secrities, it was held with a bank and new deposits used to pay bogus returns to give the impression that the business was successful. At the time of his arrest in December, he claimed to manage $65bn of investors money, but in reality there was just $1bn left. The business employed 25 people in London’s Mayfair. Madoff had claimed that his investments produced gains of roughly 1% a month for two decades, which many experts now say should have raised a red flag. Some have directed their fury at the securities and exchange commission, the US financial watchdog, which failed to spot the fraud. An internal investigation at the SEC is expected by the end of September.
At the same time, Madoff, whose name, pronounced “made-off”, might have been coined by Dickens for a financial crook, lived a lavish lifestyle and prosecutors have set about seizing assets including property and boats.
Madoff ran his business like a club and would throw out investors who asked too many questions. Many invested through personal recommendation. Joyce Greenberg, a retired financial adviser in Texas said her family had begun investing money with Madoff in the 1970s after being introduced by her stepbrother. “I hate computers and I never tried to figure out what he was doing because the bookkeeping all added up,” she said.
Corporate America has suffered a series of massive frauds during the past decade, including scandals at Enron, WorldCom, Tyco and more recently the financial empire run by Texas billionaire Allen Stanford. Former WorldCom chief Benrard Ebbers is serving 25 years for accounting fraud. Former Enron chief executive Jeffrey Skilling was sentenced to more than 24 years in prison although the sentence was overturned. He remains in prison awaiting resentencing.
