X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Victims of Bernard L. Madoff broke out in cheers and applause yesterday as Southern District Judge Denny Chin ordered a 150-year prison sentence for Mr. Madoff’s gigantic Ponzi scheme. “Symbolism is important,” Judge Chin said as he hit Mr. Madoff with the maximum possible term—by far the largest ever for a white-collar crime in the Southern District, imposed for offenses the judge called “staggering” in size and scope. Editor’s Note: This file has been updated to reflect a Correction . “Here, the message must be sent that Mr. Madoff’s crimes were extraordinarily evil,” the judge said. “This is not a bloodless financial crime that occurred only on paper, but one that took a staggering human toll.” The sentence was ordered after the judge heard 50 minutes of tearful testimony from nine heartbroken victims of a fraud in excess of $13 billion in investor losses to date. Mr. Madoff, 71, reportedly admitted the fraud was in excess of $50 billion when he confessed to his sons and prepared for his arrest on Dec. 11. “He truly has earned the reputation as being the most despised person living in America today,” said Burt Ross, who lost $5 million through the fraud run out of Bernard L. Madoff Investment Securities on Lexington Avenue, where for over a decade Mr. Madoff did not even bother to invest the money his clients sent him. Mr. Ross broke down in tears as he described the damage Mr. Madoff had done. Sheryl Weinstein said she met Mr. Madoff 21 years ago when she was the chief financial officer of Hadassah. In December, Ms. Weinstein learned that she and her husband had “lost everything” and have been forced to sell their home. “Underneath the façade, he is truly a beast,” Ms. Weinstein said. “He has fed upon us to satisfy his own needs.” Read the Victims’ Statements Presented to Judge Chin . Mr. Madoff pleaded guilty to securities fraud and 10 other felonies on March 12 ( NYLJ, March 13). Mr. Madoff was not technically eligible for a life sentence yesterday, but Judge Chin said he had the discretion to “stack” the sentences for each crime committed and have the terms run consecutively. Once the victims had spoken, Mr. Madoff rose, cleared his throat, took a sip of water and said, “I cannot offer an excuse for my behavior. How can you excuse betraying thousands of investors who entrusted you with their life savings?” He spoke of betraying his 200 employees at his proprietary trading business and betraying his brother and his two sons. He then asked how anyone could excuse the betrayal of Ruth Madoff, “the wife who stood by you for 50 years and still stands by you?” “I live in a tormented state now knowing all the suffering or pain I created,” he said. Yet Mr. Madoff could not quite bring himself to squarely confront his crimes, even as he made a point of saying, “I apologize to my victims. I turn and face you. I am sorry. I know that doesn’t help.” The gesture was quick and mechanical. Mr. Madoff then continued to speak, choosing language that minimized his actions. He spoke of starting “this problem” then added, “this crime.” He referred to how much it hurt an “industry I worked to improve,” and said he dug a hole and kept digging because “I could not accept that for once in my life I had failed.” He also referred to his “terrible mistake” and his “error in judgment.” Symbolism of Sentence Judge Chin spoke at length about the symbolism of meting out a sentence that will far exceed Mr. Madoff’s lifetime. He said the 150-year sentence — the term sought by Assistant U.S. Attorneys Lisa A. Baroni and Marc O. Litt — was important for “retribution,” as Mr. Madoff must be “punished according to his moral culpability.” The sentence was also important for purposes of deterrence and for satisfaction for the victims, the judge said. Judge Chin said the victims ranged from pension funds to the elderly, from charitable institutions to “middle class folks” who based critical decisions such as home purchases, retirement planning and their childrens’ education on promises made by Mr. Madoff. “I was particularly struck by one story,” Judge Chin said, that of a widow whose husband had invested with Mr. Madoff. The widow visited Mr. Madoff at his office two weeks after her husband’s death to express concern about her future. “He put his arm around her and, in a kindly manner, told her not to worry, your money is safe with me,” Judge Chin said. The judge disagreed with defense attorney Ira Lee Sorkin, who in a pre-sentencing submission said that some of the victim’s letters, coupled with the “hysteria” over Mr. Madoff’s crimes, conveyed the sense that people were seeking a form of “mob vengeance.” “Rather,” the victims “are doing what they are supposed to be doing, putting their faith in our system of justice,” Judge Chin said in the courtroom. Mr. Sorkin, who had little to work with, tried and failed, to convince the judge that a sentence of 12 years, which would approximate Mr. Madoff’s life expectancy, or one of 15-20 years, would be “sufficient but not greater than necessary” to meet the purposes of sentencing. Mr. Sorkin, of Dickstein Shapiro, told the court that his client “stepped forward” to admit his crimes, and is “still assisting the government” in recovering assets. Read Mr. Sorkin’s Letter to Judge Chin . His cause was not helped by a letter sent to the judge yesterday from David J. Sheehan of Baker Hostetler, the attorney for Irving H. Picard, the trustee for the Madoff bankruptcy. Mr. Sheehan said, “I write to advise the court that Mr. Madoff has not provided any meaningful cooperation or assistance to the Trustee since his arrest.” Mr. Sorkin drew snickers when he said the whole scandal had “taken a tremendous toll” and it “had also taken a toll on Mr. Madoff and his family and, to be sure, the victims in this case” as well as “the industry he helped revolutionize.” “If Mr. Madoff ever sees the light of day,” Mr. Sorkin said, he will emerge from prison “impoverished and alone. He will have paid a terrible price.” The defense attorney gamely tried to minimize the size of the losses in the case. “Most of the money went toward redemptions. People who invested money were given back money,” he said. He said the Securities Investor Protection Corporation (SIPC) has already recovered over $1 billion and has started litigation to seek clawbacks and redemptions and interest in excess of $10 billion. But the math was not in his favor. Calculated Fraud Ms. Baroni spoke for the prosecution in countering Mr. Sorkin by telling the court about a fraud of “unprecedented proportion” that took place “for over a generation.” Read the government’s sentencing memorandum. She detailed how Mr. Madoff used his victims’ money to fuel his “opulent lifestyles,” with houses at home and abroad, private jets and “tens of millions” in payments to family members. “This was not a crime born of any financial distress or pressures,” Ms. Baroni said. “It was a calculated, well-orchestrated, long-term fraud.” She reminded the judge Mr. Madoff produced “hundreds of thousands of fake documents every year” to report to his clients investments and sales he never made. Ms. Baroni anticipated the judge’s view on Mr. Sorkin’s argument that recovering money from clawbacks would help compensate victims in the case. “That has nothing to do with the loss amount in this case,” she said. And Ms. Baroni told the judge that, “in asking for 12 years, the defendant is asking you” to give a sentence for “a garden variety fraud in this district.” Judge Chin said he considered other large, white-collar crimes in the Southern District, alluding to the 25-year sentence given Bernard Ebbers in the WorldCom case and other prison terms handed down over the last few years. “Frankly, none of these other crimes is comparable to this case in terms of the scope, duration and enormity of the fraud,” he said. Judge Chin said it was telling that he had not received one letter of support for Mr. Madoff. He was also convinced that Mr. Madoff, who had $173 million in checks ready to be sent to friends and family sitting in his desk when the FBI searched his office, continued to commit his illegal behavior right up to the eve of his surrender. The judge also viewed with skepticism Mr. Madoff’s claims he was cooperating with the authorities. “I simply do not get the sense Mr. Madoff has done all that he could or told all that he knows,” the judge said. Mr. Sorkin requested that Judge Chin ask the Bureau of Prisons to designate the sentence be served at Otisville, a medium security prison in New York. Judge Chin would only request that Mr. Madoff serve his term in “the Northeast.” Statement From Ruth Ruth Madoff issued a statement yesterday through her lawyer, Peter A. Chavkin of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. Ms. Madoff said she was “stunned” by her husband’s confession and that she was “embarrassed and ashamed,” and “Like everyone else, I feel betrayed and confused.” “I am breaking my silence now, because my reluctance to speak has been interpreted as indifference or lack of sympathy for the victims of my husband Bernie’s crimes, which is exactly the opposite of the truth,” she said. Ms. Madoff was mentioned more than once by victims who came to speak to Judge Chin and confront Mr. Madoff. But there were other targets as well, including the Securities and Exchange Commission, which was criticized for the lax oversight that allowed Mr. Madoff to flourish. “Our government has failed me and thousands and thousands like me,” said Maureen Ebel. “Its [the SEC's] total incompetence and criminal negligence has allowed a psychopath to steal from me.” @

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at customercare@alm.com

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.