Barring a change of heart, Bernard L. Madoff will plead guilty tomorrow to running a massive Ponzi scheme for at least a quarter century that defrauded thousands of people in virtually every corner of the globe.
Based on 11 charges unveiled for the first time last night, the disgraced financier would face a maximum sentence of 150 years in jail, and required restitution and fines of as much as $170 billion. That is the amount prosecutors believe moved through his accounts during the years he conducted the fraud, although there is no indication that Madoff has anywhere close to that sum.
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Yet the criminal information leaves the biggest questions about the scam unanswered – whether family members and colleagues were involved, where most of the money went, and what, if any, knowledge those running several large feeder funds may have had.
Lev L. Dassin, the acting United States attorney in Manhattan, said Tuesday that his staff was still unraveling the fraud to determine who besides Madoff might have helped.
“The filing of these charges does not end the matter,” Dassin said in a statement.
Dassin said he has made no agreement to seek leniency in return for Madoff’s guilty plea or his cooperation in the investigation.
The prosecutor’s release of charges offered some fresh information about how they believe Madoff conducted his scam. For starters, they up the total pricetag from his $50-billion estimate to nearly $65 billion – the amount that thousands of customers believed they had in their accounts at the time of his arrest.
And they date the fraud to as far back as the early 1980s, when they allege that Madoff assembled an ill-trained and inexperienced clerical staff, directed them to “generate false and fraudulent documents,” told lies and supplied phony records to regulators and shuffled hundreds of millions of dollars from bank to bank to create the illusion of active trading, according to the criminal information.
For the first time, they disclose that some investors were treated differently – a select group were offered returns as high as 45 percent, according to the criminal information
And they raise questions about the supposed separation between Madoff’s 17th-floor investment operation and the supposedly legitimate wholesale stock trading operation that his sons ran. Prosecutors charge that from at least 2002 through 2008, more than $250 million from investors in the Ponzi scheme was transferred into the operations of those other businesses.
They also allege that Madoff transferred money from his firm’s London office “to purchase property and services for the personal use and benefit” of himself, his family members and associates.
Madoff has been free on $10 million bail, but confined to his apartment, since his arrest in December. It is not clear whether the government will seek to have his bail revoked if he pleads guilty on Thursday.
The charges against him include securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission, and theft from an employee benefit plan.
Even if Madoff pleads guilty as expected, the judge said he will not be sentenced for several months.
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