'Evil' Madoff Gets 150 Years in Epic Fraud

Paul Radvany in The Wall Street Journal, June 29, 2009

Media Source

Bernard Madoff was sentenced to 150 years in prison Monday after admitting in March to running one of the largest and longest financial frauds in recent memory.

At a packed hearing Monday, U.S. District Judge Denny Chin in Manhattan ordered Mr. Madoff, 71 years old, to serve the statutory maximum sentence in prison. Applause briefly broke out after the sentence was announced.

"Here the message must be sent that Mr. Madoff's crimes were extraordinarily evil," Judge Chin said.

The sentence dwarfs other prison terms handed out for other high-profile white-collar fraud in recent years, such as former Worldcom Inc. Chief Executive Bernard J. Ebbers, 67, and Adelphia Communications founder John Rigas. Mr. Ebbers is serving 25 years in prison, while Mr. Rigas, 84, is serving 12 years in prison.

"By giving this sentence (the judge) tried to send a clear message to victims he heard their pleas for justice," said Paul Radvany, a Fordham University law professor. The judge also wanted to send a message to would-be Madoffs "you'll face very serious consequences," Mr. Radvany said.

Ira Sorkin, Mr. Madoff's lawyer, had asked for a sentence of as little as 12 years in prison, citing Mr. Madoff's health, age and life expectancy. Mr. Sorkin declined to comment on the sentence.

On March 12, Mr. Madoff was ordered directly to jail after pleading guilty to 11 criminal counts, including securities fraud, mail fraud and money laundering, in a decades-long Ponzi scheme that bilked thousands of investors out of billions of dollars.

"I'm sorry; I know that doesn't help you," said Mr. Madoff, briefly turning to face his victims at the hearing prior to the judge's sentence.

Dressed in a dark, charcoal-gray suit and dark tie, Mr. Madoff stared down at the defense table during much of the hearing. As he has at previous court appearances, he showed little emotion during the hearing.

Following Bernie Madoff's sentence of 150 years in prison, Kelsey Hubbard gets reactions from victims of the fraud and talks with WSJ's Peter Lattman about what went on inside the courtroom.

"I cannot offer you an excuse for my behavior," Mr. Madoff said. "How do you excuse betraying thousands of investors who entrusted me with their life savings? How do you excuse deceiving 200 employees who spent most of their working life with me? How do you excuse lying to a brother and two sons who spent their entire lives helping to build a successful business? How do you excuse lying to a wife who stood by you for 50 years?"

Mr. Madoff said he made "a terrible mistake" and an "error of judgment" and that he lives in a "tormented state" now. He also denied that he and his wife have been silent and not sympathetic to victims of the fraud.

"Nothing could be further from the truth," Mr. Madoff said. "She cries herself to sleep every night."

In a statement Monday, Ruth Madoff, his wife, said her silence on the case shouldn't be interpreted as indifference to the suffering of victims.

"All those touched by this fraud feel betrayed; disbelieving the nightmare they woke to. I am embarrassed and ashamed," Ruth Madoff said. "Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years."

Mr. Madoff had run the scam for years through the investment advisory arm of his business, Bernard L. Madoff Investment Securities LLC, by promising steady returns and by presenting an air of exclusivity by not taking all comers and recruiting investors via friends and associates.

The scheme defrauded a wide range of investors, including individuals, hedge funds, charities and trusts, such as a charitable trust established by Boston Properties Inc. Chairman and New York Daily News owner Mortimer Zuckerman.

When the fraud was revealed in December, some individuals went from being millionaires or having comfortable retirements to being nearly destitute overnight.

"May God spare you no mercy," said Tom FitzMaurice, one of nine victims who spoke at the hearing.

Mr. FitzMaurice, 63, and his wife, Marcia, have nothing left as a result of Mr. Madoff's fraud and have been forced to go back to work, with Mr. FitzMaurice working three jobs.

"I only hope his sentence is long enough (so that) his jail cell is his coffin," said Michael Schwartz, a 33-year-old victim, who also spoke.

Mr. Madoff claimed to have as much as $65 billion in his firm's accounts at the end of November, but prosecutors said the accounts only held a small fraction of that.

Assistant U.S. Attorney Lisa A. Baroni said Monday that Mr. Madoff perpetrated a massive fraud for more than 20 years and used the money to enrich himself and his family.

"This was not a crime born of financial distress or market pressures; it was a calculated, long-term fraud," Ms. Baroni said.

Mr. Sorkin, Mr. Madoff's lawyer, said most of the money taken in by the fallen financier was paid to other investors as redemptions.

"It was money in and money out," Mr. Sorkin said.

So far, the court-appointed trustee for Bernard L. Madoff Investment Securities LLC has identified about 1,341 accounts holders who suffered estimated losses of $13.2 billion. The trustee has recovered more than $1.2 billion for investors.

Late Friday, Judge Chin signed a preliminary forfeiture order against Mr. Madoff for more than $170 billion, leaving the one-time chairman of the Nasdaq Stock Market penniless.

Prosecutors and the court-appointed trustee have insisted Mr. Madoff hasn't been as cooperative as he could be.

"I have a sense Mr. Madoff has not done all that he could do or told all that he knows," said Judge Chin, who called the fraud "unprecedented" and "staggering."

The judge said symbolism was important in this case to deter others from committing similar frauds and Mr. Madoff "knew he was going to be caught soon" when he was arrested by Federal Bureau of Investigation agents in December.

During the hearing, Mr. Sorkin said Mr. Madoff was a "deeply flawed individual" but has been diligent in attempting to help the government recover assets, and stressed, "Vengence is not the goal of punishment."

He said the government's request of a 150-year sentence, or a recommendation by the U.S. Probation and Pretrial Services of a 50-year sentence, "defies reason."

"He expects, your Honor, to live out his years in prison," Mr. Sorkin said.