Madoff faces 150 years in alleged Ponzi scheme

by ANTHONY M. DESTEFANO

Bernard Madoff, after being charged with 11 counts for allegedly running Wall Street's biggest Ponzi scheme, now faces up to 150 years in prison when he pleads guilty tomorrow, officials said yesterday.

Manhattan federal prosecutors unveiled the charges, as well as the 70-year-old's prospect of dying behind bars, during a court appearance in which the disgraced investment adviser told a judge that he wanted to keep his lawyer despite potential legal conflicts.

The attorney, Ira Sorkin, said Madoff intends to plead guilty to the charges tomorrow.

In disclosing the charges, prosecutors revealed that Madoff is accused of mail fraud, wire fraud, securities fraud and money laundering in connection with a $50-billion Ponzi scheme that allegedly ran for more than 25 years. He is also charged with perjury, giving false statements to the Securities and Exchange Commission and stealing from an employee benefit program.

"From at least as early as the 1980s through on or about December 11, 2008, Bernard L. Madoff, the defendant, perpetrated a scheme to defraud the clients of Bernard L. Madoff Investment Services by soliciting billions of dollars of funds under false pretenses," federal prosecutors said in charging documents.

"I think 150 years is in the right direction," said investor Burt Ross of Englewood, N.J. "When will he go to jail?"

The documents didn't spell out a specific amount of investor losses. But the charges noted that as of November, Madoff's clients received statements showing total balances in their accounts of $64.8 billion, when the amount was just a fraction of that. When he was arrested, Madoff allegedly told investigators his scheme totaled $50 billion.

The charges also indicate other unnamed Madoff employees took part in the alleged scheme by generating false account statements and trading tickets to show investment activity that didn't exist.

There wasn't information on Madoff's wife, Ruth, who is on the verge of being counseled by the law firm of former federal prosecutor Peter Chavkin, in court as a special counsel to advise Madoff on the conflict-of-interest issues involving Sorkin. Chavkin has cited that possibility in court.

Madoff, under house arrest after posting a $10-million bond, also diverted $250 million in client funds over a six-year period to fund the operation of his legitimate market-making activities, according to the documents.

Disclosure of the charges overshadowed the ostensible reason for the court hearing, which was the legal conflict of interest issue. On that point, Madoff, who had come to court wearing a protective vest, spoke publicly for the first time. Leaning against a table, Madoff for 12 minutes answered repeatedly with "Yes," and "Yes, I am," when asked by U.S. District Court Judge Denny Chin if he understood or was aware of the nature of Sorkin's potential conflicts.

Sorkin had represented two men who were potential witnesses against Madoff, and his family members had prior investments with Madoff's company. Sorkin himself also at one point had about $60,000 in retirement money invested with Madoff, but took it out around 1993, court papers disclosed.

Prosecutor Marc Litt revealed Madoff hasn't signed an agreement with the government, indicating he would have to plead guilty to all charges and could face up to 150 years. "He is throwing himself at the mercy of the court," said a defense attorney not involved in the case who didn't want to be named.

Chin said sentencing would take place "several months" after any guilty plea.

THE CHARGES (With maximum prison sentences)

SECURITIES FRAUD (1 COUNT) Alleges Madoff ran a Ponzi scheme out of his investment firm for more than 25 years. Penalty: 20 years

INVESTMENT ADVISER FRAUD

(1 COUNT) Alleges that as investment adviser, Madoff defrauded his clients for more than 25 years. Penalty: 5 years

MAIL FRAUD (1 COUNT) Alleges that Madoff used the mail to perpetrate his fraud. Penalty: 20 years

WIRE FRAUD (1 COUNT) Alleges that Madoff used wire communication such as the telephone, faxes and computers to carry out his fraud. Penalty: 20 years.

INTERNATIONAL MONEY LAUNDERING (1 COUNT) Alleges that Madoff transferred funds from his business in New York to his offices in London and back again to carry out a fraud. Penalty: 20 years

INTERNATIONAL MONEY LAUNDERING (1 COUNT) Alleges Madoff transferred funds back and forth to Europe to disguise their nature as proceeds of a crime. Penalty: 20 years

MONEY LAUNDERING (1 COUNT) Alleges that Madoff diverted more than $54 million from an employee benefit fund. Penalty: 10 years.

FALSE STATEMENTS (1 COUNT) Alleges that Madoff gave false statements to the Securities and Exchange Commission. Penalty: 5 years

PERJURY (1 COUNT) Alleges that Madoff gave false testimony to the SEC under oath in 2006. Penalty: 5 years.

FALSE FILING (1 COUNT) Alleges that Madoff filed false documents with the SEC in 2007. Penalty: 20 years

THEFT FROM AN EMPLOYEE BENEFIT PLAN (1 COUNT) Alleges that Madoff stole $10 million in funds from pension plans of 35 labor unions. Penalty: 5 years.

Sources: Federal court records, U.S. attorney's office

Source: NewsDay