NEW YORK financier Bernard Madoff faces a lengthy jail sentence after he admitted yesterday running a massive, decades-long Ponzi scheme that tricked investors out of billions of dollars.
Saying he was “deeply sorry and ashamed”, Madoff (70) pleaded guilty to fraud, money-laundering, perjury and theft, which carry maximum prison terms totalling 150 years. His bail was revoked and he was brought to jail in handcuffs, pending sentencing on June 16th.
“I knew what I was doing was wrong, indeed criminal,” Madoff told federal district judge Denny Chin in a packed New York courtroom. “When I began the Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and clients from the scheme. However, this proved to be difficult and ultimately impossible and as the years went by I realised that my arrest and this day would inevitably come.”
Prosecutors say that, starting in the early 1980s, Madoff used promises of huge, steady returns to trap hedge funds, charitable groups and celebrities in a scheme that cost investors as much as $65 billion.
They allege that Bernard Madoff Investment Securities engaged in an elaborate charade of shuttling money between accounts around the world to disguise the fact that the firm was not actually making any investments.
Instead, it used money from new investors to pay those who wanted to withdraw money from the scheme.
“The essence of my scheme was that I represented to clients and prospective clients who wished to open investment advisory and individual trading accounts with me that I would invest their money in shares of common stock, options and other securities of large, well-known corporations, and upon request, would return to them their profits and principal,” Madoff told the court.
“Those representations were false because, for many years and until I was arrested on December 11th, 2008, I never invested those funds in the securities, as I had promised.”
He admitted that he made up false trade confirmations and account statements and lied to federal regulators to conceal his fraud.
After his arrest, Madoff was allowed to remain in his home on New York’s Upper East Side but the judge yesterday ordered that he should be taken immediately to jail.
“He has incentive to flee, he has the means to flee, and thus he presents the risk of flight,” Judge Chin said.
Some of Madoff’s victims, who included friends, relatives and numerous Jewish charities, were in the courtroom yesterday. Madoff, who is likely to spend the rest of his life behind bars, acknowledged that he had betrayed many people who were close to him.
“I am painfully aware I have deeply hurt many, many people, including the members of my family, my closest friends, business associates and the thousands of clients who gave me their money,” he said. “I cannot adequately express how sorry I am for what I have done.”