Bernard Madoff, accused mastermind of a $50 billion investment fraud, is expected to plead guilty to criminal charges next week, three months after his arrest shocked his customers worldwide.
A court document signed today by prosecutors and Madoff's lead attorney indicated the once-respected Wall Street trader and investment manager would waive an indictment and plead guilty to criminal charges.
A March 12th hearing was scheduled for Madoff to appear in court on the charges, said a clerk for Judge Denny Chin in US District Court in Manhattan, who was assigned to oversee the case.
Mr Madoff, who is under house arrest, also is set to appear at a hearing next week on a potential conflict of interest involving his main lawyer, Ira Sorkin.
Legal experts said all signs indicate that a guilty plea has been negotiated in what authorities have called the biggest Ponzi scheme in Wall Street history. The purported swindle ran for decades but collapsed in last year's market meltdown.
Mr Madoff's lawyers and the US Attorney's Office in Manhattan declined to comment directly on any plea deal.
"This is the first step in order to enter a plea agreement," said Peter Henning, a professor at Wayne State University Law School in Detroit and a former federal prosecutor.
Prosecutors charged and arrested Madoff on December 11th after the FBI said he confessed to running a "giant Ponzi scheme" with $50 billion in losses over many years. A Ponzi scheme is one in which early investors are paid with the money of new clients.
One legal expert said it is likely that any plea deal would include Mr Madoff's agreement to cooperate with the government's investigation into the purported swindle, which bilked banks, wealthy clients, small investors and charities worldwide.
If other people were ultimately charged and put on trial, Mr Madoff's sentencing could be delayed until those cases were resolved, legal experts said.
No one else has been charged, but few believe that Mr Madoff could have carried out such a complex worldwide scheme on his own.
"Federal conspiracy law can reach far and wide, and undoubtedly the government is going to be looking to charge a conspiracy," said Bradley Simon, a white-collar criminal defense attorney not involved in the Madoff case.
"They are under enormous pressure to get to the bottom of this and bring in the bodies."
Mr Madoff was charged in December with one count of securities fraud and faces up to 20 years in jail.
The 70-year-old could spend the rest of his life in prison. In the meantime, he is out on $10 million bail and under house arrest in his $7 million New York apartment with 24-hour surveillance.
Mr Madoff's assets and those of his firm, Bernard L. Madoff Investment Securities LLC, have been frozen by court order as a trustee works to recover money for former customers. Less than $1 billion has been recovered so far.
The Madoff scandal has been one of the biggest white-collar criminal cases in recent memory. His clients included numerous celebrities, including TV talk show host Larry King and actor John Malkovich, according to court documents. Investors say he lured them through his reputation for posting amazingly consistent returns that prosecutors now say were fiction.
If Mr Madoff pleaded guilty, that would not put an end to the wave of private litigation stemming from the scandal, with investors suing Mr Madoff on their own as well as bringing cases against money managers that put their money with him.
Mr Madoff's prior court appearances have caused a frenzy at the federal courthouse in lower Manhattan. Besides the March 12th hearing, he is also to appear in court on Tuesday before the same judge to address a potential conflict involving his lawyer.
Mr Madoff must tell the judge at that hearing that he is aware that 17 years ago his lawyer Sorkin represented two accountants who invested with Madoff in a civil case that was settled.
Reuters