Bernard Madoff pleaded guilty today to charges he orchestrated the biggest financial swindle in Wall Street history and was ordered to jail to await a sentence that could last the rest of his life.
In an emotional court hearing in front of scores of investors he swindled, the former Nasdaq stock market chairman spent 10 minutes describing a long-running Ponzi scheme he knew from the beginning was criminal and wrong but hoped would end quickly.
"I am painfully aware that I have deeply hurt many, many people," including family, friends and associates, said the gray-haired, grim-faced Madoff (70), speaking of his crime for the first time publicly before US Judge Denny Chin in Manhattan federal court.
"When I began my Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme," said Madoff, who wore a grey suit but none of the rings and jewellery that long were a signature of his style.
He said that shutting down the scheme, in which early investors are paid with the money of new clients, proved impossible and he soon came to realise "that my arrest and this day would inevitably come".
Madoff was head of a family-run business in which his brother, Peter, and sons Mark and Andrew were executives in the brokerage arm of his firm. Neither they nor his wife of nearly 50 years, Ruth Madoff, were in court.
Madoff has become one of the most vilified men in America, a symbol of the unraveling of Wall Street that has laid bare other multimillion dollar frauds.
His swindle also cast a harsh light on securities regulators for failing to uncover his scam or other purported frauds, such as an $8 billion scheme run by billionaire Texan Allen Stanford.
Madoff's swindle, which took in as much as $65 billion over two decades before the 2008 market meltdown, could land him in prison for the rest of his life. The maximum possible penalties on 11 criminal charges add up to 150 years.
The judge revoked Madoff's bail and ordered him to jail immediately, ending his house arrest in his luxury Manhattan penthouse. He will be sentenced June 16. Some of his victims cheered as he was led out of the courtroom in handcuffs.
Prosecutors, who want Madoff to forfeit all of the money and property that can be traced back to the alleged fraud, estimated that figure at more than $170.8 billion.
"The essence of my scheme," Madoff said in a statement he read in court, was telling clients and prospective investors he would "invest their money in shares of common stock, options and other securities of large well-known corporations".
But he said the money was never invested. "Instead, those funds were deposited in a bank account at Chase Manhattan."
When clients asked for redemptions - and there were more requests coming in last year than he could meet - he withdrew the money from the bank account.
Assistant US Attorney Marc Litt said the investigation was far from over.
"A lot of resources are being expended both to find assets and to find anyone else who may be responsible for this fraud," he said.
After the once-respected trader answered each of the 11 criminal charges with the word "guilty," Judge Chin accepted the plea and rejected his request to stay out on bail until sentencing.
"He has incentive to flee, he has means to flee, and he is a risk of flight," the judge said.
He will be jailed in a shared cell at the nearby Metropolitan Correctional Center, a far cry from the opulent lifestyle to which he has been long accustomed.
His attorney, Ira Lee Sorkin, said he would appeal the judge's ruling revoking bail.
Some of the hundreds of former investors who sat in the courtroom or in another room in the courthouse watching a video feed of the proceedings, said they were unsatisfied by Madoff's admission and apology.
"Satisfaction will be when I get my money back," Ronnie Sue Ambrosino, a 56-year-old investor from Florida said outside the court.
His investors included hedge funds, banks, Jewish charities, the wealthy, and small individual investors in North and South America and Europe. Three were allowed to speak at the hearing. By pleading guilty to charges including securities fraud, money laundering and perjury, Madoff avoided a trial that some of his victims had sought.
They said a trial would have revealed more about Madoff's complex global scheme and his suspected co-conspirators.
No one else has been charged.
"If we go to trial we have more of a chance to comprehend the global scope of this horrendous crime," investor Maureen Ebel of Florida said in court.
"At trial, we can bear witness to the pain Mr. Madoff has inflicted on the old, the infirm and the disabled."
Reuters