‘Sorry’ is not enough, Madoff’s victims say
Even with Bernard L. Madoff heading to prison Thursday after confessing to an epic Ponzi scheme, the intrigue over his case deepened as embittered victims pressed the government to find out who may have helped him and where the money went.
At a 75-minute court hearing, he pleaded guilty to 11 securities-related fraud counts and said he was “so deeply sorry and ashamed.”
“I realized that my arrest and this day would inevitably come,” Madoff told a packed courtroom in his first public comments since his scheme was revealed in December. “I am painfully aware that I have hurt many, many people.”
That was little consolation to the more than two dozen investors who squeezed into federal court for a glimpse of the man who bilked many out of their life savings while assuring his clients only last fall that their investments were worth $65 billion.
“I just want him to rot in jail for the rest of his life,” said Richard Shapiro, 55, of Hidden Hills, a commercial real estate investor who was watching the news on television. “He’s a thief and he’s ruined people’s lives.”
To investors’ applause, U.S. District Judge Denny Chin revoked Madoff’s bail, pending a June 16 sentencing. Saying Madoff had the motive and the means to flee, the judge sent him away in handcuffs to a future that will differ vastly from the opulent Manhattan lifestyle he had enjoyed for years.
Madoff, dressed in a chalky gray suit, showed no emotion while reading his mea culpa statement or being handcuffed later. No relatives stepped up to say goodbye.
The revelation in December that Madoff had been operating his massive fraud since at least the early 1990s hit investors like a thunderclap and immediately transformed him into the most visible symbol of the global financial crisis.
Madoff, after all, was an esteemed figure on Wall Street. A onetime chairman of the Nasdaq Stock Market, he was viewed as a reformer whose electronic stock-trading firm competed with the entrenched New York Stock Exchange and helped reduce trading costs for investors.
Almost 5,000 investors -- including director Steven Spielberg, actor Kevin Bacon and baseball legend Sandy Koufax -- were ensnared by the smooth-talking financier who boasted of steady investment returns through even the most treacherous markets.
Madoff, 70, faces a maximum of 150 years in prison, though experts predict his sentence will be closer to 20 years -- potentially a life term.
Investors cheered as Chin rejected Madoff’s request to continue living at his Manhattan apartment until his scheduled sentencing in June.
Yet many victims bridled at the lack of information so far about how he pulled off the elaborate crime and whether there was any cash left to repay them.
“Investors want some money back,” said Sharon Lissauer, a New York model who entrusted her life savings to Madoff. “Even if he spends the rest of his life in jail, that doesn’t help me.”
Legal experts said the pressure was mounting on federal prosecutors to retrace Madoff’s steps and get answers for investors.
“This was the unfolding of the final chapter of a story where the early part of the book has yet to be told,” said Robert Mintz, a white-collar defense lawyer in New Jersey. “We know who the villain is. What we don’t know is how we got here and who may have helped him along the way.”
Digging that out will require far more grueling spadework than was needed to nab Madoff.
The financier has steadfastly said that he acted alone and hired inexperienced underlings who lacked the sophistication to detect his fraud.
Madoff has argued that his wife should be allowed to keep almost $70 million in assets, including the couple’s Upper East Side apartment. In court, he went out of his way to say that his company’s stock-trading unit, where his brother and two sons worked, was separate from his scam.
Some legal experts are skeptical that prosecutors will be able to piece together a fraud of such magnitude.
“I wonder practically whether there’s money squirreled away all over the world,” said Steven D. Feldman, an attorney at Herrick Feinstein in New York. “If there was, why wouldn’t he have run off to a country where the United States doesn’t have an extradition treaty and lead the good life? Instead of retiring to Florida, he would have retired to the Swiss Alps.”
Madoff’s decision to plead guilty despite the lack of a plea deal with prosecutors is rare and a move that experts said he made to curry favor with the judge. By relieving the court of the need for a lengthy trial, Madoff hopes to shorten what could otherwise amount to a life sentence, Feldman said.
“This is to get 15 [years] instead of 25,” he said.
With an automatic 15% sentence reduction for good behavior, that would make Madoff eligible for release within 13 years, or by roughly his 83rd birthday.
In his courtroom comments, Madoff offered the first explanation of his actions, saying he felt pressure to report good investment returns during the early-1990s recession.
“As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal,” he told the judge. In the classic pyramid fashion, he began taking money from new investors to pay returns promised to earlier investors.
“When I began the Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients from the scheme,” he said. That “proved difficult and ultimately impossible,” he added.
Chin allowed several victims to make statements to the court.
The first, filmmaker George Nierenberg, spoke directly to Madoff in the most emotional moment of the hearing, raising his voice as he started to describe his pain.
“I don’t know whether you had a chance to turn around and look at the victims,” Nierenberg told Madoff, taking a step toward him.
A startled Madoff swiveled to face the man, the only time Madoff broke from his straight-forward gaze to eye the victims. The judge quickly instructed Nierenberg to address the court, not Madoff.
The hearing elicited a range of emotions from swindled investors. Lissauer, the model, struggled to hold back tears as Madoff spoke. Afterward she said that encountering him was wrenching.
“Seeing him really freaked me out,” she said. “It made it much more real for me.”
Lissauer described herself as distraught, saying she lost her life savings and an inheritance from her deceased mother. Modeling has been sparse in the weak economy and other work tough to come by, Lissauer said.
“I can’t sleep,” she said. “I’m always crying. I feel almost like I’ve been raped.”
Judith Welling, 71, who with her husband lost about $2.5 million, said Madoff should be sent to a penitentiary with hardened criminals rather than a more lenient minimum-security prison with other white-collar felons.
“As far as I’m concerned, he should go to Rikers [Island],” she said.
She also blamed the Securities and Exchange Commission, which missed several opportunities to ferret out Madoff’s fraud.
Mary L. Schapiro, the new SEC chairwoman, said the agency was beefing up its enforcement and inspection capabilities to prevent a repeat of the Madoff case.
“I would never sit here and tell you that I think had we had more resources, the agency would have caught the Madoff fraud earlier on. I can’t say that,” Schapiro told a House subcommittee Wednesday. “I do know . . . that more people will allow us to make a bigger dent in the fraud and will allow us to have a greater deterrent effect.”
Debra Schwartz, 67, another Madoff victim, left the courtroom both pleased and saddened.
“I’m just so happy he’s going to jail,” she said. At the same time, Schwartz added, “my heart breaks for him and his family and all that has been created. We as a society need to look at what monsters we’ve created. He’s pathologically sick, and he went off the deep end.”
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Contributing to this report were Times staff writers Erika Hayasaki in New York, Jim Puzzanghera in Washington and Nathan Olivarez-Giles in Los Angeles.
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(BEGIN TEXT OF INFOBOX)
11
Felony counts
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150 years
Maximum sentence
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4,800
Client accounts, as of November
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$64.8 billion
Total value of investments Madoff claimed to be holding for clients
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$10 billion to $20 billion
Estimated loss of principal so far
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$950 million
Madoff assets recovered for investors
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Sources: Court records, analyst estimates
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Victims vent
Judith Welling, 71, of New York, who with husband
DeWitt Baker lost about $2.5 million:
‘Do I feel vindicated? No. Not until the [Securities and Exchange Commission] and the government step up and do what is required for the victims. The SEC should have been on trial too. . . . We do not call ourselves victims. We have our health and our families. We are survivors of Bernie Madoff. . . . How could he have done it alone? Where was he? On his yacht? In his many homes? . . . One man alone, it’s impossible to launder that much money.’
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Jay Sanderson of Encino, president of the Jewish Television
Network in Los Angeles, lost 10% of the nonprofit’s $1.5-million
operating budget:
‘This is one of the most horrible crimes in U.S. history, and it seems to be going out with a whimper rather than bang. . . . We won’t know what happened and who did it. . . . I’m spending a tremendous amount of time trying to figure out how to stay even at this point. I have to work twice as hard as I was before because of this.’
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Richard Shapiro, 55, of Hidden Hills lost millions of dollars
in savings and a pension fund:
‘The government needs to put him in prison to rot for the rest of his life in the same place they put the rapists and the killers and the other hard criminals, because what Madoff did was completely dismantle and ruin people’s lives, the lives of their families, the lives of their children and everything we’ve worked our entire lives to build. . . . Madoff didn’t turn around and address the victims, he showed no emotion and he basically said, “I’m sorry.” But . . . sorry doesn’t cut it. . . . We as taxpayers were required to pay our taxes, and if we don’t, we go to jail. Well, we paid our taxes, but our government officials didn’t stop this. I want to know what our legislators are going to do about this.’
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Debra Schwartz, 67, of New York lost two-thirds of her retirement savings:
‘I’m just so happy he’s going to jail. . . . My heart breaks for him and his family and all that has been created. We as a society need to look at what monsters we’ve created.’
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-- Source: Nathan Olivarez-Giles, Times staff writer
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‘I knew what I was doing was wrong.’
Bernard L. Madoff
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‘He has the incentive to flee. He has the means to flee.’
Denny Chin, U.S. district judge
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‘I just want him to rot in jail. . . .’
-- Richard Shapiro,
investor, Hidden Hills
