Feds Want 150 Years for Bernie
Prosecutors want a 150-year sentence for Bernard Madoff—the maximum allowed and 100 years more than the probation office recommended. Meanwhile, Ruthie's giving up her jewelry and cutting deals.
Prosecutors in the Bernard Madoff case will ask for a 150-year sentence—the maximum possible—for 71-year-old Ponzi king Bernard Madoff, they disclosed Friday in a court filing. It would be an unprecedented sentence for an unprecedented crime—it would be the longest sentence for a financial crime in American history. Prosecutors said the Ponzi scheme, run over decades, moved more than $170 billion in and out of more than 4,000 customer accounts.
In papers filed shortly before 9 p.m. Friday at the prosecutors' request, Judge Denny Chin signed an order of forfeiture against Madoff for $170.799 billion. The judge also allowed Madoff's wife, Ruth, to keep $2.5 million, at least for now, in exchange for dropping her claims that she was entitled nearly $85 million.
The prosecutors also obtained an extensive forfeiture order that ends Ruth Madoff's claims to $60 milion in cash, $22 million in real estate, and more than $2 million in jewelry. The judge's order does allow Ruth Madoff, who has not been charged with a crime, to get access to more than $2.5 million without interference by prosecutors. Judge Chin's order, however, makes it clear the bankruptcy trustee or other parties are not blocked from trying to get that $2.5 million. The forfeiture order also puts Bernard Madoff on the hook for $170.799 billion, a judgment he will never be able to satisfy.
The forfeiture arrangements filed late Friday were just the latest in a series of adverse developments for Madoff.
Before the prosecutors requested a 150-year sentence for Madoff, the probation office, The Daily Beast learned earlier Friday, had recommended a 50-year sentence. Even with a 15 percent reduction in time for good behavior, such a sentence would allow Madoff to get out of jail at 106.
Whether U.S. District Judge Denny Chin will embrace either recommendation for Madoff is debatable, according to Christopher Clark, a former U.S. prosecutor who predicts a sentence in the 20- to 30-year range.
In a court filing just before 6 p.m. Friday, acting U.S. Attorney Lev Dassin and the two prosecutors handling the case asked Judge Chin to throw the book at Madoff when he is sentenced Monday.
A sentence like that would allow Madoff to get out of jail at age 106, just seven years short of the man currently billed as the world's oldest.
“Defendant Madoff’s crimes were of extraordinary dimensions,” the prosecutors wrote, noting that a partial tally of the damage already exceeds $13 billion, “more than 32 times the baseline level of loss that would carry a sentence of life under U.S. Sentencing Guidelines. “Comparisons of this case with many large and egregious fraud cases in this District, only underscore the enormity of Madoff’s offenses,” wrote prosecutors Dassin, Marc Litt, and Lisa Baroni. They said “a reasonable sentence” would be 150 years or “a term of years that both would assure that Madoff will remain in prison for life, and would forefully promote general deterrence.”
In a June 22 letter to Judge Chin, Madoff’s lawyer Ira Lee Sorkin asked the judge to give Madoff 12 years, one year less than his projected life expectancy of 13 years. In the alternative, Sorkin asked for no more than 20 years.
To justify the request for what amounts to leniency, Sorkin said Madoff had cooperated with the inspector general of the Securities & Exchange Commission for several hours.
In an interview with The Daily Beast Friday, Sorkin said: “Bernard Madoff cooperated in full with the inspector general and answered all his questions. Any suggestion that he was evasive is entirely incorrect.”
In their sentencing memorandum, the prosecutors scoffed at the notion that Madoff had been notably helpful to investigators. They said Madoff "had not provided meaningful cooperation or assistance" to Irving Picard, the bankruptcy trustee for the Securities Investor Protection Corp. Nor was Madoff much good to the SEC inspector general, they said, adding: "The defense's speculation about the results of his meeting with the inspector general should be given little credence."
So far, SEC officials have not disclosed how they will characterize Madoff’s cooperation.
Sorkin declined to discuss whether Madoff has ever cooperated with the prosecutors from the Justice Department who are handling the criminal case. There was no mention of such cooperation in Sorkin’s letter.
It is widely believed that Madoff has refused to cooperate much beyond identifying where his assets have been placed. Criminal-defense lawyers tell The Daily Beast that Madoff would not have talked to prosecutors because it would have increased the risk of possible perjury charges against his wife, Ruth, their sons, Mark and Andrew, and his brother, Peter, all of whom worked at Bernard L. Madoff Investment Securities. So far, none of them has been charged in the criminal investigation.
Whatever the sentence is for Madoff, it almost certainly will be tantamount to life imprisonment, says Clark, the former prosecutor now with DeweyLeBeouf who predicts Judge Chin will not go for 150 or even 50 years, on the grounds that such a sentence would be overkill. “He would be saying [to Madoff], “Basically, you have no chance of getting out alive.” “Remember, despite the enormity of his crime,” says Clark. “Madoff is a nonviolent, first-time white-collar offender. There are multiple murderers in New York doing just 15 to 20 years.”
Madoff got permission from Judge Chin to have a suit delivered for the big day, so expect him to be in his trademark charcoal gray suit tailored by the Savile Row firm of Kilgour French Stanbury, set off by a dark tie paired with a shirt from Charvet of Paris. Sorkin says Madoff will apologize to the victims who are expected to pack the courtroom.
In most cases, sentences on multiple counts are handed down with concurrent, rather than consecutive, terms.
For Madoff, six of the 11 counts, including money laundering, securities fraud, bank fraud, and employee benefit fraud, carry 20-year penalties. The other five counts are for five- or 10-year crimes, and many experts in the criminal bar expect Judge Chin, who is regarded as a pro-prosecution, no-nonsense judge, to give Madoff a combination of concurrent and consecutive penalties. The betting is Madoff—the mastermind of the biggest financial fraud in history—will get at least 25 years, the sentence that former WorldCom CEO Bernard Ebbers got. More recently, Samuel Israel, who ran a hedge-fund fraud called the Bayou Funds and who disappeared for a while after faking his death, got 20 years.
The length of sentence could have a big effect on what kind of confinement Bernie faces for the remainder of his life.
Sorkin’s letter also was laying the groundwork for the judge to grant what is known as a PSF, or Public Safety Factor, waiver. That reflects whether the defendant is a flight risk, a threat to the public, and a repeat criminal who remains dangerous. Without such a waiver, any sentence of 30 years or more would mean Madoff would be sent to a high-security prison, an unpleasant prospect at best.
Twenty years or more, without a waiver, guarantees a medium-security facility. Sorkin wants Madoff to be sent to a low-security prison, an outcome almost guaranteed with a sentence of less than 20 years. Finally, when prisoners get old and sick, they can be sent to one of three prison hospitals in Rochester, Minn., Springfield, Mass., or Butner, N.C.
In a series of forfeiture orders, Ruth Madoff, who claims she has tens of millions of dollars that are not related to her husband's crimes, agreed to the sale of the couple's New York City apartment, their Montauk, N.Y., beach house, their Palm Beach, Fla., home, and various yachts and other property, including $65,000 worth of silverware and a $39,000 piano. The forfeitures will allow the immediate sale by the U.S. Marshals service while Ruth Madoff's claims are adjudicated.
Allan Dodds Frank is a business investigative correspondent who specializes in white-collar crime.