Bernie Madoff: Ponzi scholar dies in federal prison at 82
Bernie Madoff’s Ponzi scheme wiped out people’s fortunes and ruined charities and foundations. The fraud was considered the largest in Wall Street history.
NEW YORK – Bernard Madoff, the infamous architect of an epic securities scam that burned thousands of investors, foiled regulators and got him 150 years in prison, died in prison on Wednesday federal. He was 82 years old.
Madoff’s death at Federal Medical Center in Butner, North Carolina has been confirmed by his attorney and the Bureau of Prisons.
Last year, Madoff’s attorneys filed court documents with try to get him out of jail in the coronavirus pandemic, claiming he had suffered from end-stage kidney disease and other chronic medical conditions. The request was denied.
His death was due to natural causes, a person familiar with the matter told The Associated Press. The person was not authorized to speak publicly and addressed the AP on condition of anonymity.
For decades, Madoff has enjoyed an image of a self-taught finance guru whose Midas touch defied market fluctuations. Former chairman of the Nasdaq stock exchange, he has attracted a dedicated legion of investment clients – from Florida retirees to celebrities such as acclaimed director Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax.
But its investment advisory business was exposed in 2008 as a Ponzi scheme that wiped out people’s fortunes and ruined charities and foundations. He became so hated that he had to wear a bulletproof vest in court.
The fraud was considered the largest in Wall Street history.
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Over the years, court-appointed administrators working to unravel the scheme have recouped more than $ 14 billion of the roughly $ 17.5 billion that investors have put into Madoff’s business. At the time of Madoff’s arrest, fake account statements told clients they had $ 60 billion in assets.
Madoff pleaded guilty in March 2009 to securities fraud and other charges, saying he was “deeply sorry and ashamed”.
After living for several months under house arrest in his $ 7 million penthouse in Manhattan, he was taken to jail handcuffed to scattered applause from angry investors in the courtroom.
“He robbed the rich. He robbed the poor. He flew between the two. It had no value, ”former investor Tom Fitzmaurice told the judge during the sentencing. “He cheated his victims over their money so that he and his wife could live a life of luxury beyond belief.”
Madoff’s attorney for recent years, Brandon Sample, said in a statement that the financier had “lived with guilt and remorse for his crimes” until his death.
“Although the crimes of which Bernie was convicted came to define who he was, he was also a father and a husband. He was gentle and intellectual. Bernie was by no means perfect. But no man is, ”Sample said.
U.S. District Judge Denny Chin sentenced Madoff to the maximum possible sentence.
“Here the message has to be sent that Mr. Madoff’s crimes were extraordinarily perverse and that this kind of irresponsible manipulation of the system is not just a bloodless financial crime that just takes place on paper, but rather .. .a crime that takes a staggering human toll, ”Chin said.
A judge issued a forfeiture order in June 2009, stripping Madoff of all of his personal property, including real estate, investments and $ 80 million in assets that his wife, Ruth, had claimed to be hers. The order left him with $ 2.5 million.
The scandal also had a personal impact on the family: one of his sons, Mark, committed suicide on the second anniversary of his father’s arrest in 2010. And Madoff’s brother, Peter, who helped manage the business, was sentenced to 10 years in prison. in 2012, despite claims he was in the dark about his brother’s wrongdoing.
Madoff’s other son, Andrew, died of cancer at the age of 48. Ruth is still alive.
Madoff was sent to do what amounted to a life sentence at Butner Federal Correctional Complex, about 45 miles northwest of Raleigh, NC. A federal prison website gave his date probable release on November 11, 2139.
Madoff was born in 1938 in a lower-middle-class Jewish neighborhood in Queens. In the financial world, the story of his rise to power – how he left for Wall Street with Peter in 1960 with a few thousand dollars saved working as a lifeguard and installing sprinklers – has become a legend.
“They were two struggling Queens kids. They worked hard, ”said Thomas Morling, who worked closely with the Madoff brothers in the mid-1980s to install and operate computers that made their company a trusted leader in off-trading. floor.
“When Peter or Bernie said something they were going to do, their word was their connection,” Morling said in an interview in 2008.
In the 1980s, Bernard L. Madoff Investment Securities occupied three floors of a downtown Manhattan skyscraper. There, along with his brother and later two sons, he ran a legitimate business of intermediary between buyers and sellers of securities.
Madoff raised his profile by using the expertise to help launch the Nasdaq, the world’s first electronic exchange, and became so respected that he advised the Securities and Exchange Commission on the system. But what the SEC never found out was that behind the scenes, in a separate, locked office, Madoff was secretly spinning a phantom wealth ring using money from new investors to pay old ones.
Authorities say that over the years at least $ 13 billion has been invested in Madoff. An old IBM computer produced monthly statements showing consistent double-digit returns, even in a downturn in the market. At the end of 2008, the statements called for investor accounts totaling $ 65 billion.
The ugly truth: no title has ever been bought or sold. Madoff CFO Frank DiPascali said in a 2009 guilty plea that the statements detailing the transactions were “all false.”
His clients, many Jews like Madoff and Jewish charities, said they didn’t know. Among them was Nobel Peace Prize winner and Holocaust survivor Elie Wiesel, who remembers meeting Madoff years earlier at a dinner where they discussed Jewish history, education and philosophy. – no money.
Madoff “made a very good impression,” Wiesel said at a 2009 panel discussion on the scandal. Wiesel admitted to adhering to “a myth he created around himself, that everything was so special, so unique, that it had to be secret.”
Like many of his clients, Madoff and his wife enjoyed a lavish lifestyle. They had a $ 7 million apartment in Manhattan, an $ 11 million estate in Palm Beach, Florida, and a $ 4 million house on the tip of Long Island. There was yet another house in the south of France, private jets and a yacht.
It all fell apart in the winter of 2008 with a dramatic confession in Madoff’s 12th-floor apartment on the Upper East Side. In a meeting with his sons, he said his business was “just a big lie.”
After the meeting, a family lawyer contacted regulators, who alerted federal prosecutors and the FBI. Madoff was in a bathrobe when two FBI agents unexpectedly arrived at his door one December morning. He invited them in, then confessed after being asked “if there was an innocent explanation,” according to a criminal complaint.
Madoff replied, “There is no innocent explanation.”
As he had done from the start, Madoff insisted in his plea that he acted alone – something the FBI never believed. As agents searched for evidence of a larger plot and cultivated DiPascali as a cooperator, the scandal turned Madoff into an outcast, evaporated life’s fortunes, wiped out charities, and apparently prompted some investors to commit suicide. .
A trustee has been appointed to recover the funds – sometimes by suing hedge funds and other large investors who have taken the lead – and dividing the proceeds among the victims. The search for Madoff’s assets “uncovered a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and magnitude,” Trustee Irving Picard said in a report by 2009.
The report states that the trustee located assets and businesses of “interest” in 11 locations: Great Britain, Ireland, France, Luxembourg, Switzerland, Spain, Gibraltar, Bermuda, British Virgin Islands, Cayman Islands, Bahamas. More than 15,400 claims against Madoff have been filed.
When Madoff was sentenced in June 2009, wrathful former clients stood up to demand the maximum sentence. Madoff himself spoke in a monotonous voice for about 10 minutes. He has repeatedly called his monumental fraud a “problem”, “error in judgment” and “tragic error”.
He claimed that he and his wife were tormented, saying that she “cried to sleep every night, knowing all the pain and suffering I have caused”.
“It’s something I also live with,” he said.
Subsequently, Ruth Madoff – often the target of victims’ contempt since her husband’s arrest – broke her silence the same day by issuing a statement claiming that she too had been misled by her high school sweetheart.
“I am embarrassed and ashamed,” she said. “Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man I have known for all these years.
A dozen Madoff employees and associates have been indicted in the federal case. Five of them were on trial at the end of 2013 and watched DiPascali take the witness stand as the government’s star witness.
DiPascali told jurors how, just before the ploy was revealed, Madoff called him into his office.
“He had been looking out the window all day,” DiPascali said. “He turned to me and he said shouting, ‘I’m at the end of my rope. … You do not understand? This whole fucking thing is a fraud. ”
Ultimately, this fraud gave new meaning to the ‘Ponzi scheme’, named after Charles Ponzi, who was convicted of postal fraud after defrauding thousands of people out of just $ 10 million between 1919 and 1920. .
“Charles Ponzi is now a footnote,” said Anthony Sabino, a white-collar criminal defense lawyer. “These are now Madoff ploys.