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'Sorry' is not enough, Madoff's victims say

As the disgraced financier is taken away in handcuffs, victims of his Ponzi scheme still want to know whether he acted alone and whether they will be compensated.

March 13, 2009|Walter Hamilton

NEW YORK — 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.

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