une 29 (Bloomberg) -- Bernard Madoff will learn today whether he will die in prison when a judge sentences him for masterminding the largest Ponzi scheme in U.S. history.
U.S. District Judge Denny Chin will determine Madoff’s fate in Manhattan federal court. The choice confronting the judge is stark. Madoff attorney Ira Sorkin asked for a sentence of as little as 12 years, citing the 13-year life expectancy for his 71-year-old client. Prosecutors said in a fil
ing June 26 that the “scope, duration and nature of Madoff’s crimes” call for a 150-year term. The hearing began this morning at 10 a.m.
Madoff has shown “no remorse,” said victim Carla Hirschhorn, of Manalapan, New Jersey, at the hearing. She told Chin her life is a “living hell,” her mother is dependent on social security and her daughter works two jobs to pay tuition. “Don’t fail us,” she told the judge.
Madoff, who appeared in court wearing a suit, pleaded guilty March 12 to federal charges he used funds from new investors to pay off other clients. His customers were told they had as much as $65 billion in the weeks before the fraud came to light. Madoff has been held in a jail since his guilty plea.
Sorkin challenged the government’s claim that his client’s fraud has so far led to $13.3 billion in losses. He said the amount should be offset by $1.3 billion held by the trustee for Bernard L. Madoff Investment Securities LLC; by $1.3 billion already recovered by the trustee; and by letters sent by the trustee, Irving Picard, seeking to “claw back” $735 million from Madoff investors.
$10 Billion
Sorkin also cited the $10 billion demanded in various other “clawback” lawsuits as an offset, in a letter filed with the court yesterday.
“Thus, if the trustee is successful in his lawsuits, losses will be substantially reduced,” Sorkin wrote. “The media hysteria that the Ponzi scheme was approximately $65 billion and that Mr. Madoff lined his pockets with billions is simply not correct.”
Prosecutors have identified 1,341 Bernard L. Madoff Investment Securities LLC account holders who collectively suffered losses of more than $13 billion in a fraud that they say dates at least to the early 1980s. Madoff said at his guilty plea that the crime began in the 1990s.
Each Count Counted
Sharon Lissauer, who was one of the nine victims who addressed the court this morning, is a model who lives in Manhattan. She said the money manager “shattered my dreams” and lost her mother’s inheritance. Miriam Siegman, of Stamford, Connecticut, told Chin Madoff “discarded me like road kill,” and that she now relies on food stamps, collecting recyclable bottles and digging through dumpsters.
Madoff confessed in December after a flurry of redemption requests by customers hit by a worsening economy. He pleaded guilty to securities fraud, mail fraud, wire fraud, investment adviser fraud, three counts of money laundering, false statements, perjury, false filings and theft from an employee benefit plan. Madoff, who didn’t have a plea deal with prosecutors, will be sentenced separately on each count.
In a June 22 court filing, Sorkin said an alternative to the 12- year sentence might be a term of 15 to 20 years, which would meet the goals of sentencing “without disproportionately punishing Mr. Madoff.”
Sorkin cited Madoff’s “voluntary surrender, full acceptance of responsibility, meaningful cooperation efforts” and the nonviolent nature of his crimes.
“At sentencing, Mr. Madoff will speak to the shame he has felt and to the pain he has caused,” Sorkin wrote, adding that Madoff and his counsel have received “shocking” death threats and anti-Semitic e-mails.
Maximum Sentence?
Picard, tasked with unwinding Madoff’s firm said in another letter filed with the court today that the former money manager hasn’t provided “any meaningful cooperation” since his arrest.
David Sheehan, a lawyer for trustee Picard, disputed a claim by Madoff’s attorney that his client had cooperated.
Prosecutors have called for the maximum 150-year sentence suggested by federal guidelines.
“The scope, duration and nature of Madoff’s crimes render him exceptionally deserving of the maximum punishment allowed by law,” Assistant U.S. Attorneys Marc Litt and Lisa Baroni said in a letter to Chin on June 26. “The sheer scale of the Madoff fraud calls for severe punishment,” prosecutors said.
In support, prosecutors recited the words of victims, several of whom are expected to speak today.
“We now have nothing,” Kathleen Bignell wrote, according to prosecutors. “Only living off Social Security. I told my father (89) he could not die because I didn’t have enough money to bury him.”
“The government is plainly responding to the hysteria with the 150 years,” said Barry Pollack, a lawyer who represents defendants in white-collar crime cases and isn’t involved in the Madoff case. He’s with Washington-based Miller & Chevalier Chartered. “People commit murder in this country every day and they don’t get 150 years.”
More to Come
Madoff’s sentencing won’t end a case that has sent Federal Bureau of Investigation agents to Europe as part of the probe, according to a person with knowledge of the FBI’s investigation.
Accountant David Friehling was charged with securities fraud in March, the first accused Madoff accomplice. Friehling, 49, denies wrongdoing. Madoff aides Frank DiPascali, 52, and Annette Bongiorno are under scrutiny by criminal investigators. DiPascali’s lawyer, Marc Mukasey, and Bongornio didn’t return calls seeking comment.
The Securities and Exchange Commission filed civil charges earlier this month against Cohmad Securities Corp., which fed investments to Madoff, and money manager Stanley Chais. Other feeder funds have been sued by the trustee for Bernard L. Madoff Investment Securities LLC and by investors.
Madoff’s wife and sons haven’t been charged and have denied they knew about the scam.
The case is U.S. v. Madoff, 09-cr-00213, U.S. District Court for the Southern District of New York (Manhattan).
To contact the reporters on this story: David Glovin in U.S. District Court for the Southern District of New York in Manhattan at dglovin@bloomberg.net; Thom Weidlich in U.S. District Court for the Southern District of New York in Manhattan at tweidlich@bloomberg.net; Patricia Hurtado in U.S. District Court for the Southern District of New York in Manhattan at pathurtado@bloomberg.net.
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