Bernard Madoff leaves a Manhattan federal court on March 10, 2009
Bernard Madoff's lawyer, Ira Sorkin, told U.S. District Judge Denny Chin on Tuesday that Madoff expects to plead guilty to charges that will put him in prison for up to 150 years. (Watch the video of Madoff pleads guilty.)
The U.S. Attorney's office has filed 11 counts against Madoff for his part in a decades-long Ponzi scheme, now estimated in court documents to amount to $64.8 billion, considered the largest in history. In fact, the new dollar amount cited in a Justice Department communication to Sorkin tallies the total size of the fraud, which dates back to the 1980s, at $170 billion, which includes money invested with Madoff, interest earned and payouts to investors as well as the value of things he bought for himself, like a yacht. "The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years," said acting U.S. Attorney Lev L. Dassin in a statement. (See pictures of the demise of Madoff.)
"While the alleged crimes are not novel, the size and scope of Mr. Madoff's fraud are unprecedented," Dassin said. "As a result, Mr. Madoff faces 150 years in prison, mandatory restitution to the victims of his crimes, forfeiture of his ill-gotten gains and criminal fines. The government has not entered into any agreement with Mr. Madoff about his plea or sentencing. The filing of these charges does not end the matter. Our investigation is continuing."
The unexpected guilty plea without a plea deal, the multiple counts — which include mail fraud, wire fraud, securities fraud and money laundering, among others — and the potential prison term were revealed at what was supposed to be a minor hearing about a potential conflict of interest between Madoff and Sorkin. The lawyer and his father, now deceased, once invested with Madoff. The judge waived the conflict. (See 25 people to blame for the financial crisis.)
Although a plea deal was widely anticipated, one was never reached, according to U.S. Attorney papers filed with the court. The government apparently never offered a plea deal, or one fell apart.
On Tuesday Chin asked Sorkin if it was his "expectation that [Madoff] will plead guilty" at the hearing on Thursday. "That's a reasonable expectation," Sorkin replied. The judge then said he would decide at the hearing whether to accept the plea and whether to remand Madoff to jail pending sentencing in several months, setting the stage for Madoff's climactic court appearance.
The U.S. Court in lower Manhattan is bracing itself for a large crowd of Madoff victims to witness Thursday's hearing firsthand. The court is preparing two additional overflow courtrooms with television monitors and additional guards to accommodate up to 300 people, according to the judge's spokesperson. (See the top 10 scandals of 2008.)
Since reports of the pending hearing surfaced on March 6, the Justice Department has begun to gather victims, saying on its website that they have the right to be "reasonably heard" at any public proceeding "involving release, plea, sentencing or any parole proceeding." The posting requires notice "prior to a plea proceeding scheduled for March 12, 2009."
If things go according to plan, Madoff, 70, will spend the rest of his life behind bars at a federal prison. The Bureau of Prisons decides where a criminal ends up, based on a formula and any special security needs. One possible spot is a medium-security facility in Otisville, N.Y. Often referred to as Club Fed, the prison is located 70 miles northwest of New York City and generally handles white-collar criminals from the Southern New York Judicial District.
In low- and medium-security prisons there are no locked doors, steel grills or gun towers. Since Madoff admitted his "big lie" to his sons and the FBI and was subsequently arrested on Dec. 11, he has been confined to his $7 million Manhattan penthouse. (See pictures of expensive things that money can buy.)
If the judge agrees to Madoff's guilty plea, there could be a delay of six months or more before sentencing, according to Isabelle A. Kirshner, a former assistant district attorney and now a partner at Clayman & Rosenberg, New York.
"It's possible he could be jailed immediately after his plea hearing this week," said Kirshner. "He's certainly had enough time to get his things in order." If this happens, Madoff would first be sent to either the Metropolitan Correction Center, across from the courthouse, or to Brooklyn's Metropolitan Detention Center, she said.
Although there is a mountain of evidence and plenty of victims in this case, a guilty plea would save a lot of time and money for the government, according to Kirshner. But still, she said, assistant U.S. Attorney Marc Litt will want to "know the method of the crime, how it went undetected, where the money went, where it's hidden, if any, and who's involved."
Without a plea deal, Litt is free to pursue other people who may have been involved in the crime, including Madoff's family members and associates. Madoff has already forfeited millions of dollars from his company and personal assets, including homes, boats, planes and artwork. His wife Ruth Madoff is fighting to keep the penthouse and some $62 million in other assets, claiming they are not part of her husband's property.