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Madoff Tells Judge He’s Guilty in Ponzi Scheme

Date: Thursday, March 12, 2009
Author: David Glovin, David Voreacos, and Patricia Hurtado, Bloomberg

Bernard Madoff told a judge he pleads guilty to directing the largest Ponzi scheme in history, defrauding thousands of clients out of billions of dollars and becoming a symbol of investor distrust in the global recession.

Madoff, 70, is in a hearing before U.S. District Judge Denny Chin in Manhattan. After Chin decides whether to accept the plea, he will hear arguments on whether Madoff, who has been free on $10 million bond, should be immediately jailed while he awaits sentencing. He faces as much as 150 years in prison.

“Yes it is correct” that he wishes to plead guilty, Madoff, wearing a grey business suit, told Chin. Madoff told Chin that he understood his rights and and waived his right to a trial. Prosecutors have begun reading elements of Madoff’s crimes out loud.

Madoff is pleading guilty to 11 counts including securities fraud, wire fraud, and money laundering. Madoff doesn’t have a plea deal with prosecutors because he refused to admit to a conspiracy charge that would have required he implicate others, people familiar with the case said. As a result he must plead guilty to all charges.

So far, Madoff has only indicated that he wants to plead guilty. Chin must apprise Madoff of his rights and will then ask him to detail his crime. The guilty plea won’t become official until Chin formally accepts it.

If Madoff’s guilty plea is accepted, he will be required to prove why he should be allowed to remain free on bail while awaiting sentencing.

More than a dozen television trucks and over 100 members of the media were outside federal court this morning. Victims and other spectators passed through metal detectors seeking a spot in the courtroom or in one of the overflow rooms into which the court will be broadcasting the expected guilty plea.

December Arrest

Madoff was arrested Dec. 11 for using billions of dollars from new investors to pay off old ones in a classic Ponzi scheme. Investors in Madoff’s New York-based firm, Bernard L. Madoff Investment Securities LLC, included celebrities, charities, and money managers from around the world.

Madoff told 4,800 investors in November that their accounts held $64.8 billion, though their holdings were a “small fraction” of that, the government said in court papers.

Madoff told his workers to create false account documents and trade confirmations of phony returns, and to create false financial statements for regulators, according to the government. The scheme dates at least to the 1980s, prosecutors said.

The criminal 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 New York federal court at dglovin@bloomberg.net; David Voreacos in New York federal court at dvoreacos@bloomberg.net; Patricia Hurtado in New York federal court at pathurtado@bloomberg.net.