FILE - Disgraced financier Bernard Madoff leaves U.S. District Court in Manhattan after a bail hearing in New York, Monday, Jan. 5, 2009. Madoff, the financier who pleaded guilty to orchestrating the largest Ponzi scheme in history, died early Wednesday, April 14, 2021, in a federal prison, a person familiar with the matter told The Associated Press. (AP Photo/Kathy Willens, File)

FILE - Disgraced financier Bernard Madoff leaves U.S. District Court in Manhattan after a bail hearing in New York, Monday, Jan. 5, 2009. Madoff, the financier who pleaded guilty to orchestrating the largest Ponzi scheme in history, died early Wednesday, April 14, 2021, in a federal prison, a person familiar with the matter told The Associated Press. (AP Photo/Kathy Willens, File)

Ponzi schemer Bernie Madoff dies in prison: AP source

Madoff admitted swindling thousands of clients out of billions of dollars in investments over decades

Bernie Madoff, the financier who pleaded guilty to orchestrating a massive Ponzi scheme, died in a federal prison early Wednesday, a person familiar with the matter told The Associated Press. He was 82.

Madoff died at the Federal Medical Center in Butner, North Carolina, apparently from natural causes, the person said. The person was not authorized to speak publicly and spoke to the AP on the condition of anonymity.

Last year, Madoff’s lawyers filed court papers to try to get him released from prison in the coronavirus pandemic, saying he had suffered from end-stage renal disease and other chronic medical conditions. The request was denied.

Madoff admitted swindling thousands of clients out of billions of dollars in investments over decades.

A court-appointed trustee has recovered more than $13 billion of an estimated $17.5 billion that investors put into Madoff’s business. At the time of Madoff’s arrest, fake account statements were telling clients they had holdings worth $60 billion.

For decades, Madoff enjoyed an image as a self-made financial guru whose Midas touch defied market fluctuations. A former chairman of the Nasdaq stock market, he attracted a devoted legion of investment clients — from Florida retirees to celebrities such as famed film director Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax.

But his investment advisory business was exposed in 2008 as a multibillion-dollar Ponzi scheme that wiped out people’s fortunes and ruined charities and foundations. He became so hated he had to wear a bulletproof vest to court.

Madoff pleaded guilty in March 2009 to securities fraud and other charges, saying he was “deeply sorry and ashamed.”

After several months living under house arrest at his $7 million Manhattan penthouse apartment, he was led off to jail in handcuffs to scattered applause from angry investors in the courtroom.

“He stole from the rich. He stole from the poor. He stole from the in between. He had no values,” former investor Tom Fitzmaurice told the judge at the sentencing. “He cheated his victims out of their money so he and his wife … could live a life of luxury beyond belief.”

U.S. District Judge Denny Chin showed no mercy, sentencing Madoff to the maximum 150 years in prison.

“Here, the message must be sent that Mr. Madoff’s crimes were extraordinarily evil and that this kind of irresponsible manipulation of the system is not merely a bloodless financial crime that takes place just on paper, but it is instead … one that takes a staggering human toll,” Chin said.

The Madoffs also took a severe financial hit: A judge issued a $171 billion forfeiture order in June 2009 stripping Madoff of all his personal property, including real estate, investments, and $80 million in assets his wife, Ruth, had claimed were hers. The order left her with $2.5 million.

The scandal also exacted a personal toll on the family: One of his sons, Mark, killed himself on the second anniversary of his father’s arrest in 2010. And Madoff’s brother, Peter, who helped run the business, was sentenced to 10 years in prison in 2012, despite claims he was in the dark about his brother’s misdeeds.

Madoff’s other son, Andrew, died from cancer at age 48. Ruth is still living.

Madoff was sent to do what amounted to a life sentence at Butner Federal Correctional Complex, about 45 miles northwest of Raleigh, N.C. A federal prison website listed his probable release date as Nov. 11, 2139.

Madoff was born in 1938 in a lower-middle-class Jewish neighbourhood in Queens. In the financial world, the story of his rise to prominence — how he left for Wall Street with Peter in 1960 with a few thousand dollars saved from working as a lifeguard and installing sprinklers — became legend.

“They were two struggling kids from Queens. They worked hard,” said Thomas Morling, who worked closely with the Madoff brothers in the mid-1980s setting up and running computers that made their firm a trusted leader in off-floor trading.

“When Peter or Bernie said something that they were going to do, their word was their bond,” Morling said in a 2008 interview.

In the 1980s, Bernard L. Madoff Investment Securities occupied three floors of a midtown Manhattan high-rise. There, with his brother and later two sons, he ran a legitimate business as middlemen between the buyers and sellers of stock.

Madoff raised his profile by using the expertise to help launch Nasdaq, the first electronic stock 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 office kept under lock and key, Madoff was secretly spinning a web of phantom wealth by using cash from new investors to pay returns to old ones.

Authorities say that over the years, at least $13 billion was invested with Madoff. An old IBM computer cranked out monthly statements showing steady double-digit returns, even during market downturns. As of late 2008, the statements claimed investor accounts totalled $65 billion.

The ugly truth: No securities were ever bought or sold. Madoff’s chief financial officer, Frank DiPascali, said in a guilty plea in 2009 that the statements detailing trades were “all fake.”

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 recalled meeting Madoff years earlier at a dinner where they talked about history, education and Jewish philosophy — not money.

Madoff “made a very good impression,” Wiesel said during a 2009 panel discussion on the scandal. Wiesel admitted that he bought into “a myth that he created around him 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 Manhattan apartment, an $11 million estate in Palm Beach, Florida and a $4 million home on the tip of Long Island. There was yet another home in the south of France, private jets and a yacht.

It all came crashing down in the winter of 2008 with a dramatic confession at Madoff’s 12th-floor apartment on the Upper East Side. In a meeting with his sons, he confided that his business was “all just one big lie.”

After the meeting, a lawyer for the family contacted regulators, who alerted the federal prosecutors and the FBI. Madoff was in a bathrobe when two FBI agents arrived at his door unannounced on a December morning. He invited them in, then confessed after being asked “if there’s an innocent explanation,” a criminal complaint said.

Madoff responded: “There is no innocent explanation.”

As he had from the start, Madoff insisted in his plea that he acted alone — something the FBI never believed. As agents scoured records for evidence of a broader conspiracy and cultivated DiPascali as a co-operator, the scandal turned Madoff into a pariah, evaporated life fortunes, wiped out charities and apparently pushed some investors to commit suicide.

A trustee was appointed to recover funds — sometimes by suing hedge funds and other large investors who came out ahead — and divvying up those proceeds to victims. The search for Madoff’s assets “has unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth,” the trustee, Irving Picard, said in a 2009 report.

The report said the trustee has located assets and businesses “of interest” in 11 places: Great Britain, Ireland, France, Luxembourg, Switzerland, Spain, Gibraltar, Bermuda, the British Virgin Islands, the Cayman Islands, the Bahamas. More than 15,400 claims against Madoff were filed.

At Madoff’s sentencing in June 2009, wrathful former clients stood to demand the maximum punishment. Madoff himself spoke in a monotone for about 10 minutes. At various times, he referred to his monumental fraud as a “problem,” “an error of judgment” and “a tragic mistake.”

He claimed he and his wife were tormented, saying she “cries herself to sleep every night, knowing all the pain and suffering I have caused.”

“That’s something I live with, as well,” he said.

Afterward, Ruth Madoff — often a target of victims’ scorn since her husband’s arrest — broke her silence that 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 whom I have known for all these years.”

About a dozen Madoff employees and associates were charged in the federal case. Five went on trial in late 2013 and watched DiPascali take the witness stand as the government’s star witness.

DiPascali recounted for jurors how just before the scheme was exposed, Madoff called him into his office.

“He’d been staring out the window the all day,” DiPascali testified. “He turned to me and he said, crying, ‘I’m at the end of my rope. … Don’t you get it? The whole goddamn thing is a fraud.’”

In the end, that fraud brought fresh meaning to “Ponzi scheme,” named after Charles Ponzi, who was convicted of mail fraud after bilking thousands of people out of a mere $10 million between 1919 and 1920.

“Charles Ponzi is now a footnote,” said Anthony Sabino, a defence lawyer specializing in white collar criminal defence. “They’re now Madoff schemes.”

Michael Balsamo And Tom Hays, The Associated Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

prison

Just Posted

These Douglas fir logs were recently found poached on Stoney Hill in North Cowichan’s forest reserve. (Larry Pynn/sixmountains.ca)
OPINION: Cowichan Valley’s Six Mountains Forest: War or Peace—The Choice is Ours

Icel Dobel writes in favour of protecting Cowichan Valley forests

North Cedar Volunteer Fire Department crews at the scene of a single-vehicle crash on Barnes Road near Holden Corso Road in Cedar. (Chris Bush/News Bulletin)
Jeep rolls over on wet afternoon in Cedar, occupants OK

Incident happened Monday, May 17, on Barnes Road

The former St. Joseph’s School converted to the St. Joseph’s Art Studios in 2019. (File photo by Don Bodger)
Former Chemainus St. Joseph’s School site sold to addictions recovery group

Diocese stresses the importance of a community outreach option in its decision

The bow-legged bear was seen roaming 2nd Avenue on Friday, May 7 and again in Brown Drive Park on May 13. (Submitted photo)
Bow-legged Ladysmith bear euthanized after vet examination

CO Stuart Bates said the bear had obvious health issues

The Arts Council of Ladysmith and District is working with several Vancouver Island art councils on the Digitial Innovation Group to improve digital skills for Island artists. (Submitted photo)
Digital Innovation Group supports digital literacy for Island artists

The goal is to leverage digital skills to promote Vancouver Island as an ‘arts powerhouse’

North Cedar Volunteer Fire Department crews at the scene of a single-vehicle crash on Barnes Road near Holden Corso Road in Cedar. (Chris Bush/News Bulletin)
Jeep rolls over on wet afternoon in Cedar, occupants OK

Incident happened Monday, May 17, on Barnes Road

More “strings of lights” were seen on May 15, 2021, in night sky over Vancouver Island. (File photo)
Sicamous RCMP Sgt. Murray McNeil and Cpl. Wade Fisher present seven-year-old Cody Krabbendam of Ranchero with an award for bravery on July 22, 2020. (Contributed)
7-year old Shuswap boy receives medal of bravery for rescuing child at beach

Last summer Cody Krabbendam jumped into the lake to save another boy from drowning

B.C. Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry update the province’s COVID-19 vaccine program, May 10, 2021. (B.C. government)
B.C.’s COVID-19 infection rate stays below 500 a day over weekend

14 more deaths, down to 350 in hospital as of Monday

Royal Bay Secondary School’s rainbow crosswalk was vandalized shortly after being painted but by Monday, coincidentally the International Day Against Homophobia, Transphobia and Biphobia, the crosswalk had been cleaned up and students had surrounded it with chalk messages of support and celebration. (Zoe Ducklow/News Staff)
B.C. high’s school’s pride crosswalk restored following ‘hateful’ graffiti attack

Hate terms, racial slur, phallic images spray-painted at Greater Victoria high school

Terrance Mack would have celebrated his 34th birthday on May 13, 2021. Mack’s family has identified him as the victim of a homicide in an apartment on Third Avenue in Port Alberni sometime in April. (SUBMITTED PHOTO)
Family identifies Ucluelet man as victim of Vancouver Island homicide

Terrance Mack being remembered as ‘kind, gentle’ man

Nathan Zuk had left his mother’s residence in Whaletown on Cortes Island in mid-December 2020 in a 14’ skiff rowboat and headed to an unknown location near the Pryce Channel, Deer passage, or Toba Inlet. Photo courtesy RCMP
RCMP need help finding man who set off from Cortes Island in 14-foot rowboat

Nathan Zuk left in December, may have been last seen in Toba Inlet approximately three weeks ago

Discarded construction materials make up nearly 40 per cent of all materials sent to the landfill from sources in the city of Victoria. (Zero Waste Victoria)
Victoria looks to curb waste by turning demolitions into deconstructions

Community drafting bylaw forcing developers to be better at salvage and recycling

Emergency service workers at the collision scene along Highway 4 in Hilliers on Sunday, May 16. A motorcyclist was airlifted to hospital by BC Air Ambulance and later died. (Collin C photo)
UPDATE: Motorcyclist dies from injuries sustained in Mid-Island highway collision

BC Highway Patrol says impairment not a contributing factor in crash

Most Read