Madoff Sentenced To 150 Years 602
selven was one of several readers to send in the news that Bernie Madoff was sentenced to 150 years in prison. "Bernard Madoff's victims gasped and cheered when he was sentenced to 150 years in prison, but they walked away knowing little more about how he carried out the biggest robbery in Wall Street history. In one of the most dramatic courtroom conclusions to a corporate fraud case, the 71-year-old swindler was unemotional as he was berated by distraught investors during the 90-minute proceeding. Many former clients had hoped he would shed more light on his crime and explain why he victimized so many for so long. But he did not. Madoff called his crime 'an error of judgment' and his 'failure,' reiterating previous statements that he alone was responsible for the $65 billion investment fraud. His victims said they did not hear much new from Madoff in his five-minute statement. They also said they did not believe anything he said. As he handed down the maximum penalty allowed, US District Judge Denny Chin... [said], 'I simply do not get the sense that Mr. Madoff has done all that he could or told all that he knows.'"
Re:Now what about (Score:5, Informative)
Re:They need to find the money now (Score:5, Informative)
On paper he did, but that's just because he had overstated clients' gains from the get-go.
Here's what happens:
Investor A gives you $5 Bn.
Investor B gives you $10 Bn.
After 3 years, investor A pulls out -- you pay him $10 Bn in earnings & principal.
So now you have $0, but you owe Investor B $10 Bn plus earnings.
So what do you have left?
Madoff overstated earnings for a long time. This meant for every $1 Bn invested, he had to pay out some n*$1 Bn when that investor called. Eventually he had no money left to pay the investors.
In other words, that $65 Bn isn't squirreled away somewhere (well, I'm sure some of it is) -- it was used to pay off other investors who withdrew their earnings.
The money's not in the Swiss bank accounts. It's in Bob's yacht, and Bill's mansion in the hills. It's in Mary's diamond necklaces, and in Elizabeth's matching Ferraris.
Re:Madoff is content (Score:5, Informative)
I think Bernie is at least partly taking the fall for his sons. I only wish we could find out the whole truth.
It is very very obvious that the sons knew. The 5+ million dollar loans that each of them received from daddy just before the arrest (never to be repaid, obviously), the sham divorce proceedings that son Andrew and is wife went through right after daddy's arrest (only to be seen splurging on shopping together just days after), the mailing-out of jewellery and other untraceable assets to the sons and the families... That all is very obvious. (Less provable is of course the origin of the rest of their wealth... Tens of millions in real estate in Manhattan and Greenwich each, etc etc)
Re:Tricky -- NOT (Score:4, Informative)
Madoff's going to spend his time in medium security or worse because of the length of his sentence. Madoff is not going to like prison one bit.
Re:Good... although (Score:4, Informative)
The message to would-be scammers is: don't get caught.
Or as a corollary, don't lose money. Nobody, including the SEC, cared until he started losing money and couldn't keep paying out those astronomical returns.
Re:Self delusion is a powerful force (Score:5, Informative)
He ran NASDAQ for fuck's sake. That takes some serious economic knowledge as well as some heavy connections. That kind of background, he knew what he was doing. Ponzi schemes are not hard to spot if you know what to look for. He knew. He knew the bottom would drop out someday, and just bet that it would happen after he croaked. He lost.
Re:DOOOOOOPED! You Are So Wrong... (Score:4, Informative)
On a lighter note, Madoff has an impressive Bacon Factor of 1. The actor wouldn't confirm how much he gave Madoff, but let's hope it was way less than the $10 million Zsa Zsa Gabor claims to have lost. I shudder at the thought of the horrible movies a financially desperate Kevin Bacon would churn out.
Re:Last thing to do (Score:5, Informative)
Much was paid in taxes on the BS cap gains. (Score:3, Informative)
Now the suckers want that money back from the IRS.
12% compounded, cap gains are 27% (not sure).
Assume the Ponzi scheme had a 'cap gains tax leak' (redemptions to cover taxes) of 3% per year.
To get to 65 billion in fictitious value at 12% compounded over 20 years would require an initial investment of about 6.5 billion. I know it didn't happen this way, actual principle was much higher as most investors came in late. Still an interesting number.
3% of 65 billion is about 2 billion in cap gains per year.
Where is the money?
The IRS got it from the suckers as they thought they were raking in great earnings.
Now the suckers will get into a legal brawl among themselves and with the IRS over the remaining money (they want to amend 20 year old tax returns).
Lawyers and forensic accountants will get most of it.
Re:Now here's an inconvenient truth: (Score:2, Informative)
There a world of difference between distorting the fact and opinions..
I've seen cnn, msnbc and the like a bit biased , but actually backing their opinions on facts.
NEVER 'massage' the fact to fit the opinion.
Almost 99% (to leave space for surprise) of the times I've heard Fox reporting something that sounded outrageous, I found out after going to the original source, the complete video when they just showed a snippet, that they completly distorded the meaning, Its so systematics that you cant dismiss it as incompetency ! Or blow out of proportion a banality, or take a public survey of morons and pass it at the general 'democratic' base.
There might exist, but didnt encounter it yet, point to me any cnn, msnbc 'distorded' news and im certain that the facts are quit real, you just dont agree with the interpretration/opinions .. check any controversial FOX reporting, lookup different source of their 'fact' .. and conclude that they are not news, just propaganda machine for the rep/murdoch.
Re:Now what about (Score:5, Informative)
OK, I found the answer (cite [msn.com]):
At the same time, hedge funds were facing an unprecedented run on redemptions from their own investors. That meant the hedge funds may have had to quickly extract cash from their Madoff positions to pay their own investors back.
"People didn't stop believing in Madoff. They just needed the money, and that started this spiral," said Stephen Breitstone of the law firm Meltzer Lippe Goldstein & Breitstone, which is representing Madoff investors.
Re:Tricky -- NOT (Score:5, Informative)
And how exactly do you know what you wrote about socialized care is true?
I am a disability pensioner in a country that has socialized medicine. Not only can my Doctor prescribe any drug on the list at any time,
he can specify virtually any treatment. There is no
input form anyone other than my own doctor in my treatment.
If you must make sweeping generalizations, try for a modicum of accuracy please.
Re:Now what about (Score:3, Informative)
http://www.google.com/hostednews/afp/article/ALeqM5gqvXBPfrYOKdzGqoOStYPAH_fEAQ [google.com]
NEW YORK--Court documents show that Bernard Madoff and his wife Ruth lived a life of high luxury, with exclusive homes, yachts and other assets worth $823 million.
The revelations came in documents filed with the US Court of Appeals, which is due on March 19 to hear Madoff's appeal to be granted bail. He was jailed on Thursday after pleading guilty to a multibillion-dollar investment fraud.
The documents, filed by Madoff's lawyer Friday, show the Wall Street con man and his wife had $22 million worth of real estate at the end of 2008.
This includes the $7-million Manhattan apartment where Madoff lived from his arrest in December to Thurday's court hearing, when he pleaded guilty to 11 counts including fraud, perjury, money laundering and theft.
Lawyers for Madoff, 70, argue that he should be allowed back there on bail while he waits for his June 16 sentencing hearing. He is expected to receive a lengthy prison sentence, with a maximum term of 150 years.
In addition to the $7-million apartment, the Madoffs had a $1-million house in exclusive Cap d'Antibes in France, another in New York state and an $11-million house in Palm Beach, Florida.
$7-M yacht
Aside from the real estate, the disclosure lists nearly $10 million worth of furniture and art and a $7-million yacht named "Bull" in France, complete with its own $1.5-million slip.
The details in the legal documents regarding the couples' wealth follow months of lurid speculation in tabloid newspapers about how Madoff spent his ill-gotten gains.
In a list of monthly expenses, Madoff says he paid out a modest $200 a month in medical fees, with $250 for doctors' visits.
No expenses spared
No more than $70 a month went for entertainment at the New York apartment.
But in other areas, the Madoffs did not spare expenses. Tens of thousands of dollars were spent at their various houses on security and they listed paying $3,448 a month just to maintain the Florida yacht.
The vessel's skipper was paid $5,250--less than the $5,600 paid monthly to the captain of the yacht in France.
Long known for lavish tastes, the Madoffs are revealed to have owned $2.6 million in jewelry, a $39,000-Steinway piano and $65,000 worth of silverware in their New York apartment alone.
The couple's monthly expenses included $100,000 for legal fees, $140,000 for personal security, $2,860 for a housekeeper and $885 for a gardener, the document said. It also detailed more mundane monthly expenditures, such as $700 each for electricity and phones and $370 for cable.
Madoff's full statement (Score:4, Informative)
Following is a transcript of Bernard L. Madoffâ(TM)s statement to the court during his sentencing, as provided by the court:
Jine Lee/Bloomberg News " Your Honor, I cannot offer you an excuse for my behavior. How do you excuse betraying thousands of investors who entrusted me with their life savings? How do you excuse deceiving 200 employees who have spent most of their working life working for me? How do you excuse lying to your brother and two sons who spent their whole adult life helping to build a successful and respectful business? How do you excuse lying and deceiving a wife who stood by you for 50 years, and still stands by you? And how do you excuse deceiving an industry that you spent a better part of your life trying to improve?
There is no excuse for that, and I donâ(TM)t ask any forgiveness.
Although I may not have intended any harm, I did a great deal of harm. I believed when I started this problem, this crime, that it would be something I would be able to work my way out of, but that became impossible. As hard as I tried, the deeper I dug myself into a hole. I made a terrible mistake, but it wasnâ(TM)t the kind of mistake that I had made time and time again, which is a trading mistake. In my business, when you make a trading error, youâ(TM)re expected to make a trading error, itâ(TM)s accepted. My error was much more serious. I made an error of judgment. I refused to accept the fact, could not accept the fact, that for once in my life I failed. I couldnâ(TM)t admit that failure and that was a tragic mistake.
I am responsible for a great deal of suffering and pain. I understand that. I live in a tormented state now knowing of all the pain and suffering that I have created. I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. Thatâ(TM)s something I will live with for the rest of my life. People have accused me of being silent and not being sympathetic. That is not true. They have accused my wife of being silent and not being sympathetic. Nothing could be further from the truth. She cries herself to sleep every night knowing of all the pain and suffering I have caused, and I am tormented by that as well. She was advised not to speak publicly until after my sentencing by our attorneys, and she complied with that. Today she will make a statement about how she feels about my crimes. I ask you to listen to that. She is sincere and all I ask you is to listen to her.
Apologizing and saying I am sorry, thatâ(TM)s not enough. Nothing I can say will correct the things I have done. I feel terrible that an industry I spent my life trying to improve is being criticized terribly now, that regulators who I helped work with over the years are being criticized by what I have done. That is a horrible guilt to live with. There is nothing I can do that will make anyone feel better for the pain and suffering I caused them, but I will live with this pain, with this torment for the rest of my life. I apologize to my victims. I will turn and face you. I am sorry. I know that doesnâ(TM)t help you. Your Honor, thank you for listening to me. â
No, he's not out on bail. (Score:5, Informative)
No. He's been in jail for months.
In the words of the New Yorker, on his bail hearing a few months back: "As soon as Sorkin finished asking that Madoff's bail be continued, Chin said curtly, "I don't need to hear from the government. It is my intention to remand Mr. Madoff." Immediate applause, quickly tamped down by the Judge. Moments later, two court officers approached Madoff, who stood silently and still, and then he moved his arms a little so that his hands were behind his back. And then there was a click."
That was Madoff's last moment of freedom for the rest of his life. Madoff is Federal inmate #61727-054 at the Metropolitan Correctional Center, New York City, NY. That's a maximum security facility. Here is Madoff's cell. [nydailynews.com]
MCC isn't a long-term facility, so the Bureau of Prisons will probably move him after a while.
Re:Good... although (Score:5, Informative)
It certainly was.
The whole point of a Ponzi scheme is Peter gives you $1000, Paul gives you $2000. You tell peter his $1000 is now worth $2000, you tell Paul his $2000 is worth $4000. Peter takes his money and you're left with $1000.
You now hope to Christ that Paul doesn't ask for his money before you can find someone else to give you at least $3000. Seeing as Paul has just seen his savings double in some absurdly small amount of time, then provided Paul has no reason to need the money quickly then you should be OK. As long as you've got more people joining your scheme than you have leaving, you're in business.
Re:Tricky -- NOT (Score:4, Informative)
As a Swede, I find it amusing how my country is used by people of shall we say socialist sympathies as the example of heaven on earth. Granted, not all things are bad here, but healthcare certainly is. Let me put it this way: if you are seriously ill, you go to Germany. Not only are there endless queues in Sweden for any more complicated treatment but the survival rates are among Europe's lowest. The statistics has improved somewhat in the last years since the state monopoly on running hospitals has been removed.
The idea that we have "free healthcare" is nonsense as well. First it's free as in "free lunch". You pay, just not to the people who provide the healthcare but to the state which then distributes it as it sees fit. Second, you actually do pay directly. There is a top cap that is applied to certain treatments and certain medicine - far from all.
Thankfully, these remnants of the "Swedish model" from the '70s (borrow and tax) are dying out. Things are getting better. In some respects we are far less socialist than the US. We have less regulation of financial markets. We have no estate tax or gift tax etc..
Madoff'll be 221 when he gets out (Score:3, Informative)