Madoff to plead guilty as money hunt continues

Disgraced hedge fund manager Bernard Madoff is expected to plead guilty tonight to 11 felony charges relating to the collapse of a $US65 billion Ponzi scheme he ran for decades.

Madoff is likely to spend the rest of his life in jail, as the charges carry a maximum sentence of 150 years.

The operations of Madoff’s empire were laid bare in documents that became public yesterday. Prosecutors say the fraud started in the early 1980s, when investors were promised highly inflated returns from Madoff, with some told they could expect annual returns of up to 46%.


To cover his tracks, prosecutors say Madoff purposefully hired employees who knew little about the securities industry and directed them to “generate false and fraudulent documents” such as bogus trading statements and monthly accounts.


To top it all off, Madoff allegedly skimmed off commissions of around $US250 million to run his trading operation from 2002 to 2008.


But one question remains unanswered – where has all the money gone?


In late November 2008, Madoff’s firm reported that it had 4800 client accounts containing assets of $US64.8 billion, but prosecutors say they could seek up to $US170 billion from Madoff.


His defence lawyers have rejected this claim, arguing that the $US170 billion figure is “grossly overstated – and misleading – even for a case of this magnitude” and does not take into account billions paid out to investors in the form of redemptions.


However, these figures appear to be theoretical. Prosecutors say the actual assets in the company’s accounts was “a fraction” of the $US64.8 billion Madoff claimed at the end of November.


So far, Madoff’s bankruptcy trustee has recovered just under $US1 billion and it is still unclear how much investors in Madoff’s scheme can expect to receive once Madoff’s empire is unraveled.

At least some of these victims will get their chance to vent their anger at Madoff in court. Judge Denny Chin has ordered that victims will be able to testify, providing they keep their comments to the issue of  whether or not the court should accept Madoff’s plea, and whether he should be allowed to remain on bail before sentencing.



Related articles:




Notify of
Inline Feedbacks
View all comments