Bernie Madoff Part II

 

Plea, sentencing, and prison life

On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, including securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC. The plea was the response to a criminal complaint filed two days earlier, which stated that over the past 20 years, Madoff had defrauded his clients of almost $65 billion in the largest Ponzi scheme in history. Madoff insisted he was solely responsible for the fraud. Madoff did not plea bargain with the government. Rather, he pleaded guilty to all charges. It has been speculated that Madoff pleaded guilty instead of cooperating with the authorities in order to avoid naming any associates and co-conspirators who were involved with him in the scheme.

In November 2009, David G. Friehling, Madoff's accounting front man and auditor, pleaded guilty to securities fraud, investment adviser fraud, making false filings to the SEC, and obstructing the Internal Revenue Service. He admitted to merely rubber-stamping Madoff's filings rather than auditing them. Friehling extensively cooperated with federal prosecutors and testified at the trials of five former Madoff employees, all of whom were convicted and sentenced to between 2 and a half and 10 years in prison. Although he could have been sentenced to more than 100 years in prison, because of his cooperation, Friehling was sentenced in May 2015 to one year of home detention and one year of supervised release. His involvement made the Madoff scheme by far the largest accounting fraud in history, dwarfing the $11 billion accounting fraud masterminded by Bernard Ebbers in the WorldCom scandal.

Madoff's right-hand man and financial chief, Frank DiPascali, pleaded guilty to 10 federal charges in 2009 and (like Friehling) testified for the government at the trial of five former colleagues, all of whom were convicted. DiPascali faced a sentence of up to 125 years, but he died of lung cancer in May 2015, before he could be sentenced.

In his plea allocution, Madoff stated he began his Ponzi scheme in 1991. He admitted he had never made any legitimate investments with his clients' money during this time. Instead, he said, he simply deposited the money into his personal business account at Chase Manhattan Bank. When his customers asked for withdrawals, he paid them out of the Chase account—a classic "robbing Peter to pay Paul" scenario. Chase and its successor, JPMorgan Chase, may have earned as much as $483 million from his bank account. He was committed to satisfying his clients' expectations of high returns, despite an economic recession. He admitted to false trading activities masked by foreign transfers and false SEC filings. He stated that he always intended to resume legitimate trading activity, but it proved "difficult, and ultimately impossible" to reconcile his client accounts. In the end, Madoff said, he realized that his scam would eventually be exposed.

On June 29, 2009, Judge Chin sentenced Madoff to the maximum sentence of 150 years in federal prison. Madoff's lawyers initially asked the judge to impose a sentence of 7 years, and later requested that the sentence be 12 years, because of Madoff's advanced age of 71 and his limited life expectancy.

Madoff apologized to his victims, saying,

I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This was something I will live in for the rest of my life. I'm sorry. I know that doesn’t help you.

Judge Chin had not received any mitigating factor letters from friends or family testifying to Madoff's good deeds. "The absence of such support was telling," he said.

Judge Chin also said that Madoff had not been forthcoming about his crimes. "I have a sense Mr. Madoff has not done all that he could do or told all that he knows," said Chin, calling the fraud "extraordinarily evil", "unprecedented", and "staggering", and that the sentence would deter others from committing similar frauds. Judge Chin also agreed with prosecutors' contention that the fraud began at some point in the 1980s. He also noted that Madoff's crimes were "off the charts" since federal sentencing guidelines for fraud only go up to $400 million in losses.

Ruth did not attend court but issued a statement, saying "I am breaking my silence now because my reluctance to speak has been interpreted as indifference or lack of sympathy for the victims of my husband Bernie's crime, which was exactly the opposite of the truth. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud was not the man whom I have known for all these years."

Incarceration

Madoff's attorney asked the judge to recommend that the Federal Bureau of Prisons place Madoff in the Federal Correctional Institution, Otisville, which was located 70 miles (110 km) from Manhattan. The judge, however, only recommended that Madoff be sent to a facility in the Northeast United States. Madoff was transferred to the Federal Correctional Institution Butner Medium near Butner, North Carolina, about 45 miles (72 km) northwest of Raleigh; he was Bureau of Prisons Register #61727-054. Jeff Gammage of The Philadelphia Inquirer said, in regards to his prison assignment, "Madoff's heavy sentence likely determined his fate."

Madoff's projected release date was January 31, 2137. The release date, described as "academic" in Madoff's case because he would have to live to the age of 198, reflects a reduction for good behavior. On October 13, 2009, it was reported that Madoff experienced his first prison yard fight with another inmate, also a senior citizen. When he began his sentence, Madoff's stress levels were so severe that he broke out in hives and other skin maladies soon after.

On December 18, 2009, Madoff was moved to Duke University Medical Center in Durham, North Carolina, and was treated for several facial injuries. A former inmate later claimed that the injuries were received during an alleged altercation with another inmate.

Other news reports described Madoff's injuries as more serious and including "facial fractures, broken ribs, and a collapsed lung". The Federal Bureau of Prisons said Madoff signed an affidavit on December 24, 2009, which indicated that he had not been assaulted and that he had been admitted to the hospital for hypertension.

In his letter to his daughter-in-law, Madoff said that he was being treated in prison like a "Mafia don":

They call me either Uncle Bernie or Mr. Madoff. I can't walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up. It's really quite sweet, how concerned everyone was about my well being, including the staff […] It's much safer here than walking the streets of New York.

After an inmate slapped Madoff because he had changed the channel on the TV, it was reported that Madoff befriended Carmine Persico, boss of the Colombo crime family since 1973, one of New York's five American Mafia families. It was believed Persico had intimidated the inmate who slapped Madoff in the face.

On July 29, 2019, Madoff asked Donald Trump for a reduced sentence or pardon, to which the White House and Donald Trump made no comment.

In February 2020, his lawyer filed for compassionate release from prison on the claim that he was suffering from chronic kidney failure, a terminal illness leaving him less than 18 months to live, and that the COVID-19 pandemic further threatened his life. He was hospitalized for this condition in December 2019. The request was denied due to the severity of Madoff's crimes.

Death

Madoff died of natural causes at the age of 82 in Federal Medical Center, Butner, a federal prison for inmates with special health needs near Butner, North Carolina, on April 14, 2021. A death certificate obtained by TMZ listed the cause of death as hypertension, atherosclerotic cardiovascular disease and chronic kidney disease. According to the document, he was cremated in Durham, North Carolina.

Personal life

Madoff met Ruth Alpern while attending Far Rockaway High School. The two eventually began dating. Ruth graduated from high school in 1958, and earned her bachelor's degree at Queens College. On November 28, 1959, Madoff married Alpern. She was employed at the stock market in Manhattan before working in Madoff's firm, and she founded the Madoff Charitable Foundation. Bernard and Ruth Madoff had two sons: Mark (March 11, 1964 – December 11, 2010), a 1986 graduate of the University of Michigan, and Andrew (April 8, 1966 – September 3, 2014), a 1988 graduate of University of Pennsylvania's Wharton Business School. Both sons later worked in the trading section alongside paternal cousin Charles Weiner.

Several family members worked for Madoff. His younger brother, Peter, an attorney, was senior managing director and chief compliance officer, and Peter's daughter, Shana Madoff, also an attorney, was the firm's compliance attorney. On the morning of December 11, 2010 – exactly two years after Bernard's arrest – his son Mark was found dead in his New York City apartment. The city medical examiner ruled the cause of death as suicide by hanging.

Over the years, Madoff's sons had borrowed money from their parents, to purchase homes and other property. Mark Madoff owed his parents $22 million, and Andrew Madoff owed them $9.5 million. There were two loans in 2008 from Bernard Madoff to Andrew: $4.3 million on October 6, and $250,000 on September 21. Andrew owned a Manhattan apartment and a home in Greenwich, Connecticut, as did his brother Mark,[167] prior to his death.

Both sons used outside investment firms to run their own private philanthropic foundations. In March 2003, Andrew Madoff was diagnosed with mantle cell lymphoma and eventually returned to work. He was named chairman of the Lymphoma Research Foundation in January 2008, but resigned shortly after his father's arrest.

Peter Madoff (and Andrew Madoff, before his death) remained the targets of a tax fraud investigation by federal prosecutors, according to The Wall Street Journal. David Friehling, Bernard Madoff's tax accountant, who pleaded guilty in a related case, was reportedly assisting in the investigation. According to a civil lawsuit filed in October 2009, trustee Irving Picard alleges that Peter Madoff deposited $32,146 into his Madoff accounts and withdrew over $16 million; Andrew deposited almost $1 million into his accounts and withdrew $17 million; Mark deposited $745,482 and withdrew $18.1 million.

Bernard Madoff lived in Roslyn, New York, in a ranch house through the 1970s. In 1980, he purchased an ocean-front residence in Montauk, New York, for $250,000.[179] His primary residence was on Manhattan's Upper East Side, and he was listed as chairman of the building's co-op board. He also owned a home in France and an 8,700-square-foot house in Palm Beach, Florida, where he was a member of the Palm Beach Country Club, where he searched for targets of his fraud. Madoff owned a 55-foot (17 m) sport-fishing yacht named Bull. All three of his homes were auctioned by the U.S. Marshals Service in September 2009.

Sheryl Weinstein, former chief financial officer of Hadassah, disclosed in a memoir that she and Madoff had had an affair more than 20 years earlier. As of 1997, when Weinstein left, Hadassah had invested a total of $40 million with Bernie Madoff. By the end of 2008, Hadassah had withdrawn more than $130 million from its Madoff accounts and contends its accounts were valued at $90 million at the time of Madoff's arrest. At the victim impact sentencing hearing, Weinstein testified, calling him a "beast".

According to a March 13, 2009 filing by Madoff, he and his wife were worth up to $126 million, plus an estimated $700 million for the value of his business interest in Bernard L. Madoff Investment Securities LLC.

During a 2011 interview on CBS, Ruth Madoff claimed she and her husband had attempted suicide after his fraud was exposed, both taking "a bunch of pills" in a suicide pact on Christmas Eve 2008. In November 2011, former Madoff employee David Kugel pleaded guilty to charges that arose out of the scheme. He admitted having helped Madoff create a phony paper trail, the false account statements that were supplied to clients.

Bernard Madoff suffered a heart attack in December 2013, and reportedly suffered from end-stage renal disease (ESRD). According to CBS New York and other news sources, Madoff claimed in an email to CNBC in January 2014 that he had kidney cancer, but this was unconfirmed. In a court filing from his lawyer in February 2020, it was revealed Madoff was suffering from chronic kidney failure.

On February 17, 2022, Madoff's sister, Sondra Weiner, and her husband, Marvin, were both found dead with gun wounds in their Boynton Beach, Florida home. The deaths of Sondra, 87, and Marvin, 90, were labeled by police as a potential murder-suicide.

Philanthropy and other activities

Madoff was a prominent philanthropist, who served on boards of nonprofit institutions, many of which entrusted his firm with their endowments. The collapse and freeze of his personal assets and those of his firm affected businesses, charities, and foundations around the world, including the Chais Family Foundation, the Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT Foundation which were forced to close. Madoff donated approximately $6 million to lymphoma research after his son Andrew was diagnosed with the disease. He and his wife gave over $230,000 to political causes since 1991, with the bulk going to the Democratic Party.

Madoff served as the chairman of the board of directors of the Sy Syms School of Business at Yeshiva University, and as treasurer of its board of trustees. He resigned his position at Yeshiva University after his arrest. Madoff also served on the board of New York City Center, a member of New York City's Cultural Institutions Group (CIG). He served on the executive council of the Wall Street division of the UJA Foundation of New York which declined to invest funds with him because of the conflict of interest.

Madoff undertook charity work for the Gift of Life Bone Marrow Foundation and made philanthropic gifts through the Madoff Family Foundation, a $19 million private foundation, which he managed along with his wife. They also donated money to hospitals and theaters. The foundation also contributed to many educational, cultural, and health charities, including those later forced to close because of Madoff's fraud. After Madoff's arrest, the assets of the Madoff Family Foundation were frozen by a federal court.

In the media

On May 12, 2009, PBS Frontline aired The Madoff Affair, and subsequently ShopPBS made DVD videos of the show and transcripts available for purchase by the public at large.

In season 7 of Curb Your Enthusiasm, aired in 2009, the character George (from Seinfeld) loses all of the money he made from an app called iToilet by investing with Madoff.

Imagining Madoff was a 2010 play by Deb Margolin that tells the story of an imagined encounter between Madoff and his victims. The play generated controversy when Elie Wiesel, originally portrayed as a character in the play, threatened legal action, forcing Margolin to substitute a fictional character, "Solomon Galkin". The play was nominated for a 2012 Helen Hayes Award.

A documentary, Chasing Madoff, describing Harry Markopolos' efforts to unmask the fraud, was released in August 2011.

Woody Allen's 2013 film Blue Jasmine portrays a fictional couple involved in a similar scandal. Allen said that the Madoff scandal was the inspiration for the film.

In God We Trust (2013), a documentary about Eleanor Squillari, Madoff's secretary for 25 years and her search for the truth about the fraud (The Halcyon Company).

Madoff was played by Robert De Niro in the May 2017 HBO film The Wizard of Lies, based on the best-selling book by Diana B. Henriques. Michelle Pfeiffer plays Ruth Madoff in the film, which was released on May 20, 2017.

Madoff, a miniseries by ABC starring Richard Dreyfuss and Blythe Danner as Bernard and Ruth Madoff, aired on February 3 and 4, 2016.

"Ponzi Super Nova", an episode of the podcast Radiolab released February 10, 2017, in which Madoff was interviewed over prison phone.

Chevelle's song "Face to the Floor", as described by the band, was a "pissed off, angry song about people who got taken by the Ponzi scheme that Bernie Madoff had for all those years."

The heroine of Elin Hilderbrand's novel, Silver Girl, published in 2011 by Back Bay Books, was the wife of a Madoff-like schemer.

Cristina Alger's novel, The Darlings, published in 2012 by Pamela Dorman Books, features a wealthy family with a Madoff-like patriarch.

The action of James Grippando's thriller, Need You Now, published in 2012 by HarperCollins, was set in motion by the suicide of the Bernie Madoff-like Ponzi schemer Abe Cushman.

The protagonist of Elinor Lipman's novel, The View from Penthouse B, published in 2013 by Houghton Mifflin Harcourt, loses her divorce settlement by investing it with Bernie Madoff.

Randy Susan Meyers's novel, The Widow of Wall Street, published in 2017 by Atria Books, was a fictionalized account of the Madoff Ponzi scheme from the wife's point of view.

Emily St. John Mandel's novel, The Glass Hotel, published in 2020 by Alfred A. Knopf, includes a character named Jonathan Alkaitis, who was closely based on Madoff.

A Kaddish For Bernie Madoff (2021), a docudrama created by musician/poet Alicia Jo Rabins and directed by Alicia J. Rose, tells the story of Madoff and the system that allowed him to function for decades through the eyes of Rabins, who watches the financial crash from her 9th floor studio in an abandoned office building on Wall Street.