Judge orders Madoff to forfeit $170 billion
As sentencing nears, victims remain furious over massive Ponzi scheme
msnbc.com news services
updated 9:37 p.m. MT, Fri., June 26, 2009
Disgraced financier Bernard Madoff must forfeit $170 billion, a federal judge ordered Friday.
U.S. District Judge Denny Chin entered a preliminary order of forfeiture, and Acting U.S. Attorney Lev Dassin released a copy of the order Friday night. Madoff was ordered to give up his interests in all property, including real estate, investments, cars and boats.
According to earlier court documents, prosecutors reserved the right to pursue more than $170 billion in criminal forfeiture. That represents the total amount of money that could be connected to the fraud, not the amount stolen or lost.
The government also settled claims against Madoff's wife, according to Friday's order. Under the arrangement, the government obtained Ruth Madoff's interest in all property, including more than $80 million of property to which she had claimed was hers, prosecutors said.
The order makes it clear, though, that nothing precludes other departments or entities from seeking to recover additional funds.
A call to Madoff's lawyer, Ira Sorkin, after hours Friday was not immediately returned.
In his own court filing in March, Sorkin said the government's forfeiture demand of $177 billion was "grossly overstated — and misleading — even for a case of this magnitude."
The agreements strip the Madoffs of all their interest in properties belonging to them, including homes in Manhattan, Montauk, and Palm Beach, Fla., worth a total of nearly $22 million. The Madoff's must also forfeit all insured or salable personal property contained in the homes.
Other seized assets include accounts at Cohmad Securities Corp., valued at almost $50 million, and at Wachovia Bank, valued at just over $13 million, and tens of millions of dollars in loans extended by Madoff to family, employees and friends.
The judge's order also authorized the U.S. Marshals Service to sell the Manhattan co-op, properties in Montauk and Palm Beach and certain cars and boats.
Madoff is due to leave his jail cell to hear his punishment on Monday. For his victims, even a lifetime in prison may not be enough.
Madoff's clients, who once considered themselves lucky to be part of his seemingly exclusive investment circle, have struggled in the six months since his arrest with lost nest eggs, unpaid bills, anxiety, depression and anger over what they see as an unfair process to try to get any money back.
The courtroom drama is expected to draw many victims, including a few who will describe their financial ruin to the judge. Others plan a rally to publicize their plight, saying they worry they'll be forgotten once Madoff is put in prison.
"We don't care about what happens to Madoff," said Laurance Cohen, 79, of Eldorado, N.M., who together with his wife Marcia, 78, plan to be outside the Manhattan federal courthouse when the swindler is sentenced.
"We just want to get our money back."
For many, there will be no justice until more people they believe were in on the crime join Madoff behind bars. Madoff, 71, has pleaded guilty to running a long-standing Ponzi scheme and is expected to spend the rest of his life in prison. Court papers filed Friday indicate federal prosecutors are seeking a 150-year term, although Madoff's lawyer has said his client should serve only 12 years.
They are angry that Madoff's wife, their two sons and his brother, who have not been charged with any wrongdoing in what was a family-run business, do not appear to be suffering like they are.
"I think my biggest concern is that, basically, everything has gone according to his plan," said Jen Meerow, a New York resident who lost money to Madoff. "It is upsetting to know there are people at all levels of this that are probably going to get away with it."
Meerow, 32, whose parents also were bilked, said she fears Madoff long ago hid cash in anticipation of his arrest.
"He knew this day would come," she said. "What if he arranged to stash away some money in an offshore account and his children will get it in 20 years?"
Lives of excess
Madoff is expected to speak at the sentencing hearing and will address "the shame he has felt" and "the pain he has caused," his lawyer said in court papers this week. The swindler has been told of the more than 100 victim letters describing the devastating toll of his fraud, his lawyer said.
Only Madoff and an outside auditor have been charged with criminal wrongdoing tied to the $65 billion scam, although U.S. stock regulators have brought civil fraud charges against several middlemen.
Much of the investors' vitriol has been directed at Madoff's wife, Ruth, who is still living in the couple's four- bedroom Manhattan penthouse. She has argued she should be allowed to keep the apartment plus $62 million in assets she contends are unrelated to her husband's crimes.
She spends most of her time at home and, according to the New York Times, was banned from the exclusive hair salon where she used to get blond highlights. Wiped-out victims say such an inconvenience is hardly equal to what they are enduring.
"I do not see his family suffering," investor Rosalind Clark, of San Anselmo, Calif., wrote to the judge who will sentence Madoff. "They are still leading lives of excess."
Madoff's sons, Mark and Andrew, have been sued by employees at the Bernard L. Madoff Investment Securities LLC brokerage, who said they must have known what their father was doing. The sons' lawyer has said they were not involved in Madoff's asset management business and were shocked to learn of the fraud.
Victims also are angry at how they have been treated. Many were bitter over the public release of their names in court filings connected to the shutdown of Madoff's firm.
They also say they are frustrated by the refund process from an investor protection group compensating customers up to $500,000 each. Some complain the system for calculating losses is arbitrary. Others say they are unjustly shut out of any refunds because they invested through third parties.
The trustee helping to oversee the recovery of assets has said that reconstructing client accounts has been complex and that he is trying to deal with the claims fairly.
Many victims also are frustrated they are viewed as elites who greedily sought out Madoff without asking tough questions about his operation, said Ilene Kent, a New York woman whose parents lost their savings.
The sentencing, Kent said, may revive the horror many felt when they heard last December of Madoff's arrest. After that, she said, they'll go back to dealing with the havoc he caused.
"It is going to be very emotional for a lot of people," she said. "But it's just the preface of the book, not the end."
