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Mar 11, 2009 6:12 pm

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by Bill Singer

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The Madoff Case Winds Down: Read the Criminal Information

Written: March 11, 2009

By Bill Singer

Read the Criminal Information in the case of the United States of America v. Bernard L. Madoff  (cr-00213-DC/March 10, 2009).  For copies of the December 2008 SEC Complaint and the Criminal Complaint, visit this link.

A brief synopsis of where we presently stand:

In 2008, Madoff purportedly told 4,800 investors that their accounts held $64.8 Billion, and that he was managing those funds through a “split-strike conversion strategy” that mimicked the price movement of the Standard & Poor's 100 Index, while "opportunistically" timing purchases. Seventy-year old Bernard Madoff was arrested on December 11 and presently free on $10 Billion bail.  Madoff promised annual returns of up to 46% created a broad infrastructure at his firm to give the appearance of a legitimate investment advisory business in which client funds were actively traded. Madoff’s back-office staff had little or no prior pertinent training or experience in the securities industry and generated phony documents showing fictitious returns. Madoff “repeatedly lied” to the SEC during questioning in 2006. He is also alleged to have used $250 million from his advisory business to finance market-making and proprietary trading operations. Madoff is accused of stealing some $10 million from 35 labor union pension funds.

On Dec. 9, Madoff told his son Mark, who ran Madoff’s proprietary trading business, and Andrew, who was a director of that unit, that he wanted to pay bonuses two months earlier than usual, and eventually disclosed the extent of the fraud. His sons turned him in to federal prosecutors. Madoff’s brother Peter was chief compliance officer at the company. None of Madoff’s family members have presently been accused of any wrongdoing, including his wife is Ruth Madoff. Notably, the Information does not allege a conspiracy. 

Prosecutors will seek forfeiture from Madoff of as much as $170 billion in traceable proceeds of fraud. AUSA Marc Litt says there has been no plea agreement.  That scenario suggests that Madoff has either genuinely refused to cooperate (and the USA office will respond subsequently) or that there is no “formal” plea deal but the Sorkin has fashioned a series of “understandings.” Recent statements from the prosecutor's office suggests that the investigation is ongoing and others may yet be named.  Ike Sorkin, Madoff’s Attorney, disagreed with the amount of loss alleged by the government, arguing that some victims received more in returns than they invested with Madoff.  

According to recent developments, he will plead guilty to 11 criminal charges, and could face 150 years in prison.

11 COUNTS IN CRIMINAL INFORMATION ( U.S. v. Madoff, 08-cr-00213, U.S. District Court, Southern District of New York (Manhattan):

1.     Investment Adviser Fraud

2.     Mail Fraud

3.     Wire Fraud

4.     Money Laundering (3 counts)

5.     False Statements

6.     Perjury

7.     False Filing (SEC)

8.     Theft from Employee Benefit Plan

US District Judge Denny Chin said that only two issues will be considered at Madoff’s allocution (plea hearing) on March 12:  

1.     whether the judge will accept a guilty plea and

2.     whether Madoff will be sent to prison that day.

Chin said victims who wish to speak about the jail term Madoff receives will have to wait until sentencing.  

This is the way the world ends

This is the way the world ends

This is the way the world ends

Not with a bang but a whimper.

The Hollow Men by T. S. Eliot