Bernard Madoff pleaded guilty on Thursday to orchestrating the biggest investment fraud in Wall Street history and was jailed to await a sentence that could keep him in prison for the rest of his life.
As some of his victims looked on in the courtroom, the former Nasdaq stock market chairman calmly described for 10 minutes a long-running, worldwide Ponzi scheme that he knew was criminal from the start but thought would end quickly.
I am painfully aware that I have deeply hurt many, many people, including family, friends and associates, the grim-faced Madoff, 70, said before U.S. Judge Denny Chin in Manhattan federal court. It was the first time he had spoken publicly of his crime.
When I began my Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme, said Madoff, who wore a gray suit but none of the rings that were a signature of his style.
Madoff, who read from a prepared statement, did not mention the size of the scheme, but prosecutors have said it amounted to as much as $65 billion over 20 years and involved more than 4,800 client accounts.
Madoff said that shutting down the scheme, in which early investors were paid with money from new ones, proved impossible. As the years went by, I realized that my arrest and this day would inevitably come, he said.
Madoff has become one of the most vilified men in America, a symbol of the unraveling of Wall Street that has laid bare other multimillion dollar frauds. Some onlookers cheered as he was led out of the courtroom in handcuffs.
Dozens of investors caught in Madoff's web huddled outside the courthouse, commiserating, crying and passing judgment on the disgraced financier.
It's a Pyrrhic, bittersweet victory, said Miriam Siegman, 65, of New York City. A retired consultant, she said she had lost her life savings to Madoff's fraudulent investments and now receives food stamps.
I have no one to help me. That he's in jail doesn't change that, she said. I still have the rest of my life to live, or try to live, in incredible stress and in total poverty. He took everything.
Two suicides have been associated with the collapse of Madoff's scheme.
WHERE WERE THE WATCHDOGS?
The swindle has cast a harsh light on securities regulators for failing to uncover the scam, even after a whistleblower brought it to the attention of the U.S. Securities and Exchange Commission in May 1999.
The case has intensified demands for greater regulation of the financial industry.
Madoff's investors included hedge funds, banks, Jewish charities, the wealthy, and small individual investors in North and South America and Europe.
Three investors accepted an opportunity to speak in court. One of them, George Nierenberg, tried to address Madoff directly.
I don't know whether you had the chance to turn around and look at the many victims, Nierenberg said. Madoff pivoted in his seat slightly and briefly looked at him.
As the world slipped into recession and Madoff's investors started asking for their money, his swindle collapsed.
Madoff told the court that the essence of his scheme was telling customers that he would invest their money in shares of common stock, options and other securities of large well-known corporations.
He admitted that he simply deposited clients' money in an account at Chase Manhattan bank instead of investing it.
When people wanted their money, I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds.
PENTHOUSE TO PEN
After his arrest last December, Madoff was released on bail and confined to his $7 million Manhattan penthouse.
After he pleaded guilty, the judge ordered Madoff to jail and scheduled his sentencing for June 16. Madoff can get up to 150 years for the 11 charges against him, which include securities fraud, money laundering and perjury.
Madoff headed a family-run business in which his brother, Peter, and sons Mark and Andrew were executives in the brokerage arm of his firm. Madoff insisted that the brokerage unit was a legitimate business.
Neither they nor his wife of nearly 50 years, Ruth, were in court.
During the hearing, which ran more than an hour, rapt attention was broken by scoffs or laughter at a reference by defense lawyer Ira Lee Sorkin to Ruth Madoff paying for security at their apartment as part of her husband's house arrest and bail package.
Madoff will be jailed in a shared cell at the nearby Metropolitan Correctional Center, a far cry from his opulent lifestyle that included boats and mansions.
WHERE'S THE CASH?
Investors have said that any money in Ruth Madoff's name is likely proceeds of her husband's fraud and belongs to them.
Prosecutors have said that as of November 30, 2008, Madoff's client accounts purportedly had $64.8 billion, but in reality held only a small fraction of that.
They are seeking $170.8 billion in forfeiture from him, a sum they estimate of all the money and property that can be traced back to the fraud. They have not said how they arrived at that figure, and Madoff's lawyers have challenged that amount.
After the once-respected trader answered each of the charges with the word guilty, Chin accepted the plea and rejected his request to stay out on bail until sentencing. His attorney said he would appeal the ruling revoking bail.
Acting U.S. Attorney for Manhattan Lev Dassin said in a statement that Madoff's guilty plea is one step in an ongoing investigation.
He said, We are continuing to investigate the fraud and will bring additional charges against anyone, including Mr. Madoff, as warranted..
Some of the investors in the courtroom and in another room nearby watching a video feed of the proceedings, said they were unsatisfied by Madoff's admission and apology.
Many wanted a trial.
If we go to trial, we have more of a chance to comprehend the global scope of this horrendous crime, investor Maureen Ebel of Florida said in court.
At trial, we can bear witness to the pain Mr. Madoff has inflicted on the old, the infirm and the disabled.
(Reporting by Grant McCool and Martha Graybow; Additional reporting by Edith Honan and Caroline Humer; Writing by Paul Thomasch; Editing by Brian Moss, Toni Reinhold)