Page last updated at 23:47 GMT, Thursday, 12 March 2009

Madoff admits $50bn fraud scheme

Artist impression of Madoff giving his testimony
Mr Madoff said he could not adequately express his sorrow

Disgraced US financier Bernard Madoff has been jailed after pleading guilty to all 11 charges surrounding an estimated $50bn (35bn) fraud.

Some of his victims clapped when he was handcuffed and led out of a New York courtroom. He had earlier said he was "deeply sorry and ashamed".

The 70-year-old defrauded thousands of investors in a fraud he admitted had been running since the early 1990s.

He could receive up to 150 years when he is sentenced in June.

Arrest 'inevitable'


You're dealing with the greatest con artist probably in the history of the world

Madoff investor Burt Ross, a former town mayor

"I cannot adequately express how sorry I am for what I have done," Madoff told the court.

He said that when he started the fraud, he had hoped it would only be for a limited time.

"I realised that my arrest and this day would inevitably come," he said.

While Madoff insists he acted alone, attention is now likely to switch to whether others at his company were involved.

"A lot of resources are being expended both to find assets and to find anyone else who might be responsible for this fraud," said prosecutor Marc Litt.

"It's impossible to believe that Mr Madoff did this by himself," William Galvin, secretary of the Commonwealth of Massachusetts, told the BBC.

Prior to having his bail revoked, Madoff had been under house arrest at his luxury Manhattan apartment.

'Evil incarnate'

A number of Madoff's victims attended the hearing.

Speaking outside the courtroom, Cynthia Friedman told the BBC Madoff was "evil incarnate".

She and her husband lost $3m with Madoff. "He has no remorse. He's a horrible man," she said. "He stole from charities, he's just an awful man."

Many of his victims told the court they opposed his guilty plea, because they wanted the case to go to full jury trial so they could find out exactly what he had done with the money.

Yet most clapped when he was handcuffed.

"I think the only thing he feels is regret that he got caught," said one investor.

"But the best view of all was when they put the handcuffs on him - you know, he might be in that several thousand dollars suit that the investors paid for - to see that is justice."

Money laundering

A former chairman of the Nasdaq stock market, Madoff has been a Wall Street figure for more than 40 years.

Investors Judith Welling, Bennett Goldsworth and Cynthia Friedman describe their ordeal

The only person accused in the giant fraud surrounding his firm, Bernard L Madoff Investment Securities, Madoff is said to have run a Ponzi scheme, whereby early investors were paid off with the money of new clients.

Madoff's 11 charges include four counts of fraud. In addition, he pleaded guilty to three counts of money laundering, making false statements, perjury, making a false filing to the US financial watchdog, and theft from an employee benefit plan.

Madoff himself estimates that the fraud totalled $50bn.

'A genius'

One of Madoff''s victims, Burt Ross, a former mayor of New Jersey town Fort Lee, told the BBC he did not expect to recover a single cent of the $5m he invested.

WHAT IS A PONZI SCHEME?
Charles Ponzi
A fraudulent investment scheme paying investors from money paid in by other investors rather than real profits
Named after Charles Ponzi (pictured) who notoriously used the technique in the United States in the 1920s
Differs from pyramid selling in that individuals all tend to invest with the same person

"Bernard Madoff is a genius," said Mr Ross. "You're dealing with the greatest con artist probably in the history of the world.

"He created a mystique and associated with extraordinarily well respected and revered people, and so he was given the benefit of the doubt by financial regulators who blew it badly."

Investigators say they are continuing efforts to recover all the money Madoff has stolen, but most commentators - and most of his investors - say it is highly unlikely that any more than a very small amount will be found.

"It's going to be hard to recover the money," said Lisa Osofsky, former deputy general counsel for the FBI, now a consultant with Control Risks.

"In a Ponzi scheme, you're constantly passing the money out rather than keeping it, so who knows how much money he actually made."

Mark Raymond, a lawyer representing some of Madoff's victims, said it would be wrong to think of them all being multimillionaires.

Despite widespread press coverage of famous names and a wealthy elite, Mr Raymond, of law firm Broad and Cassel, said many were normal working people, including a retired couple from Atlanta.

"He's 82, she's 78, and they are both looking for work because they have lost everything," he said.

Mr Raymond said another victim was a plumber who earned no more than $60,000 a year.

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