Page last updated at 16:05 GMT, Sunday, 28 June 2009 17:05 UK

Madoff victims call for life sentence

By Greg Wood,
BBC North America Business Correspondent

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Victims want Madoff 'jailed for life'

"If your father wasn't already dead this would have killed him," said Cindy Friedman.

I was visiting Cindy and her accountant husband Richard at their home in Long Island, New York.

The house is all they have left. Their life savings of $3m (£1.8m) were wiped out in the Madoff fraud case.

The wall of their sitting room is covered with framed photographs of five generations of the Friedman family, including Richard's mother, who suffers from Alzheimers. She lost $12m.

The couple showed me a copy of the "personal impact statement" which they'd sent to the judge in the Madoff case, Denny Chin, ahead of the sentencing.

Letters

Hundreds of victims have made similar statements about the wreckage caused to their lives.

"I went to some websites and people were commenting that they couldn't get through the letters without tears," said Richard. "I'm starting to get a little teary eyed myself in thinking about the other people.

We have each other. But some people are alone. Family becomes more important than ever before."

"That's one way we're rich," said Cindy. "We're rich in our family."

Victim statements

In March, Bernard Madoff pleaded guilty to eleven counts, including fraud, theft and money laundering, which together carry a maximum jail term of 150 years. The Friedmans said he deserved to be punished to the full extent of the law.

Cindy Friedman holding personal impact statement
Victims have sent the judge statements about the impact of the fraud

"He should of course be sentenced to many years and hopefully in a jail where he's with hardened criminals. Maximum security. He's a horrible man. He did horrible things to charities, to elderly people, to friends."

Mr Madoff's lawyer, Ira Sorkin, has taken issue with the victim statements.

He wrote to the judge complaining about what he called "a desire for a type of mob vengeance".

He urged the court to set aside emotion and hysteria, arguing that a sentence of 12 years for his 71-year-old client would be fair.

Luxury penthouse

But that won't satisfy the victims who also remain convinced that Bernard Madoff did not act alone.

His wife Ruth has been making weekly visits to the downtown Manhattan jail where her husband has been confined since his conviction.

She has not been charged with any wrongdoing.

Confronted on one of her recent prison visits by a reporter with the accusation that she was involved in her husband's Ponzi scheme, she replied, "I have no response to you."

Assets

Bernard Madoff's properties in Florida, Long Island, and the South of France have been confiscated along with his luxury yacht.

Around $1bn in assets have so far been recovered by the US court-appointed trustee, Irving Picard, mainly from bank accounts belonging to Madoff family members.

At a recent conference call for journalists, Mr Picard said that further lawsuits were being considered.

"The fact that we haven't brought a lawsuit yet against a member of the Madoff family shouldn't be viewed as a fact that we're not going to. It's a matter that's being worked on."

Mr Picard has accused some prominent Madoff investors of being complicit in the fraud.

He's filed a lawsuit against Jeffry Picower, a well-known philanthropist, demanding the return of $5bn in fictitious profits which Mr Picower is alleged to have withdrawn from the Madoff funds.

Mr Picower denies the allegations.

The US financial watchdog, the Securities and Exchange Commission, has also filed civil fraud charges against a number of Bernard Madoff's business associates and investment advisers who channelled billions of dollars into his funds.

Compensation

But Irving Picard himself now faces the threat of legal action from Madoff victims.

They're entitled to compensation of up to half a million dollars each under an investment protection scheme.

They want the amount of compensation to be based on the value of their investments as calculated in the last statement sent out by the Madoff firm.

But Mr Picard says that value is fictitious because those investments never existed. He wants to base compensation on the amount that investors paid into the Madoff funds, minus any returns or withdrawals they made.

For some Madoff investors, that means they could actually receive "clawback" letters from Mr Picard, demanding that they pay back gains from previous years.

Punishment

The Friedmans are worried they could get a "clawback" letter. They told me they felt let down.

"I believed in the system," said Cindy, "and now I no longer believe in the system."

"How can you believe in it?" Richard commented. "We're being victimised a second and third time."

The sentence passed on Bernard Madoff will have huge symbolic value as a punishment for the greed of a financial system gone wrong.

But, as the fight over the recovery of assets and compensation gets increasingly messy, it'll do nothing to get the money back.



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