Retribution, deterrence, and symbolism for the victims, said U.S. District Judge Denny Chin, were among the most important factors in his decision to sentence
to 150 years in prison. The sentence means that Madoff left U.S. District Court in Manhattan on June 29 to face what will undoubtedly be the rest of his life behind bars. As Madoff's lawyer reminded the judge during the proceedings, his 71-year old client would need to live to age 221 to experience a day of freedom.
Cheers erupted in the packed courtroom and the two overflow rooms when Chin delivered the news.
Before the sentence was delivered, nine victims addressed the packed courtroom, describing the financial pain and horror Madoff's Ponzi scheme had imposed on them and their families. Madoff responded to the victims, calling the scheme a "terrible mistake" and a "serious error of judgment."
"I could not accept the fact that for once in my life, I failed," he said in a monotone, also announcing that his wife Ruth planned to make a public statement. Dressed in the dark suit and tie he had been granted permission to wear for the occasion, he then turned around to face his victims and apologize directly, saying "I'm sorry." After the hearing, Ruth Madoff said she was "betrayed and confused"
by her husband's actions.
Federal prosecutors had requested 150 years—the maximum term, according to federal sentencing guidelines—after Madoff pleaded guilty in March
to 11 counts of fraud, money laundering, theft, and perjury. Madoff—a former chairman of the Nasdaq stock exchange ( (NDAQ)
)—and his accountant are the only people thus far to face criminal charges in connection with the fraud, in which an estimated $65 billion was lost. Prosecutors estimate that Madoff's firm collected and paid some $171 billion over perhaps decades of deception.
Not a single letter of support
Ira Lee Sorkin, Madoff's attorney, acknowledged his client as a "deeply flawed individual" but said he is nonetheless human and asked the judge for a 12-year sentence. Sorkin cited Madoff's health and decision to step forward to disclose the fraud seven months ago as reasons that argued for a shorter sentence.
But Judge Chin said that Madoff's case must deliver a message to everyone, since Madoff's "evil" crimes exacted a "staggering human toll" on his victims
. Not only were the crimes unprecedented in scope and enormity, Chin said, but Madoff's breach of his clients' trust caused them to base important life decisions on lies. The judge added that a civic trustee advised the court that Madoff had not been helpful in the government's quest to uncover further assets and investigate the crimes further, squelching an argument the defense attorney used when asking for a lighter sentence. Also, Chin noted, not a single letter from a friend or family member had been submitted on Madoff's behalf, which he called unusual in such a case. "The absence of such support is telling," Chin said.
Madoff already has taken a severe financial hit as a judge issued a preliminary $171 billion forfeiture order stripping Madoff of all his personal property, including real estate, investments, and $80 million in assets that his wife Ruth had claimed were hers. The order left her with $2.5 million. The terms require the Madoffs to sell a $7 million Manhattan apartment where Ruth Madoff still lives. An $11 million estate in Palm Beach, Fla.; a $4 million home in Montauk, N.Y.; and a $2.2 million boat will be put on the market as well.
Madoff's investors spanned charitable organizations like Nobel laureate Elie Wiesel's Foundation for Humanity to public institutions such as Yeshiva University and New York Law School. Some of the more prominent individual investors not present at Monday's proceedings include actor John Malkovich, former Los Angeles Dodger pitcher Sandy Koufax, talk-show host Larry King and actress Zsa Zsa Gabor.
With some in tears, each victim who spoke implored the judge to hand down the maximum sentence allowed by law and requested that it be served in a maximum security prison. Many acknowledged that even this punishment would not amount to what they had endured as victims since Dec. 11, 2008—when the news of the Ponzi scheme broke—and what they would continue to endure with their life savings now obliterated.
"This was such an extreme fraud in terms of its [dollar] amount and the number of victims—it pretty much dwarfs any white collar corporate fraud I can recall," says David L. Douglass, an attorney and chairman of the Government Enforcement and Corporate Compliance Committee, an organization of corporate attorneys. Douglass considers Chin's decision "an expression of condemnation by the court to the victims that the judge and the judicial system understand what Mr. Madoff has done." But he sees Madoff's longer-than-life sentence as an outlier and predicts it will have little impact in deterring future scam artists because it is so extreme.
The problem is the lack of financial transparency, says James Ratley, president of the
in Austin (Tex.). He calls the 150-year sentence "a very ineffective method of preventing fraud, because every perpetrator thinks they will never get caught." The organization is pressing for transparency measures on executives of publicly-traded companies and regulated industries, similar to disclosure laws for those running for federal office. While the information on corporate income and spending would not be available to the public, Ratley says this transparency would allow auditors and regulators the ability to detect anomalies sooner and could complement the new set of financial regulations the Obama administration rolled out in mid-June. "It's not a new concept, just a new application and could have meant that Madoff's crimes were detected much earlier," Ratley said. "This is by no means a cure-all, but what we're doing right now is not working, obviously."
While Madoff's sentence is significant, "there is nothing the [SEC] can do that will prevent the reoccurrence of another Ponzi scheme," says Patrick Hunnius, a former SEC enforcement attorney and now a partner at
in New York. The best defense potential victims can rely on, he says, "is entirely cliché but it's true: If it is too good to be true it probably is. There were rules in place that said this shouldn't happen and it still did."
victim: " he's imprisoned us"
The anger and sadness were starkly apparent in the faces and voices of the victims as many labeled Madoff a "monster," "psychopath," and "evil lowlife." Many said they have been unable to eat, sleep, or care for themselves or others since hearing the news. Other victims used their time to rail against the government and the Securities & Exchange Commission for failing to detect Madoff's crimes, leading Judge Chin to remind one woman that she was there to address him regarding the prison sentence and it was "not the time to criticize the agencies."
Dominic Ambrosino, a 49-year old retired New York City corrections officer, spoke first as his wife stood beside him, calling Madoff's actions an "indescribably heinous crime" that wiped out the couple's life savings. Requesting that Chin sentence Madoff to 150 years, Ambrosino admitted that while a life sentence would not solve their financial woes, at least they "will know that he's in prison the way he's imprisoned us and others."
Sheryl Weinstein, chief financial officer of a charitable women's organization, called the day she met Madoff 21 years ago "the unluckiest day" of her life. She cited a Time
magazine article estimating that 3 million people were likely to be affected by Madoff's crimes and referred to him as an "equal opportunity destroyer" for the range of people and organizations he targeted. "Underneath that faÃ§ade is truly a beast," Weinstein said, who should be kept "in a cage behind bars."
Michael Schwartz, 33, blasted Madoff for stealing from not only retired veterans and widows but the disabled too, such as his disabled brother for whom a now-empty family trust fund was intended to support. "I only hope that his sentence is long enough so that his jail cell will become his coffin."