Madoff Goes To Jail

(CBS/AP) A somber-looking Bernard Madoff was led out of court in handcuffs Thursday after pleading guilty to charges that he knowingly carried out an epic fraud that robbed investors around the world of billions of dollars.

Applause broke out in the packed courtroom of around 100 spectators after U.S. District Judge Denny Chin denied bail for Madoff, 70, noting that he had the means to flee and an incentive to do so because of his age. Madoff stood stoically, if a little pale, at the judge's ruling, reports CBS investigative producer Pat Milton.

Madoff, wearing a bulletproof vest under his charcoal gray suit, admitted he began operating the giant Ponzi scheme in the early 1990s in response to a recession.

"I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," he told U.S. District Judge Denny Chin, who accepted the plea after hearing from three investors.

Madoff, flanked by his four attorneys and apparently with no family or friends in the courtroom, read from a typed written statement explaining a scam from which he originally believed he could extricate himself.

"When I began this scheme, I believed it would end shortly. … As the years went by, I realized my risk, and this day would inevitably come," he said in a steady voice. "I cannot adequately express how sorry I am for my crimes."

After arguments began as to whether Madoff should remain free on bail, his lawyer Ira Sorkin described the bail conditions and how Madoff had, "at his wife's own expense," paid for private security at his $7 million penthouse.

Loud laughter erupted among the spectators crammed into the large courtroom on the 24th floor of the federal courthouse in lower Manhattan. The judge warned the spectators to remain silent.

The fraud turned a revered money man into an overnight global disgrace whose name became synonymous with the current economic meltdown.

Madoff described his crimes after he entered a guilty plea to all 11 counts he was charged with, including fraud, perjury, theft from an employee benefit plan, and two counts of international money laundering.

Prosecutors say the disgraced financier, who has spent three months under house arrest in his $7 million in Manhattan penthouse, could face a maximum sentence of 150 years in prison at sentencing.

Chin set the sentencing date for June 16.

The plea came three months after the FBI claimed Madoff admitted to his sons that his investment fund was all a big lie - a Ponzi scheme that was in the billions of dollars. Since his arrest in December, the scandal has turned the former Nasdaq chairman into a pariah.

The scheme evaporated life fortunes, wiped out charities and apparently pushed at least two investors to commit suicide. His victims exceed a staggering 13,000 - 162 pages of names who say they lost something or everything, reports CBS News correspondent Jeff Glor. They range from elderly Florida retirees to actors Kevin Bacon and Kyra Sedgwick and Nobel Peace Prize winner Elie Wiesel.

Before accepting the plea, the judge gave investors a chance to challenge his conclusion. One former client said she objects to Madoff's guilty plea until the money lost can be found.

Another, Maureen Ebel, wanted to see the case go to trial so the public would have "more of a chance to comprehend the global scope of this horrendous crime," reports Milton.

He also let burned investors challenge his decision whether Madoff should be go to prison immediately.

The fact that Madoff had been allowed to live in his Manhattan penthouse after his arrest "really infuriates everyone," said Matt Weinstein, a motivational speaker who lost the bulk of his savings in the scheme.

"People can't even afford rent anymore," Weinstein said. "He can't go on in this palace of denial."

If Madoff is sentenced to more than 25 years, he will serve out his prison term in a maximum security facility, said CBS' The Early Show legal analyst Lisa Bloom.

For as angry as victims are toward Madoff, some also lay blame at the door of the Securities and Exchange Commission.

"The SEC did not do their job. They were negligent, they were ineffective. … They lured people into a false sense of security," Phyliss Molchatsky, a retiree who lost her life savings, told The Early Show. Molchatsky says she plans to sue the SEC.

Another victim, Dr. Henry Backe, told The Early Show that Madoff was an "economic terrorist."

The size of the scandal has made him an international symbol of greed and deception in difficult economic times. But it remains in dispute.

People familiar with the case tell CBS News that federal investigators are "ripping apart" 20 years of fraud inside Madoff's firm. They're moving beyond Madoff himself and looking at sons Andrew and Mark, who directed trading activities, and brother Peter, the company's chief compliance officer. None of them have been charged with any wrongdoing.

Also under the microscope: Madoff's wife of 49 years, Ruth, who has not been charged in the case. In court papers, she claims nearly $70 million in assets separate from her husband's fortune, including a $7 million New York apartment, $45 million in bonds, and $17 million in cash. She's also listed as the owner of a $9 million Palm Beach mansion.

"Just because Madoff apparently won't cooperate with authorities doesn't mean we won't perhaps see charges against other people here," said CBS News legal analyst Andrew Cohen. "There clearly is a paper trail, and clearly people were handling the details of the phony trades, and the investigation is ongoing. When there is this much money at stake the trail won't grow cold here or now."

At the hearing, prosecutor Marc Litt said that the investigation is continuing and that "a lot of resources and effort are being expended to find assets and anyone else who might be responsible for this fraud," reports Milton.

Prosecutors filed papers Tuesday saying Madoff's investment company reported a total balance of $64.8 billion in November even though it actually had only a small fraction of that amount.

Investigators say the true amount lost by investors may be between $10 billion and $17 billion and the larger estimates by Madoff include the false profits prosecutors say he generated with tens of thousands of bogus account statements cataloguing steady profits.
So far, authorities have located only about $1 billion in assets.

Prosecutors say he generated or had employees generate tens of thousands of account statements and other documents, operating a massive Ponzi scheme, a scam in which people are persuaded to invest in a fraudulent operation that promises unusually high returns.

The money Madoff received was never invested but was used by him, his business and others or, as occurs in Ponzi schemes, was paid out to early investors, prosecutors said.