By Alex Berenson
Friday, January 9, 2009
Pressing the case that the financier Bernard Madoff should have his bail revoked, prosecutors said in court documents on Thursday that investigators found 100 signed checks worth $173 million in Madoff's desk that were ready to be sent to family members and friends on the day of his arrest.
The checks were another indication, prosecutors said, that Madoff was trying to keep his assets away from his investors.
"What the defendant failed to highlight for the court in his rendition of events is the fact that, prior to his arrest, he announced his intention to transfer $200-$300 million of the remaining investor's assets to selected family, friends and employees," an assistant U.S. attorney, Marc Litt, said in the filing.
"The only thing that prevented the defendant from executing the plan to dissipate those assets was his arrest by the FBI on Dec. 11," Litt wrote.
The judge overseeing the case, Ronald Ellis, was expected to rule soon on whether Madoff should be sent to jail. He is out on $10 million bail, but confined to his New York apartment.
In a court filing on Tuesday, prosecutors said that Madoff and his wife, Ruth, had sent packages of valuables worth about $1 million to his sons and brother, violating the terms of his bail agreement. The items included 16 watches, including diamond-encrusted timepieces from Tiffany and Cartier, 4 diamond brooches, 2 sets of cuff links and an emerald ring.
Madoff, who is said to have confessed last month to a huge Ponzi scheme, in which money from new investors paid returns to previous investers, has promised the U.S. Securities and Exchange Commission not to dispose of any of his assets, which may eventually be sold and used to repay investors who lost money in the scheme.
At a hearing Monday, a lawyer for Madoff, Ira Lee Sorkin, told Ellis that many of the items were relatively inexpensive, including $25 cuff links and $200 mittens.
But Litt and another assistant U.S. attorney, Lisa Baroni, said in their filing that Sorkin's description of the packages was at best incomplete.
"The defendant sent a package containing a total of approximately 13 watches, one diamond necklace, an emerald ring and two sets of cuff links," the filing said. "The government has been informed that the value of those items could exceed $1 million. Two other packages — containing a diamond bracelet, a gold watch, a diamond Cartier watch, a diamond Tiffany watch, four diamond brooches, a jade necklace and other assorted jewelry — also were sent to relatives."
By mailing the jewelry, Madoff disobeyed a court order and showed that he presented a "serious risk of flight," prosecutors wrote. They asked Ellis to revoke Madoff's bail and immediately send him to jail.
Zachary Carter, a former U.S. attorney in New York, said that prosecutors had a relatively good chance of persuading Ellis to revoke his bail.
"The argument that I would make as a prosecutor would be that to the extent that Madoff ignored a legal obligation to preserve his assets, it is some indication that he would be willing to ignore other obligations, like remaining in the jurisdiction," Carter, who is now a partner in New York at the law firm of Dorsey & Whitney, said. "It could be regarded as a step in the direction of flight."
In a response filed Wednesday, Sorkin and Daniel Horwitz, who represent Madoff, argued that jailing him would be unfair and wrong. Madoff is already being watched around the clock, both for his protection and to prevent flight, and has an electronic monitoring device, his lawyers wrote. In addition, they said, at this point, Madoff is too widely known and too disliked to get very far if he tried to flee. Instead of jail, they said, Madoff would accept having his property inventoried and all his outgoing mail checked to make sure he did not try to transfer valuables again.
As for the jewelry that Madoff sent last month, Madoff's lawyers characterized it as "a few sentimental personal items." and Madoff's decision to mail it, they said, was an honest mistake.
"Mr. Madoff gathered a number of watches that he had collected over the course of years, knowing that, due to the sudden change in his circumstances, he would never have an occasion to wear these watches again. To Mr. and Mrs. Madoff, the value of these items was purely sentimental," the lawyers wrote.
Prosecutors, in their filing Thursday, said Madoff's explanation that he was simply reaching out to friends and family was "preposterous"
"That's what telephones, e-mails and personal letters are for," the filing said
Upon hearing of the mailing, some of Madoff's investors, and their lawyers, had strong sentiments of their own.
"His acts were outrageous," said Jerry Reisman, a New York awyer who represents 13 investor-claimants, with aggregate claims of $150 million. "He violated a court order; he tried to secret his assets."
Reisman said Madoff should be immediately confined to jail. "To use a great American expression in Webster's dictionary — he has chutzpah," Reisman said. "He's gotten away with it for so long that he thought he could continue to get away with it."
Madoff's ordinary clients face financial ruin
By James Barron
Thursday, January 8, 2009
NEW YORK: Thomas Liccardi knew all about how people should prepare for retirement. He was an accountant who specialized in tax returns for estates - often dealing with people whose elderly parents had died, usually after long and comfortable lives.
He himself kept on working through his 60s and his 70s and into his 80s, doing a few tax returns every year and helping younger accountants he knew in White Plains, New York.
He had planned for his own retirement, of course. By last year, even after two heart attacks and a serious stroke, Liccardi, 86, was confident that he had no financial worries: He had become a millionaire, wealthy enough to afford $130,000 a year for assisted-living accommodations in a home for the elderly and the round-the-clock health aides on whom he and his wife depend.
The computer-generated financial statements he received every month showed that he had $2.7 million, an impressive increase from the $400,000 he had originally invested with Bernard L. Madoff Investment Securities, in the late 1990s. "My whole life was wrapped up around that money," he said.
Of the Madoff firm's 8,000 customers, many will surely survive financially - universities, foundations, some who served on their boards or were regulars on the charity circuits in Manhattan and Palm Beach. But there are dozens, if not hundreds, of victims who poured their life savings into what apparently were phantom accounts.
This is no consolation to Liccardi, who now is wondering where he and his wife will live out their days. "I'm a small fry compared to most of the other people," he said, "but I'm hurt more. I can't work anymore or anything."
Sitting in their little room at Fountains at RiverVue, his wife, Edith, 84, interrupted. "He's a nervous wreck," Edith Liccardi said of her husband. She had a small stroke last year and uses a walker.
With the money he invested with Madoff gone, Thomas Liccardi fears that he and his wife cannot afford to stay at the Fountains at RiverVue, where they have lived for a year and a half.
April Johnson, the executive director of the home, in Tuckahoe, New York, said no decision had been made about what to do if the Liccardis run out of money. Liccardi went to Johnson to negotiate a reduction of their room and board almost as soon as he heard about the scandal - and he heard about it when a former associate called.
"He said, 'Tom, Madoff's picture is on the front page as a rip-off artist,"' Liccardi said. "I just about fell to the floor. It was impossible. I had so much faith."
And Liccardi had been a reluctant convert. He set up an accounting practice in the Bronx and in Westchester County after he graduated from Manhattan College. Over the years, he was careful with his money.
His first encounter with the Madoff firm involved a longtime client's tax return that Liccardi was preparing. He did not believe the figures the firm had reported to the Internal Revenue Service, year after year.
"When I saw a 25 percent return," he said, "I said the returns sounded much too good. Something sounded wrong." The client suggested that Liccardi visit the Madoff firm's office, where he met Madoff himself.
"He impressed me very much, as he did everyone else, and there were banks of computers and people running all over the place," Liccardi said. "I thought this had to be legitimate because you couldn't employ that kind of staff without money."
Liccardi was convinced that the Madoff firm was making the money for its clients - so convinced that he decided to invest the $400,000 he had saved over the years. He said that except for their house, and some savings bonds his wife had inherited from her mother, "that was everything." In 2006, they sold the house. He put the $400,000 profit from the sale in their Madoff account, believing it had been invested safely.
"I wasn't taking any chances," he said.
Thursday, January 8, 2009
NEW YORK: Thomas Liccardi knew all about how people should prepare for retirement. He was an accountant who specialized in tax returns for estates - often dealing with people whose elderly parents had died, usually after long and comfortable lives.
He himself kept on working through his 60s and his 70s and into his 80s, doing a few tax returns every year and helping younger accountants he knew in White Plains, New York.
He had planned for his own retirement, of course. By last year, even after two heart attacks and a serious stroke, Liccardi, 86, was confident that he had no financial worries: He had become a millionaire, wealthy enough to afford $130,000 a year for assisted-living accommodations in a home for the elderly and the round-the-clock health aides on whom he and his wife depend.
The computer-generated financial statements he received every month showed that he had $2.7 million, an impressive increase from the $400,000 he had originally invested with Bernard L. Madoff Investment Securities, in the late 1990s. "My whole life was wrapped up around that money," he said.
Of the Madoff firm's 8,000 customers, many will surely survive financially - universities, foundations, some who served on their boards or were regulars on the charity circuits in Manhattan and Palm Beach. But there are dozens, if not hundreds, of victims who poured their life savings into what apparently were phantom accounts.
This is no consolation to Liccardi, who now is wondering where he and his wife will live out their days. "I'm a small fry compared to most of the other people," he said, "but I'm hurt more. I can't work anymore or anything."
Sitting in their little room at Fountains at RiverVue, his wife, Edith, 84, interrupted. "He's a nervous wreck," Edith Liccardi said of her husband. She had a small stroke last year and uses a walker.
With the money he invested with Madoff gone, Thomas Liccardi fears that he and his wife cannot afford to stay at the Fountains at RiverVue, where they have lived for a year and a half.
April Johnson, the executive director of the home, in Tuckahoe, New York, said no decision had been made about what to do if the Liccardis run out of money. Liccardi went to Johnson to negotiate a reduction of their room and board almost as soon as he heard about the scandal - and he heard about it when a former associate called.
"He said, 'Tom, Madoff's picture is on the front page as a rip-off artist,"' Liccardi said. "I just about fell to the floor. It was impossible. I had so much faith."
And Liccardi had been a reluctant convert. He set up an accounting practice in the Bronx and in Westchester County after he graduated from Manhattan College. Over the years, he was careful with his money.
His first encounter with the Madoff firm involved a longtime client's tax return that Liccardi was preparing. He did not believe the figures the firm had reported to the Internal Revenue Service, year after year.
"When I saw a 25 percent return," he said, "I said the returns sounded much too good. Something sounded wrong." The client suggested that Liccardi visit the Madoff firm's office, where he met Madoff himself.
"He impressed me very much, as he did everyone else, and there were banks of computers and people running all over the place," Liccardi said. "I thought this had to be legitimate because you couldn't employ that kind of staff without money."
Liccardi was convinced that the Madoff firm was making the money for its clients - so convinced that he decided to invest the $400,000 he had saved over the years. He said that except for their house, and some savings bonds his wife had inherited from her mother, "that was everything." In 2006, they sold the house. He put the $400,000 profit from the sale in their Madoff account, believing it had been invested safely.
"I wasn't taking any chances," he said.
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