Madoff in jail, victims left in the cold

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By Ben Conery

Scam artist Bernard Madoff may have enjoyed his last day of freedom, but his victims remain haunted by vanished fortunes and lost opportunities to stop the largest Ponzi scheme in U.S. history.

Madoff, 70, pleaded guilty Thursday to 11 charges, including fraud, perjury and money laundering, and Judge Denny Chin ordered him jailed immediately. His plea came without an agreement, meaning he faces a statutory maximum of 150 years in prison when he is sentenced June 16.

But the lack of a plea deal also means he is under no obligation to help investigators, and even prosecutors said that most of the billions of dollars lost by investors are likely gone forever.

"I have no one to help me. That he's in jail doesn't change that," Miriam Siegman, who said she lost her life savings to Madoff and now relies on food stamps, told Reuters news service. "I still have the rest of my life to live, or try to live, in incredible stress and in total poverty. He took everything."

With his guilty plea, Madoff traded his $7 million penthouse for a cramped prison cell. Judge Chin's jailing of Madoff ended a home-confinement arrangement that raised the ire of victims.

But that outrage is unlikely to subside as Madoff has said in court documents related to the case that he is entitled to keep the Manhattan penthouse and another $62 million in assets because they are held in his wife's name and unrelated to the Ponzi scheme.

Madoff's attorney also claims the $170 billion that the government will seek to seize as proceeds of the scam are "grossly overstated - and misleading - even for a case of this magnitude."

Investigators said they have found about $1 billion related to Madoff's scam.

"We continue to trace money and restrain assets so that victims may recover the greatest possible amount on their losses," said acting U.S. Attorney Lev L. Dassin. "However, because of the nature and length of the scheme, victims may recover only a small fraction of their losses."

Boston financial analyst Harry Markopolos tried to alert the Securities and Exchange Commission for the better part of a decade about Madoff's scams, sending a warning that was detailed and prescient.

"Madoff Securities is the world's largest Ponzi scheme," he wrote in one message to the SEC.

Madoff, a former chairman of the Nasdaq exchange, wooed investors with a strategy he called a "split strike conversion," and promised some people returns of up to 46 percent. The scam ensnared many prominent clients, including 1986 Nobel Peace Prize winner Elie Wiesel.

Despite his big talk of complex investment maneuvers, Madoff now says he simply put the money into an account at Chase Manhattan Bank. Madoff took great pains to hide his Ponzi scheme, sending clients fake monthly statements and trade confirmations, and hiring staff with little training in the securities industry.

The whole operation began to unravel with the economic downturn. In December, Madoff surrendered to the FBI agents and took full responsibility for the scam. Questions remain whether his wife, two sons or others may have been involved, and the FBI investigation is continuing.

After his confession and subsequent arrest, Madoff instantly went from a Wall Street legend to its biggest pariah. He arrived at court Thursday wearing a bulletproof vest. Madoff apologized in court, saying he was "deeply sorry and ashamed."

"When I began my Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients from the scheme," he said. "However, this proved difficult, and ultimately impossible, and as the years went by, I realized my arrest and this day would inevitably come."

Madoff's apology meant little to DeWitt Baker, an investor who said he lost more than $1 million.

"I'd stone him to death," Mr. Baker told the Associated Press.