New York (Hedgeco.Net) – Bernard Madoff was finally promoted from house arrest to maximum security prison, after pleading guilty to the largest Ponzi scheme in history. Madoff, who swindled an estimated $65 billion out of the most elite investors, could face up to 150 years of prison.
“I operated a Ponzi scheme through the investment advisory side of my business,” Madoff admitted to U.S. Judge Denny Chin at the hearing, referring to Bernard L. Madoff Investment Securities LLC. He did contend that his U.K.-based affiliate, Madoff Securities International along with the units run by his two sons were all legitimate entities.
“I am actually grateful for this opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed,” Madoff confessed in the Manhattan courtroom. “I knew what I was doing was wrong, indeed criminal.”
Madoff spent years building up a stellar reputation with the rich and famous, many of whom invested their life savings with him. Madoff told the judge he started feeling pressure in the early 90’s to deliver the consistent returns that his investors expected. This jump started the staple Ponzi scheme action of using new capital coming in to pay returns to existing investors.
Instead of investing in securities like he promised his clients, Madoff instead deposited their cash into an account at Chase Manhattan Bank, where he would withdraw funds as needed for investor redemptions.
“I believed it would end shortly, and I would be able to extricate myself,” he said of the scheme. “As the years went by, I realized that my arrest and this day would inevitably come.”
Madoff’s sons have not been charged with any wrongdoing, nor have any employees at his New York City headquarters although investigations are still in the works. Attorneys for Madoff’s wife, Ruth, state that she was the sole owner of their Manhattan apartment, along with $17 million in cash and $45 million in bonds.
Madoff’s attorney, Ira Sorkin said he would appeal the jailing before his sentencing hearing on June 16.
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