Hedge fund fraudster Bernard Madoff has pleaded guilty to 11 counts of fraud and has been immediately sent to jail, pending sentencing, which will not take place for several months.
Madoff has used his court appearance in New York overnight to apologise to victims over the $US65 billion fraud, claiming the Ponzi scheme he set up in the recession of the 1990s was only supposed to run for a short time.
“As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal,” Madoff told the court.
“When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by I realised that my arrest and this day would inevitably come.”
Madoff then went on to lay out the details of his crimes. He told the court that he sold the scheme to clients by promising that all monies invested would be put into standard stocks and options.
“I never invested those funds in the securities, as I had promised. Instead, those funds were deposited in a bank account at Chase Manhattan Bank. When clients wished to receive the profits they believed they had earned with me or to redeem their principal, I used the money in the Chase Manhattan Bank account that belonged to them or other clients to pay the requested funds.”
Madoff used a multitude of strategies to hide his tracks, including wiring money back and forth between the US and Britian to make it appear like he was actively trading and sending clients false monthly trading statements.
“While I never promised a specific rate of return to any client, I felt compelled to satisfy my clients’ expectations, at any cost.”
Madoff was sent straight to jail and is expected to be sentenced later this year.
But victims were unimpressed by Madoff’s statement and continue to demand answers to two main questions – where has the money gone, and will any of Madoff’s accomplices be charged?
Prosecutors say they could seek up to $US170 billion from Madoff, but so far just $US1 billion has been recovered.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
