Second Judge Refuses to Jail Madoff
Financier Accused in Massive Ponzi Scheme Allowed to Remain Free on Bail
Bernard Madoff leaves federal court in New York after a judge denied a bid by prosecutors to jail him for violating a court order. Madoff reportedly sent $1 million in jewelry to relatives and friends
(By Elizabeth Williams -- Bloomberg News)
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Thursday, January 15, 2009
NEW YORK, Jan. 14 -- Bernard L. Madoff, the accused mastermind of a vast Ponzi scheme, will remain free on bail after a second federal judge refused the government's request to jail him while the alleged fraud is investigated.
Madoff, who appeared Wednesday at a hearing in Manhattan federal court, returned to his multimillion-dollar Upper East Side apartment, where he is to remain under house arrest. Last month Madoff was charged with securities fraud for allegedly directing the $50 billion scam.
Prosecutors told the judge Madoff should be jailed because he attempted to dispose of $1 million in valuables in violation of a court order freezing his assets. They also said he may flee. The judge rejected the government's arguments, saying the existing bail terms were "severe."
"The chance of Mr. Madoff fleeing at this point is as close to nil as you can get," U.S. District Judge Lawrence McKenna said in rejecting the request. "The freeze on the assets has made it close to impossible for the defendant to dispose of anything valuable."
Madoff, 70, confessed that he used new money to pay old investors, the government said. The investment adviser, who faces as much as 20 years in prison if convicted, hasn't formally responded to the charges. He appeared at the courthouse Wednesday wearing a bulletproof vest under a black overcoat.
On Jan. 12, a magistrate judge in Manhattan allowed him to remain free, prompting an appeal. That judge had ordered Madoff to inventory his Manhattan apartment, and on Wednesday, McKenna said he would also have to inventory the contents of homes in Palm Beach, Fla., and Montauk, N.Y.
That "makes it close to impossible to dispose of his property," McKenna said.
Madoff sat silently at the defense table, flanked by his lawyers. He stared straight ahead, rarely looking up at the judge or anyone in the courtroom.
Defense attorney Ira Sorkin told McKenna that the transfer of jewelry was "a desperate and futile effort" by Madoff to "reconnect" with his family.
"These had been sent out, in error, innocently, stupidly," Sorkin told McKenna. He said in a court filing earlier that the government made a "cynical decision to backtrack on its" agreement to allow Madoff to remain free on $10 million bond.
