By Tomoeh Murakami Tse
Washington Post Staff Writer
Tuesday, June 30, 2009
NEW YORK, June 29 -- Bernard L. Madoff, the mastermind behind one of the biggest and longest-running financial frauds in history, on Monday was ordered to serve 150 years in prison, the maximum sentence allowed, for a scheme that has come to define the latest iteration of Wall Street greed.
The sentence far surpasses that of other recent high-profile white-collar crimes and took many noted criminal defense attorneys and former federal prosecutors by surprise. In handing down the sentence, federal District Judge Denny Chin acknowledged that any term above 25 years would be symbolic, given Madoff's advanced age of 71. Nevertheless, the judge said, it was important that the severity of the sentence serve as a deterrent to future offenders.
"The message must be sent that Mr. Madoff's crimes were extraordinarily evil," Chin said, his voice a stoic monotone.
However, several legal experts questioned whether the sentence would achieve Chin's objective. "Unfortunately, the way it works with these types of financial crimes is that for some individuals, greed is larger and more powerful than the deterrent effect," said Lilly Ann Sanchez, a former federal prosecutor who is now a white-collar criminal defense lawyer in Miami. "In these very large financial crimes . . . typically involving extremely powerful men who have all their lives been able to control and create whatever they wanted to, I do believe that there is some sense that they can go forward and do what they need to do, and, almost with impunity."
Thomas M. Durkin, a partner at the law firm Mayer Brown who is also a former federal prosecutor, said the 150-year sentence, usually reserved for perpetrators of violent and fatal crimes, is in effect a life sentence for anyone and could serve as a deterrent "if anyone thought about what they were doing before they committed the crime. . . . But the problem is most people don't."
Other major white-collar criminals have received far shorter terms. Bernard J. Ebbers, the former head of WorldCom, received a 25-year sentence in 2006 for his role in an $11 billion accounting fraud that brought down the company. Dennis L. Kozlowski, former chief executive of Tyco International, is serving a sentence of 8 1/3 to 25 years, handed down in 2006, for securities fraud and other charges.
Sholam Weiss, however, felt far sterner justice than Madoff did, getting 845 years in 2000 for his role in the collapse of National Heritage Life Insurance.
Stronger regulation and more frequent prosecutions could do more to deter white-collar crime than a few stratospheric sentences for those who get caught, said Daniel Richman, a former federal prosecutor who teaches at Columbia University. "That being said," he added, "the readiness of a court to impose the highest available punishment must have some marginal effect."
Sanchez said she was surprised that Chin had gone for the maximum sentence after Madoff pleaded guilty. Sanchez, who worked in the U.S. Attorney's Office in Washington, said she considered a variety of factors when seeking a maximum sentence, as prosecutors had done in the Madoff case. These included the long-term nature of an offense, an intent to do harm, recklessness, and the overwhelming effect on many individuals or a community.
Such factors existed in the Madoff scheme, Sanchez said, adding that there were few mitigating aspects. "At least, he pled guilty quickly and . . . didn't cost taxpayers more time and energy and resources than he would have if he had insisted on going to trial," she said.
Aside from deterrence, Chin said, the symbolism of a maximum allowable punishment was also important for victims, ranging from middle-class retirees to the wealthy to charities and academic institutions. The crime, Chin said, had left the victims "doubting our financial institutions . . . our government's ability to regulate, and, sadly, themselves."
When Chin announced his sentence, some victims who had traveled to the Lower Manhattan courtroom let out a loud cheer.
One by one, they had implored the judge to keep Madoff jailed for life, describing through tears and tremors of anger how he had forced them to take on several jobs instead of retiring, give up on paying for their children's college education, sell their homes or rely on government assistance.
"Mr. Madoff is sentenced to life as his victims are sentenced to life," Maureen Ebel, a Madoff victim and 61-year-old widow from Pennsylvania, said after the 90-minute hearing.
Madoff's attorney Ira Lee Sorkin had asked the judge for a 12-year sentence, saying that "vengeance is not the goal of punishment." Sorkin said that his client was cooperating with authorities and that Madoff had willingly given himself up when he informed his sons of his $50 billion scheme in December.
But Chin declined, saying the magnitude of the fraud was "off the charts" -- literally, as federal sentencing guidelines go up only to losses as high as $400 million. Madoff's confession came only after he knew his scheme was within days of collapse, Chin said. "I simply do not get the sense that Mr. Madoff has done all that he could or told all that he knows," he said.
Before the sentence was handed down, Madoff, dressed in a dark gray suit, white shirt and black tie, sat still as the victims spoke about 12 feet behind him. He briefly turned to face his victims while reading a prepared statement. "I'm sorry," he said. "I know that doesn't help you."
Madoff said allegations that he and his wife were unsympathetic to the victims were false. He lives in a "tormented state," and his wife "cries herself to sleep every night," he said.
Ruth Madoff, in her first public statement after the fraud unraveled, said she, too, was a victim.
"The man who committed this horrible fraud is not the man whom I have known for all these years," she said. "In the end, to say that I feel devastated for the many whom my husband has destroyed is truly inadequate."
Last Friday, Chin entered a preliminary order that would leave Madoff nothing and his wife $2.5 million. The extent of Madoff's fraud is still unclear; about $13 billion in losses have been documented, but prosecutors believe that the loss is much greater.
The Madoff case has brought regulatory agencies, in particular the Securities and Exchange Commission, under attack for failing to protect investors despite red flags. The SEC's inspector general is investigating.