What to Expect from Madoff’s Hearing

by Jacob Zamansky on March 11th, 2009 at 5:13 pm : Comments 000

All reports indicate that Bernard Madoff will plead guilty tomorrow to orchestrating the largest Ponzi scheme in history. A plea bargain does not appear to be in the cards and this is a good thing because if there were any side deals or leniency of any kind, investors would be outraged.

Bernie Madoff will undoubtedly be put behind bars for, effectively, the rest of his life. I suspect about 20 years, but maybe more. The biggest question that remains is what will happen to his immediate family members and key employees of the firm. I would not count out jail time for immediate family members if they are implicated in any of the charges. Lest we forget, the wife of Andy Fastow, Enron’s CFO who pled guilty, served a year in jail as a result of the Enron scandal. Family members shouldn’t get a pass and I doubt they will if there was wrongdoing.

Though there appears to be no deal in the works, Madoff may get some leeway as to the prison in which he lives out the remainder of his life.  My guess is he’s hoping for a place closer to home and away from the most hardened criminals. But any leeway Madoff gets will surely be contingent upon any help he gives to prosecutors. He could be helpful in providing information about feeder funds and their complicity or knowledge of the fraud. Any money that can be recovered from the feeder funds to help make investors whole could help his cause as well. Madoff could also be helpful in indentifying overseas accounts which the SIPC trustee may not have found yet. I’m hopeful he will.

It’s likely that Bernie Madoff will be sent to prison tomorrow. However, that is unlikely to offer much comfort to his victims. 

But they should rest assured; Bernie Madoff will spend the rest of his life in jail. My hope is that all those involved in the largest Ponzi scheme in history be brought to justice and prosecuted. And further, that any money that can be recovered, is recovered and given back to investors who deserve it. I am confident U.S. prosecutors will do their best to accomplish this end.

Filed under Bernard Madoff, Hedge Funds, Institutional Investors, Investment Fraud
and Bernie Madoff, guilty plea, hearing, investors, plea deal