Peter Madoff Pleads Guilty, Faces 10 Years In Prison
NEW YORK (CBSNewYork/AP) – Peter Madoff, the younger brother of convicted Ponzi schemer Bernie Madoff, pleaded guilty Friday to charges he doctored documents that helped conceal a fraud that wiped out thousands of investors.
The 66-year-old entered the plea as part of a deal expected to result in a 10-year prison term. He had been taken into custody at his lawyer’s Midtown Manhattan office earlier in the morning.
“Peter Madoff enabled the largest fraud in human history,” U.S. Attorney Preet Bharara said in a statement. “He will now be jailed well into old age and he will forfeit virtually every penny he has. We are not yet finished calling to account everyone responsible for the epic fraud of Bernard Madoff and the epic pain of his many victims.”
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Madoff told the judge he was “deeply ashamed and terribly sorry” but that he didn’t know about the scam until his brother revealed it in December 2008.
When he learned of the fraud he said, “I was in shock and my world was destroyed. I lost everything I worked for.”
Bernard Madoff’s son, Mark, committed suicide two years after the scandal broke. His surviving son, Andrew, remains under investigation, investigative sources told CBS 2’s John Slattery. So does Peter Madoff’s daughter, Shana, who, like her father, was a compliance officer for the firm.
The government has used the cooperation of six former employees and associates at Bernard L. Madoff Investment Securities LLC to learn what went on inside the secretive business.
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Close to $20 billion vanished in the scam, the largest Ponzi scheme ever prosecuted in the U.S. The scheme left behind only a few hundred million dollars, not the $65 billion claimed in bogus financial statements.
Peter Madoff revealed in court that he agreed to assist his brother in sending out the only money left to favored people, including friends and family.
“He instructed me as to which clients should get shares of the remaining $300 million, and put friends and family ahead of the other clients,” Peter Madoff said. “I was shocked and devastated but nevertheless I did as my brother had said, as I had consistently done for decades. I knew that the conduct was wrong and I am deeply ashamed.”
The checks never went out.
“The Madoff investment empire, built on a foundation of deceit, was a house of cards that grew to skyscraper proportions. As Peter Madoff has admitted today, he was one of the chief architects,” FBI Assistant Director Janice K. Fedarcyk said in a statement.
It was three years ago to the day that Bernie Madoff was sentenced to 150 years in prison for swindling billions of dollars from thousands of investors.
In his 2009 guilty plea, Bernard Madoff admitted his investment advisory business was a sham, but insisted that his brother and two sons, who also worked for him, were in the dark about his misdeeds.
The FBI nevertheless had been suspicious from the start about the role of Peter Madoff, who had worked side by side with his scheming brother for more than 40 years.
Peter Madoff sometimes signed many weeks of compliance reports in one sitting, intentionally changing pens and ink colors to make it appear he had signed them at various times, Assistant U.S. Attorney Lisa A. Baroni told U.S. District Judge Laura Taylor Swain. She said he also arranged for his wife to have a no-show job at the company, allowing her to receive salary.
Fedarcyk said Peter Madoff played an “essential enabling role” in the scam by certifying fabricated investment results.
In 2009, Madoff victim Andrew Samuels got a court order to freeze Peter Madoff’s assets. Samuels told CBS 2 it was Peter and not Bernie who lost nearly half a million dollars in his trust fund.
“It seems they’re both pretty bad guys and it seems Bernie decided his time was up and he’d take the blame for everybody else,” Samuels said.
Peter Madoff was being released on $5 million bail, secured by $1 million in cash or property, pending his Oct. 4 sentencing. Prosecutor said Peter Madoff has agreed to give up all his assets.
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