Investors may speak at Madoff hearing

A person close to the case said Madoff was expected to plead guilty at a hearing to charges that he carried out a massive swindle.

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March 8, 2009 09:40
3 minute read.
Investors may speak at Madoff hearing

Bernard Madoff 248 88 . (photo credit: AP)

 
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Bernard Madoff could soon find himself in a courtroom with some of the investors he is accused of ripping off in one of the biggest financial frauds in history. A person close to the case said Friday that Madoff was expected to plead guilty at a hearing on Thursday to charges that he carried out the massive swindle. A federal judge issued an order to invite alleged victims wishing to be heard to notify the court a day earlier. Madoff, 70, is waiving his right to have a grand jury hear the government's case against him, agreeing instead to be charged directly by prosecutors, a step defendants take when they are preparing to plead guilty. Madoff could enter a guilty or not guilty plea, depending on whether he has reached a plea deal with the government. But a person close to the case, who spoke on condition of anonymity because the plea had not yet been entered, said Madoff was expected to plead guilty. Late Friday, US District Judge Denny Chin invited victims to address the court after prosecutors submitted papers noting that crime victims had the right to be "reasonably heard at any public proceeding in the district court involving release, plea, sentencing or any parole proceeding." A potential plea deal could mark an important step toward answering the vexing questions about how Madoff carried out the sweeping scheme he is accused of orchestrating, and who else may have been involved. Prosecutors say he masterminded a fraud that wiped out life savings around the world. The US attorney's office first suggested Friday that a plea was imminent when it filed a court document indicating that Madoff was ready to waive an indictment. One of Madoff's lawyers said he had already done so. A waiver of indictment is a necessary procedural step before a defendant enters a guilty plea. Prosecutors have a deadline of March 13 to bring an indictment against Madoff under the speedy-trials law. Madoff has been confined to his Manhattan penthouse since his arrest after authorities said he told his family that he had engaged in a $50 billion fraud. Authorities have since said that money lost by investors was far less than that. Madoff has never contested the allegations and recently surrendered millions of dollars in major assets, actions that typically precede plea deals. The legal developments came as a financial organization in charge of reimbursing Madoff investors said it had sent out the first checks to victims Friday, Stephen Harbeck of the Securities Investor Protection Corp. told The Associated Press. SIPC is an industry-funded organization that steps in when a brokerage firm fails and has been helping process hundreds of claims by investors hoping to recoup losses. Investors are eligible for reimbursements of up to $500,000 from the organization and have until July to file claims. Harbeck would not disclose the value of the initial reimbursement checks and did not expect that a plea deal would affect the SIPC's work. "We will go about our business regardless of what happens on the criminal side," he said. Daniel J. Horwitz, a Madoff defense lawyer, would say only, "We've waived the right to indictment, and the case will proceed by information." Typically, a defendant is brought before a judge, waives indictment and enters a guilty plea the same day to a charging document known as an "information," which resembles an indictment but is brought by prosecutors rather than a grand jury. Prosecutors' spokeswoman Rebekah Carmichael declined to comment. Matthew Fishbein, a former chief of the criminal division in the federal prosecutor's office in Manhattan who is now in private practice, said a waiver of indictment is often followed quickly by a guilty plea, but it does not have to occur immediately. Madoff has already begun relinquishing his assets, something he might not do if he planned to fight the charges. He has surrendered rights to his business and any of the assets it held. A trustee overseeing the assets said he had identified nearly $1b. that was available to reimburse investors who had lost money over the past five decades. Shortly after his arrest, Madoff offered to relinquish many of his and his wife's assets, including properties in Palm Beach and France, as well as boats and cars. Lawyers have indicated in court documents that Madoff's $7 million Manhattan penthouse and an additional $62m. in assets should not be taken from the family because they are in his wife's name and did not result from any alleged fraud.

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