Madoff investors prepare for court confrontation

On Thursday, he is expected to enter a guilty plea in the multibillion-dollar fraud, setting up clash with people he is accused of cheating.

Madoff jump sign 88 248 (photo credit: Bloomberg)
Madoff jump sign 88 248
(photo credit: Bloomberg)
Bernard Madoff has yet to face the many investors he is accused of ripping off in a jaw-dropping Ponzi scheme that amounted to one of the biggest financial frauds in history. The disgraced financier has been insulated from them in his expensive Manhattan apartment, where he has been under house arrest since December. But on Thursday, he is expected to enter a guilty plea in the multibillion-dollar fraud, setting up a dramatic and highly unusual confrontation with the people he is accused of cheating. Late Friday, US District Judge Denny Chin invited victims to address the court after prosecutors submitted papers noting that crime victims have the right to be "reasonably heard at any public proceeding in the district court involving release, plea, sentencing, or any parole proceeding." Typically, victims speak at sentencing hearings, not at ones in which a guilty plea is offered. It's not clear how many of Madoff's former investors will attend the hearing. Thousands lost money, among them many charitable institutions and schools. "There will be some fireworks," said Brad Friedman, a New York lawyer representing dozens of people who lost hundreds of millions of dollars. "But it's not going to be blistering because it's a courtroom. People will stand up in a respectful but forceful manner." Authorities said Madoff told his family he had engaged in a $50 billion fraud, though they have since said investors lost far less because some of their vanished profits were fictitious from the start. The actual number is unknown at this point; some believe it's less than a still-staggering $20 billion. Before his arrest, the 70-year-old former NASDAQ market chairman told an investigator there was "no innocent explanation" and he expected to go to prison, according to a criminal complaint. There will be room at Thursday's hearing for only so many people, time for only so many accounts. It's likely plenty of investors will submit letters to the judge - potentially boxes of them. In a court filing Friday, prosecutors said anybody wishing to be heard at the hearing had to send an e-mail to the court by 10 a.m. Wednesday. A spokeswoman for the U.S. attorney's office in Manhattan declined to say Saturday how many people had already signed up to speak. It won't be the first time a once high-flying businessman will be forced to face people who blame him for ruining them. In 2006, former Enron chief executive Jeffrey Skilling was sentenced to more than 24 years in prison after the energy conglomerate collapsed, leading to the loss of thousands of jobs and billions in stock and employee pension plans. Victims let him have it. One former Enron employee called him a "a liar, a thief and a drunk, flaunting an attitude above the law." The year before, former WorldCom CEO Bernard Ebbers got an earful at his sentencing from a former employee. Ebbers was sentenced to 25 years in prison after his conviction in an $11 billion accounting fraud that brought down the telecommunications giant. "He can never repay me or the tens of thousands like me whose lives disintegrated in the blink of an eye," Henry J. Bruen said. "Where do I get my life savings back from?" Friedman said none of his clients have asked to attend next week's hearing, and he'd advise them not to go. "I just don't think it accomplishes a lot," he said. "You're not going to make him feel bad."