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Madoff Apologizes for Fraud Scheme

Bernard Madoff apologized to his family and to the victims of his multibillion-dollar fraud scheme.

The 71-year-old financier said Monday at his sentencing that he "will live with this pain, this torment, for the rest of my life."

Bernie Madoff
CNBC.com
Bernie Madoff

"I cannot offer an excuse for my behavior," Madoff said. "How do you excuse deceiving investors and 200 employees? How do you excuse lying to my sons and two brothers? How do you excuse lying to a wife who stood by me for 50 years and still stands by me? There is no excuse for that. I made a terrible mistake."

He went on to say he left a legacy of shame for his family.

Victims who lost millions of dollars earlier urged a stiff 150-year sentence for the former Nasdaq stock market chairman.

Madoff has pleaded guilty to securities fraud and other charges in March and has been jailed ever since. Victims who lost millions of dollars in the multibillion-dollar fraud perpetrated by Bernard Madoff described their ruined lives Monday to the judge sentencing the former Nasdaq stock market chairman.

Madoff, wearing a dark suit, white shirt and a tie, sat with his hands in his lap, his head down and his back to his victims, as he listened to nine emotional witnesses describe how he spoiled their security, and they urged U.S. District Judge Denny Chin to send him to prison for life.

"Commit Madoff to prison for the rest of his life," said Burt Ross, who lost $5 million. "May Satan grow a fourth mouth where Madoff can spend the rest of eternity."

Crying, Michael Schwartz said, "My trust fund wasn't for a house in the Hamptons, a yacht or Mets seats. Part of that money was for my brother who is mentally disabled ... [Madoff's] jail cell should become his coffin."

Carla Hirshhorn's family lost its entire life savings.

"Life has been a living hell," she said. "It feels like the nightmare we can't wake from."

"He stole from the rich. He stole from the poor. He stole from the in between. He had no values," said Tom Fitzmaurice. "He cheated his victims out of their money so he and his wife Ruth could live a life of luxury beyond belief."

Dominic Ambrosino called it an "indescribably heinous crime" and urged a long prison sentence so he "will know he is imprisoned in much the same way he imprisoned us and others."

He added: "In a sense, I would like somebody in the court today to tell me how long is my sentence."

Prosecutors argued in court papers Friday that federal sentencing guidelines allow the 150-year sentence. Any lesser term, they said, should at least be the equivalent of a life sentence.

Attorney Ira Sorkin said the 150 years in prison recommended by prosecutors or the 50 years recommended by the federal probation department are excessive.

"We seek neither mercy nor sympathy," Sorkin wrote. But the lawyer urged Chin to "set aside the emotion and hysteria attendant to this case" as he determines the sentence. He added that the sentencing guidelines "do not speak of vengeance and revenge."

"We represent a deeply flawed individual," Sorkin said. "We cannot be unmoved by what we heard. This is a tragedy for victims at every level."

"The sheer scale of the fraud calls for severe punishment," the prosecutors wrote.

The jailed Madoff already has taken a severe financial hit: Last week, a judge issued a preliminary $171 billion forfeiture order stripping Madoff of all his personal property, including real estate, investments, and $80 million in assets his wife Ruth had claimed were hers. The order left her with $2.5 million.

The terms require the Madoffs to sell a $7 million Manhattan apartment where Ruth Madoff still lives. An $11 million estate in Palm Beach, Fla., a $4 million home in Montauk and a $2.2 million boat will be put on the market as well.

Before Madoff became a symbol of Wall Street greed, he had earned a reputation as a trusted money manager with a Midas touch. Even as the market fluctuated, clients of his secretive investment advisory business — from Florida retirees to celebrities such as Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax — for decades enjoyed steady double-digit returns.

But late last year, Madoff made a dramatic confession: Authorities say he pulled his sons aside and told them it was "all just one big lie."

Madoff pleaded guilty in March to securities fraud and other charges, saying he was "deeply sorry and ashamed." He insisted that he acted alone, describing a separate wholesale stock-trading firm run by his sons and brother as honest and legitimate.

Aside from an accountant accused of cooking Madoff's books, no one else has been criminally charged. But the family, including his wife, and brokerage firms who recruited investors have come under intense scrutiny by the FBI, regulators and a court-appointed trustee overseeing the liquidation of Madoff's assets.

The trustee and prosecutors have sought to go after assets to compensate thousands of burned victims who have filed claims against Madoff. How much is available to pay them remains unknown, though it's expected to be only a fraction of the astronomical losses associated with the fraud.

The $171 billion forfeiture figure used by prosecutors merely mirrors the amount they estimate that, over decades, "flowed into the principal account to perpetrate the Ponzi scheme." The statements sent to investors showing their accounts were worth as much as $65 billion were fiction.

The investigation has found that in reality, Madoff never made any investments, instead using the money from new investors to pay returns to existing clients — and to finance a lavish lifestyle for his family.

In bankruptcy filings, Trustee Irving Picard say family members "used customers accounts as though they were their own," putting Madoff's maid, boat captain and house-sitter in Florida on the company payroll and paying nearly $1 million in fees at high-end golf clubs on Long Island and in Florida.

Picard has sought to reclaim ill-gotten gains by freezing Madoff's business bank accounts and selling legitimate portions of his firm. (Its season tickets for the Mets went for $38,100.) He's also sued big money managers and investors for billions of dollars, claiming they were Madoff cronies who also cashed in on the fraud.

The defendants include leading philanthropists Stanley Chais and Jeffry Picower — from whom Picard is seeking at least $5.1 billion alleged to have come out of victims' pockets — and hedge fund manager J. Ezra Merkin. All have denied any wrongdoing.