Peter Madoff, who admitted to assisting his infamous brother Bernie with the latter’s notorious Ponzi scheme that swindled numerous individuals and institutions out of millions of dollars, was sentenced last week to 10 years in prison. Despite pleading guilty to conspiracy and falsifying books and records, Peter Madoff had claimed that he was not aware of his brother’s fraud. His sentence was handed down by U.S. District Judge Laura Taylor Swain, after a number of victims of the Ponzi scheme testified in the Manhattan courtroom about the emotional toll they have gone through since forfeiting their life savings to the defendant’s brother. Bernard Madoff is currently serving a 150-year jail term.
Judge Swain said that the suggestion that Peter Madoff did not know about the extensive fraud being committed by his brother is “frankly not believable.” The judge advised him to cooperate with investigators still looking into the details of the case, stating, “I challenge you to be honest about all that you have done and all that you have seen.”
67-year-old Peter Madoff is now the second person to be sentenced in the massive swindle carried out at Bernard L. Madoff Investment Securities LLC, which was first revealed in December 2008. “I am deeply ashamed of my conduct and have tried to atone by pleading guilty and forfeiting all my assets,” Madoff told Judge Swain. “I am here to accept my punishment from this court.”
Swain additionally sentenced Peter Madoff to one year probation upon his release, and she approved a forfeiture order that Madoff agreed to, which will require him to surrender all of his assets, including Social Security proceeds, up to $143.1 billion. Swain approved the deal, which she termed ‘‘draconian,’’ saying it ‘‘seals Peter Madoff’s financial ruination.’’
Peter Madoff had asked the court for permission to attend his granddaughter’s bat mitzvah next month prior to the start of his jail sentence on February 6. Swain stated that she will recommend the defendant’s placement in a federal prison camp in Otisville, New York, as per his request.
Michael T. DeVita and Amy Luria Nissenbaum, who were each victimized by Bernard Madoff’s scheme, addressed the court. ‘‘I ask that you show the same degree of compassion for Peter Madoff that he showed for us — none,” DeVita said, asking the judge to set aside Madoff’s plea agreement and sentence him to more than 10 years.
“He benefited from this scam for over 30 years and he should be in prison for the same amount of time,” Nissenbaum told Judge Swain, adding her dissent to the permission given him to attend the family bat mitzvah. “I find it unacceptable that he has an opportunity to attend a family event and I feel he should go away today,” she said.
Anthony Sabino, a professor of law at St. John’s University in New York, opined that many victims of the Madoff fraud will most likely not be happy with Peter Madoff’s sentence, especially considering the 150 years his brother was given. “Ten years — it just seems to be on the low end of the scale,” Sabino mused.
In papers filed with the court, Peter Madoff’s attorney, John R. Wing, said his client was “a victim of his brother’s Ponzi scheme.” Peter Madoff’s “world was shattered” when his brother confided to him about the fraud, Wing said in the letter, which was made public this week.
Peter Madoff pleaded guilty to one count of conspiracy and one count of falsifying records of an investment adviser. Each of these offenses can earn their perpetrator a maximum of five years in prison.
Peter Madoff acknowledged that he had improperly avoided taxes by having Bernard L. Madoff Investment Securities LLC cover many of his expenses, which he did not report as income. The fraud mastermind’s brother also admitted that he had filed false reports with regulators that helped cover up the fraud. After being informed about the Ponzi scheme, Peter Madoff said he helped his brother distribute $300 million remaining in the firm to specifically chosen friends and relatives.
According to prosecutors in the case, Peter Madoff repeatedly lied and violated the trust investors had in the firm. His crimes commenced around 1996 and continued until December 2008 when the firm collapsed, according to the government.
If regulators and clients would have discovered the truth about the compliance program supervised by Peter Madoff, “it is possible that the fraud would have been detected years earlier and losses to the many victims would have been avoided,” prosecutors stated in court papers on December 14.
Federal prosecutors have obtained guilty pleas from Madoff’s former chief financial officer, Frank DiPascali, his former accountant, David Friehling, and former employees Craig Kugel, David Kugel, Enrica Cotellessa-Pitz, Irwin Lipkin and Eric Lipkin, none of whom have yet been sentenced. Former employees Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara and George Perez – all of whom have pleaded not guilty – are still awaiting charges.