On June 29, 2009, Bernard Madoff was sentenced to 150 years in prison for orchestrating the largest ponzi scheme in American history. In handing down a sentence three times as long as the federal probation office had suggested, and more than 10 times as long as defense lawyers had requested, Federal District Judge Denny Chin described Madoff’s crimes as “extraordinarily evil”. Nine of Madoff’s victims told the Lower Manhattan Court about the damage his crimes had done to their lives. One said, “It feels like a nightmare that we can’t awake from.”
The life that will end in a prison cell began on April 29, 1938, in Queens, N.Y. Madoff’s father, Ralph, was the son of Polish immigrants and worked for many years as a plumber. Madoff’s mother, Sylvia, the daughter of Romanian and Austrian immigrants, was a housewife. Ralph and Sylvia endured many years of financial struggle before becoming involved in finance in the early 1950s. Sylvia registered as a broker-dealer in the 1960s and listed the Madoffs’ home address in Queens as the office for a company called Gibraltar Securities, which the SEC eventually closed. A tax lien on the couple’s house exceeding $13,000 also went unpaid 1956-65. It has been suggested that both the company and the loans were merely a front for Ralph’s backhanded dealings.
Bernard graduated from high school in 1956 and attended the University of Alabama for one year before transferring to Hofstra University. He married Ruth Alpern, his high school sweetheart, in 1959, a year before he earned his bachelor’s degree in political science. Ruth landed a job on the stock market in Manhattan after graduating from Queens College, while Bernard began attending at Brooklyn Law School. However, his studies were short-lived. Using $5,000 he had earned from both his summer lifeguarding job at the Silver Point Beach Club in Atlantic Beach, Long Island, and a job installing sprinkler systems, Bernard and Ruth founded Bernard L. Madoff Investment Securities.
The firm was a tremendous success. Attracting investors through word-of-mouth, its client list eventually included such celebrities as Steven Spielberg, Kevin Bacon and Kyra Sedgwick. Famous for its reliable annual returns of 10 percent or more, by the 1980s, Madoff Investment Securities handled up to 5 percent of the trading on the New York Stock Exchange. With its owner’s reputation as a successful investor growing, Madoff Investment Securities began using computer technology to develop stock quotes. It tested and helped develop the National Association of Securities Dealers Automated Quotations (NASDAQ). Madoff would later serve as president of the NASDAQ stock exchange’s board of directors. He also served on the boards of the National Association of Securities Dealers and the Securities Industry Association.
Marianne Brown, CEO of Omgeo, a firm that helps to affirm trades, described Madoff as a “statesmen in our industry.” Madoff’s firm was the sixth-largest market maker for Standard & Poor’s 500 stocks in 2008 through October, executing trades on $1.86 billion of shares. In addition, Madoff’s efforts to lower the cost of trading was credited with creating a vibrant market for small investors and leading to such firms as E-Trade, Ameritrade and Charles Schwab in the 1990s. All that success brought many luxuries, including an expansive prewar co-op on Manhattan’s Upper East Side, a waterfront home in Palm Beach and a 55-foot yacht. Madoff also found time to give back, donating $25,000 a year to the Democratic Senatorial Campaign Committee as well as races by New York Sens. Charles Schumer and Hillary Clinton and New Jersey Gov. Jon Corzine. Through the Ruth and Bernard Madoff Foundation, he was an active donor to New York philanthropies including The Doe Fund and Girls Inc.
Then it all came crashing down. On Dec. 11, 2008, Madoff was arrested and charged with criminal securities fraud. A criminal complaint filed against him in Manhattan stated that he had confessed to his two sons, both employees of his firm, that he had been running a “giant Ponzi scheme.” Four days later, a federal judge ordered the U.S. operations of Madoff’s firm to be liquidated. As more details emerged, it was revealed that Madoff’s alleged fraud had wrecked the investments of thousands of individuals, public pensions, charitable foundations and university endowments. On March 12, 2009, Madoff plead guilty to 11 criminal charges, including securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the SEC.
Appearing in court three months later for his sentencing, Madoff apologized for the harm he had caused his clients, employees and family and blamed pride that he said refused to allow him to admit his failures. “I am responsible for a great deal of suffering and pain. I understand that,” he said. I live in a tormented state now, knowing of all the pain and suffering that I have created.” At the end of his statement, he turned to face the crowd and said, “I am sorry,” then added, “I know that doesn’t help you.”
Shortly before noon on July 14, 2009, Madoff arrived at the Butner Federal Correctional Complex in North Carolina to begin serving his sentence. Federal sentencing attorney Alan Ellis said that Madoff had “hit the inmate lottery” by being assigned there and called the facility “one of the crown jewels of the federal prison system.” Madoff’s fellow inmates included Omar Abdel-Rahman, mastermind of the 1993 World Trade Center bombing, and Carmine Persico, the former head of a crime family.
In March 2010, the Bureau of Prison disputed reports that a fellow inmate had beaten Madoff at the prison. It was reported that Madoff had declared in a signed an affidavit on Dec. 24, 2009, that he had not been assaulted. A letter he sent to his daughter-in-law, Stephanie, painted a very different picture. “As you can imagine, I am quite the celebrity, and am treated like a Mafia don,” Madoff wrote. “They call me either Uncle Bernie or Mr. Madoff. I can’t walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up. It’s really quite sweet, how concerned everyone is about my well being, including the staff…It’s much safer here than walking the streets of New York.”