March 10 (Bloomberg) -- Bernard Madoff, the New York money manager accused of leading the largest Ponzi scheme in U.S. history, will plead guilty later this week to 11 criminal charges, his lawyer told a federal judge.

Madoff, 70, will admit he directed a fraud that prosecutors alleged began in the 1980s. By last November, Madoff told 4,800 investors their accounts held $64.8 billion, according to court papers filed in Manhattan federal court. Prosecutors will seek forfeiture from Madoff of as much as $170 billion. Madoff, free on $10 million bail, faces 150 years in prison.

“There is no plea agreement,” Assistant U.S. Attorney Marc Litt said at hearing today before U.S. District Judge Denny Chin.

Madoff, originally charged with a sole count of securities fraud, will plead guilty to that charge and an additional 10 counts filed today in a so-called criminal information, defense attorney Ira Sorkin said. The new charges are investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission and theft from an employee benefit plan.

Sorkin disclosed Madoff’s plans at a hearing where Madoff waived his attorney’s possible conflicts of interest in the case. The lawyer said he disagreed with the amount of loss alleged by the government, arguing that some victims received more in returns than they invested with Madoff.

At the hearing, Madoff gave brief answers to more than 50 questions posed by the judge.

“We have been unable to review a vast amount of documents, reflecting money going in and going on,” Sorkin said in court. “It’s difficult at this point to identify real victims.”

Arrested Dec. 11

Madoff was arrested Dec. 11 and charged with securities fraud for using billions of dollars from new investors to pay off old ones in a classic Ponzi scheme. Investors in Madoff’s New York-based firm, Bernard L. Madoff Investment Securities LLC, included celebrities, charities, and money managers from around the world.

Chin said at today’s proceeding that there will be only two issues at Madoff’s plea hearing scheduled for March 12 -- whether the judge will accept a guilty plea and whether Madoff will be sent to prison that day. Chin said victims who wish to speak about the jail term Madoff receives will have to wait until sentencing.

“I understand that emotions are high,” Chin said to the packed courtroom.

25-Page Filing

New details of the alleged fraud emerged in the 25-page criminal information filed today. Madoff promised returns of up to 46 percent annually and “created a broad infrastructure” at his firm to give the appearance of “a legitimate investment advisory business in which client funds were actively traded.”

Madoff’s back-office staff had “little or no prior pertinent training or experience” in the securities industry and generated phony documents showing “fictitious returns,” according to the information.

Prosecutors didn’t say whether his staff was aware of the fraud. Madoff isn’t charged with conspiracy, a charge which would necessarily mean others were involved with the scheme.

To cover his tracks, Madoff “repeatedly lied” to the SEC in written submissions and sworn testimony during questioning in 2006, according to the government. Prosecutors also said that Madoff used $250 million from his investment advisory business to finance his market-making and proprietary trading businesses.

“The filing of these charges does not end the matter,” said Acting Manhattan U.S. Attorney Lev Dassin. “Our investigation is continuing.”

Decades-Long Scheme

Madoff’s decades-long scheme unraveled in early December amid a rush of investor redemptions, the government said. On Dec. 9, he told his son Mark, who ran Madoff’s proprietary trading business, and Andrew, who was a director of that unit, that he wanted to pay bonuses two months earlier than usual, according to prosecutors.

The sons turned their father into federal authorities, according to their lawyer, Martin Flumenbaum. Neither is accused of any wrongdoing.

In a separate court filing, prosecutors said they will seek to force Madoff to forfeit more than $170 billion, representing “proceeds traceable” to the fraud. No additional explanation of the amount was provided.

“The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years,” Dassin said in a statement. “The size and scope of Mr. Madoff’s fraud are unprecedented.”

Sorkin and Madoff appeared in court today with another lawyer, Peter Chavkin. Chavkin said he may be a “potential counsel” for Madoff’s wife, Ruth, in future related litigation. Ruth Madoff also isn’t accused of any wrongdoing.

The criminal case is U.S. v. Madoff, 08-cr-00213, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net; David Voreacos in New York federal court at dvoreacos@bloomberg.net; Erik Larson in New York federal court at elarson4@bloomberg.net.

Last Updated: March 10, 2009 18:12 EDT