Peter Madoff Says He Was a Victim of Brother’s Ponzi Scheme
Bernard Madoff’s younger brother Peter Madoff told a judge he was a victim of the multibillion- dollar fraud at their former firm and asked to be allowed to attend his granddaughter’s bat mitzvah in January before he goes to prison.
Peter Madoff, 67, who worked for Bernard L. Madoff Investment Securities LLC four decades, pleaded guilty in June to helping his brother pull off the biggest Ponzi scheme in history. As part of an agreement with prosecutors, Peter Madoff agreed not to seek less than the maximum 10-year prison term allowed by law and to forfeit his assets up to $143 billion. He asked the court to let him attend the bat mitzvah before his prison term begins.
“In some respects this case constitutes a personal tragedy for an otherwise decent and compassionate man,” Peter Madoff’s lawyer, John R. Wing, said in a letter to the sentencing judge, U.S. District Judge Laura Taylor Swain in Manhattan. “Although a clear beneficiary of his older brother’s largess, he was also a victim of his brother’s Ponzi scheme.”
The letter, which is dated Dec. 6, was made public today.
Peter Madoff’s guilty plea to two criminal charges came three years to the day after his brother was sentenced to 150 years in prison. During his plea hearing, Peter Madoff told the court he had no knowledge of Bernard Madoff’s scheme until Dec. 9, 2008, the night his brother confessed to him that the investment business was a sham. Bernard Madoff was arrested and confessed to authorities two days later, on Dec. 11.
Peter Madoff pleaded guilty to one count of conspiracy and one count of falsifying records of a investment adviser. Both offenses carry maximum sentences of five years in prison.
Peter Madoff admitted to improperly avoiding taxes by having the firm pay many of his expenses, which he didn’t report as income. He also said he filed false reports with regulators that helped conceal the fraud. And after learning of the Ponzi scheme, Peter Madoff said he helped his brother parcel out $300 million remaining in the firm to select friends and family members.
Peter Madoff repeatedly lied and violated the trust investors put in the firm, prosecutors said. His crimes began in about 1996 and continued until December 2008 when the firm collapsed, according to the government.
Had regulators and clients known the truth about the sham compliance program, “it is possible that the fraud would have been detected years earlier and losses to the many victims would have been avoided,” prosecutors said in court papers Dec. 14.
‘World Was Shattered’
According to the letter made public today, Peter Madoff’s “world was shattered” when his brother disclosed the fraud to him.
The forfeiture order and Peter Madoff’s agreement to be barred from the securities industry mean he will “live out his days as a jobless pariah,” Wing said in the letter. His client won’t even be permitted to collect Social Security, he said.
“The only question is whether Peter will die in prison or share a few more years living with his cherished family,” Wing wrote.
Wing asked that his client be assigned to a federal prison camp in Otisville, New York, 70 miles northwest of New York City.
Bernard Madoff insulted and degraded his brother, including for his devotion to his Jewish faith, Wing said.
“Despite the abuse, Peter seemed to be blind to his brother’s flaws,” Wing said. “He loved, trusted, admired and even idolized his brother, believing him to be a trading genius.”
The youngest of three children in his family, Peter Madoff looked up to Bernard and competed with him, Wing said in the court filing. A friend said that, even as an adult, Peter Madoff viewed himself as “a little fat boy who wanted so much to please his father and his older brother.”
He graduated from Queens College and Fordham University Law School, joining his brother’s firm in 1970, Wing said. Peter and Marion had two children: Shana, who would later work for the Madoff firm, and Roger, who worked as a Bloomberg News reporter and died of leukemia in 2006.
The case is U.S. v. Madoff, 10-cr-228, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org