Good Morning
Good Morning

Madoff victims to address court before sentencing

Survivors of the Holocaust said they wrote about their terrible experiences as a way of bearing witness to the world.

For investor Burt Ross, his decision to speak in Manhattan Federal Court tomorrow at the sentencing of swindler Bernard Madoff is motivated by a similar concern.

"I speak to bear witness," Ross, 66, of Englewood, N.J., told Newsday. "If nobody spoke, it would appear to be a victimless crime when it is anything but that."

There are thousands of victims of Madoff in what is Wall Street's largest Ponzi scheme. Hundreds of them will pack a Manhattan courtroom tomorrow to see Madoff get sentenced to what is expected to be the rest of his life in prison. Eleven, including Ross, have asked to address the court before Judge Denny Chin turns Madoff over to federal prison officials.

Ross said his statement will be powerful but not wordy and that he intends to address the issue of being Jewish in the scandal.

"These were the people in his social network and my feeling is that the overwhelming [number of] people who invested with Madoff were Jewish," Ross said.

Madoff also is Jewish.

Until 2004, only victims of violent crimes could speak at federal sentencings, said Jayne Barnard, a professor of law at The College of William and Mary who wrote a law review article which helped changed the practice to include fraud victims. "It is very empowering for victims to tell their story, very useful for the judges," Barnard said.

Said Sharon Lissauer, a model from Manhattan: "It is the only way I'm going to get closure."

Court officials are bracing for a large crowd and have reserved the palatial ninth-floor courtroom of the Second Circuit Court of Appeals. It is a room that seats about 300. Hundreds more will watch proceedings on television downstairs.

Madoff faces a 150-year maximum and while his attorney asked for a 12-year term because of his client's age, Madoff is likely to die behind prison walls.

The Wall Street wizard who once touted a net worth of close to $1 billion is also going to be penniless. Prosecutors have asked that everything Madoff owns, as well as substantial assets of his wife, Ruth, be surrendered. The money will be used to compensate the victims.

Chin will probably sign an order of forfeiture that spells out exactly what assets the Madoffs are losing. But even the hundreds of millions of dollars that will be forfeited won't cover the losses. While the last statements Madoff sent to investors in November totaled $65 billion, investigators now believe that the true losses will run from $13 billion to $21 billion.

After Madoff is taken away tomorrow, he will probably spend a week in the same cell he has called home since he pleaded guilty in March. Bureau of Prison officials will then assign him to a correctional institution.

Investors and many pundits are waiting to see whether prosecutors go after Madoff's wife and the couple's sons, Andrew and Mark. All are reportedly the subject of investigation but none has been accused of wrongdoing.

The continuing story will be the fight to recover funds, a struggle that is expected to take years. Many investors will be able to recoup up to $500,000 of their losses from the nonprofit Securities Investor Protection Corp.

But some investors have sued alleging that the way the special trustee Irving Picard is computing losses is wrong. The investors, led by lawyer and fellow investor Helen Chaitman, have in essence claimed Picard should be valuing their accounts as of the date of the last statement mailed by Madoff in November.

However, Picard insists the statements include fictitious profits and should be discounted. Any withdrawals paid out by Madoff represent money stolen from investors who never took out cash, Picard said. A bankruptcy judge's ruling will undoubtedly be appealed by the losing side.

So far, Picard has found $1.3 billion in assets and has sued to recover more than $10 billion from some high-rolling investors and hedge funds.

If Picard can recover $5 billion, that would cover anywhere from 23 cents to 38 cents on the dollar of losses.

More news