Peter Madoff pleaded guilty to conspiracy in Manhattan federal court three years to the day after his brother Bernard was sentenced to 150 years in prison for directing the biggest Ponzi scheme in US history.
A chief compliance officer of Bernard L. Madoff Investment Securities LLC who helped his brother run the firm for four decades, Peter Madoff, pleaded guilty today to one count of conspiracy to commit securities fraud and one count of falsifying records. He faces 10 years in prison.
"I was in shock and my world was destroyed," he said today in federal court of when his brother Bernard informed him of the fraud. "I always looked up and admired him."
Peter Madoff (66), a graduate of Fordham University Law School who began working at the Manhattan-based firm in 1965, agreed as part of his plea not to ask US District Judge Laura Taylor Swain in New York for less than a 10-year term.
"The Madoff investment empire, built on a foundation of deceit, was a house of cards that grew to skyscraper proportions," FBI assistant director Janice K. Fedarcyk said in a statement.
"Peter Madoff played an essential enabling role in the largest investment fraud in US history. He made a pretence of compliance; he was really about complicity."
Madoff also agreed to forfeit $143.1 billion, including all of his real and personal property. The forfeiture calculation is based on the total funds that passed through the Madoff firm during the fraud.
"I am deeply ashamed of my actions," Peter Madoff said in his statement to the court. "I want to apologise to anyone who was harmed and to my family. And I'm here today to take responsibility." Judge Swain accepted the plea agreement.
Peter Madoff was arrested at his lawyer's office earlier. Federal prosecutors on Wednesday revealed in a letter that Peter Madoff had been criminally charged with participating in his brother's fraud. He is the first Madoff family member to be arrested and charged.
Prosecutors have not said whether criminal cases are also being prepared against Bernard Madoff's son, Andrew, who was co-director of trading, or his niece, Shana, who was a compliance officer at the firm.
In May, Irving Picard, the trustee seeking money for victims of the Ponzi scheme, named members of Madoff's family in an expanded $255.3 million lawsuit, claiming they should have detected Bernard Madoff's Ponzi scheme at the firm that operated "as if it were their family piggy bank".
In addition to Madoff's brother Peter, Picard sued Andrew Madoff, who was co-director of trading; the estate of son Mark, co-director of trading who died by suicide in December 2010; and Shana Madoff.In the lawsuit, Picard described Peter Madoff as a savvy investor who once served as vice-chairman of the board of governors of the Financial Industry Regulatory Authority.
Picard is seeking $90.4 million from Peter, $81.3 million from Mark Madoff's estate, $73.8 million from Andrew and $15.3 million from Shana.
Lawyers for Andrew and Shana Madoff did not immediately return calls seeking comment.
Between 1993 and 2008, Peter Madoff was paid over $36 million in salary and bonuses, Picard said, and the firm funded his lavish lifestyle, including $140,000 for a Ferrari in 1995 and a home on Manhattan's upscale Park Avenue.
Bernard Madoff (74), is serving a 150-year prison sentence after pleading guilty to the Ponzi scheme in March 2009. He was ordered to forfeit $170.8 billion.
Peter Madoff is charged with one count of conspiracy to commit securities fraud and mail fraud as well as making false statements about the firm's compliance programme and investment advisory business.
He is also charged with falsifying records.
About a dozen people have now been implicated in criminal wrongdoing related to the Madoff firm.Five have pleaded not guilty: Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O'Hara and George Perez.
Frank DiPascali, the former chief financial officer often called Bernard Madoff's right-hand man, pleaded guilty in August 2009 and has been praised by prosecutors for his cooperation. He has yet to be sentenced.
Picard has estimated customers of the Madoff firm lost about $20 billion. On Monday, the US Supreme Court let stand a lower court ruling on the trustee's methods for calculating losses.
That decision could help Picard repay customers faster.
Bloomberg/Reuters