Madoff ordered to forfeit $171 billion

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June 27, 2009

By Tom McElroy The Salem News Sat Jun 27, 2009, 02:46 PM EDT

NEW YORK (AP) — Bernard Madoff would be stripped of all his possessions under a $171 billion forfeiture order handed down only days before prosecutors seek to put the disgraced financier away in prison for the rest of his life.

U.S. District Judge Denny Chin entered the preliminary order Friday, ruling that Madoff must give up his interests in all property, including real estate, investments, cars and boats.

The forfeiture represents the total amount that could be connected to Madoff's fraud, not the amount stolen or lost, and the order made clear that nothing prevents other departments or entities from seeking to recover additional funds.

A call to Madoff's lawyer, Ira Sorkin, after hours Friday was not immediately returned. In a court filing in March, Sorkin said the government's forfeiture demand of $177 billion was "grossly overstated — and misleading — even for a case of this magnitude."

The 71-year-old Madoff pleaded guilty in March to charges that his exclusive investment advisory business was actually a massive Ponzi scheme. Federal prosecutors say Madoff orchestrated perhaps the largest financial swindle in history.

Acting U.S. Attorney Lev Dassin, who released a copy of the order Friday night, plans to seek a 150-year prison term at Madoff's sentencing Monday. Sorkin has argued in court papers for a 12-year term.

According to Friday's order, the government also settled claims against Madoff's wife. Under the arrangement, the government obtained Ruth Madoff's interest in all property, including more than $80 million-worth that she had claimed was hers, prosecutors said. The order left her $2.5 million in assets.

The agreements strip the Madoffs of all their interest in properties belonging to them, including homes in Manhattan, Montauk, N.Y., and Palm Beach, Fla., worth a total of nearly $22 million. The Madoff's must also forfeit all insured or salable personal property contained in the homes.

Other seized assets include accounts at Cohmad Securities Corp., valued at almost $50 million, and at Wachovia Bank, valued at just over $13 million, and tens of millions of dollars in loans extended by Madoff to family, employees and friends.

The judge's order also authorized the U.S. Marshals Service to sell the Manhattan co-op, properties in Montauk and Palm Beach and certain cars and boats.

At the time of Madoff's arrest, fictitious account statements showed thousands of clients had $65 billion. But investigators say he never traded securities, and instead used money from new investors to pay returns to existing clients.

Prosecutors said the total losses, which span decades, haven't been calculated. But 1,341 accounts opened since December 1995 alone suffered losses of $13.2 billion, they said.

"The sheer scale of the fraud calls for severe punishment," the prosecutors wrote in response to the defense motion seeking lighter punishment.

Prosecutors said federal sentencing guidelines allow for the 150-year term, and any lesser sentence should still be long enough to send a forceful message and "assure that Madoff will remain in prison for life."

The government's papers quoted from letters to Chin written by victims of the scheme who are suffering severe hardships. Madoff "ruined lives," one letter said. "He deserves no mercy."

But Sorkin argued in filings that his client deserved credit for his voluntary surrender, full acceptance of responsibility and meaningful cooperation efforts.

"We seek neither mercy nor sympathy," Sorkin wrote.

He urged the judge to "set aside the emotion and hysteria attendant to this case" as he determines the sentence.

Associated Press writer Tom Hays in New York also contributed to this report.

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Madoff ordered to forfeit $171 billion

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