With plea, Madoff’s brother will enter spotlight
Friday, June 29, 2012
NEW YORK (AP) — Peter Madoff was the quiet one.
While Bernard Madoff was the face of the investment firm that attracted rich and famous clients with too-good-to-be-true returns, his younger brother kept firmly behind the scenes.
It stayed that way even after Bernard Madoff was arrested in 2008 on charges he orchestrated the largest Ponzi scheme in history. In his 2009 guilty plea, Bernie Madoff maintained that his brother had nothing to do with it — and for more than three years, his brother stuck to the script.
“Peter Madoff is not Bernard Madoff” is how Peter’s lawyers put it when defending him against harsh accusations leveled by a trustee appointed to recover stolen assets.
The younger Madoff is scheduled to emerge from the shadows Friday and plead guilty to conspiracy charges, becoming the only other family member to admit a role in the epic scheme. He will be sentenced to 10 years in prison, a small fraction of his brother’s 150-year term. He also has agreed to forfeit his assets.
Details of how the 66-year-old multimillionaire decided to agree to a plea deal haven’t been made public. His lawyer hasn’t commented on it.
The FBI had been suspicious from the start about a man who had worked side by side with his notorious brother for more than 40 years.
Friends and business associates had described the brothers as being very close. Their offices at Bernard L. Madoff Investment Securities LLC in midtown Manhattan were a few feet from each other. Their families vacationed together.
A graduate of Fordham Law School, Peter Madoff was the firm’s top technocrat.
He was credited with creating a computer trading system for the firm in the late 1970s and early 1980s that was considered groundbreaking at the time. He ran the daily trading operation while his brother focused on the more secretive investment advisory arm.
He made a good enough living to own a $1.7 million home in Old Westbury, on Long Island, and a Palm Beach, Fla., vacation house that recently sold for $5.5 million.
When Bernie Madoff was arrested, Peter broke the news to Madoff Securities employees. And he was a co-signer on a $10 million bond that won his brother’s release.
Through attorneys, he denied any wrongdoing.
But the denial didn’t stop federal authorities from moving to freeze Peter Madoff’s assets. He agreed not to dispose of his substantial fortune and promised to curtail his personal spending as the investigation moved forward. His living expenses were capped at $10,000 a month.
The court-appointed trustee also went on the attack, accusing Peter Madoff of financing his high-end lifestyle through the fraud.
A complaint filed in bankruptcy court alleged that the Madoff investment business had transferred more than $77 million to Peter Madoff. It said that between 1993 and 2008, he was paid a total of $36 million in salary and bonuses. And it identified other income for Peter Madoff as memberships to country clubs, including Glen Oaks Club in New York and one of Donald Trump’s country clubs.
Given Madoff’s “level of financial experience and sophistication,” the trustee alleged that he either knew or should have known that he reaped gains “derived from purported transactions grounded in fraud and deception.”
The trustee also took aim at Madoff’s daughter Shana, who once worked as an in-house lawyer at the firm and has denied involvement in the scheme.
“Had Peter, as the Chief Compliance Officer, or Shana, as Compliance Counsel, done their jobs properly, the fraud might have been revealed years earlier,” the complaint said. “Either they failed completely to carry out their required supervisory/compliance roles, or they knew about the fraud but covered it up.”
Defense lawyers responded by branding the complaint “a sensationalistic attempt to lump together members of the Madoff family and create liability by association.” Their court papers claimed the scandal has “left Peter Madoff mired in litigation, and has devastated his family emotionally and financially.”
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