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Thursday, January 8, 2009

Feds Push Judge to Jail Madoff

U.S. Steps Up Efforts to Convince Court Madoff Should Be Jailed
The New York Law Journal by Mark Hamblett - January 08, 2009

A prosecutor yesterday ramped up his effort to have Bernard Madoff jailed while he awaits trial for his multi-billion dollar Ponzi scheme. Assistant U.S. Attorney Marc Litt argued that Mr. Madoff, who has been out on bail since his arrest Dec. 11, cannot be trusted with assets that could be used to compensate victims of his gigantic fraud and is a genuine risk to flee the country. Those arguments came in a letter brief to Southern District Magistrate Judge Ronald Ellis, who is being asked to revoke Mr. Madoff's bail after he and his wife Ruth mailed more than $1 million in jewelry to family and friends in late December.

Mr. Litt asked Magistrate Judge Ellis to share his broad reading of the Bail Reform Act and said the case law is on the government's side. The same claim was made by Ira Sorkin of Dickstein Shapiro, who is fighting to keep his client out of jail. Mr. Sorkin filed his own brief late yesterday saying the Bail Reform Act was never intended to apply to someone like Mr. Madoff, who, he reminded the court, was still entitled to the presumption of innocence. Mr. Litt said in his brief that several courts have gone beyond interpreting the act's provision for protecting the safety of individuals and the community as allowing pretrial detention only where a person charged with a violent crime might attack again. Those courts, he said, have adopted a more expansive reading of community safety and jailed white-collar defendants where they pose a threat of additional economic harm to their victims.

That harm, Mr. Litt wrote, is the dissipation of assets by Mr. Madoff that could be used to compensate victims of the crimes he admitted to his sons, his brother, his wife and the FBI. In late December, Mr. Madoff and his wife mailed to relatives packages of jewelry, including a diamond necklace, that had an estimated value in excess of $1 million. The jewelry has since been turned over to the government. The Bail Reform Act, 18 U.S.C. §3142(e), states that before a judge decides to jail a defendant pretrial, the judge must first find that there are no conditions that will reasonably assure the return of the defendant to court and "the safety of any other person and the community."

In making that calculation, §3142(g) requires the judge to consider the nature and circumstances of the offense, the weight of the prosecution's evidence, the history and characteristics of the defendant, and, lastly, "the nature and seriousness of the danger to any person or the community that would be posed" by the defendant's release. Mr. Litt argued at a Monday bail hearing and in his letter brief yesterday that Mr. Madoff's offense was enormous, the evidence was strong and that Mr. Madoff had spent years deceiving investors in the scheme. He also said the danger of dissipation of assets was ongoing and victims would suffer more. Mr. Sorkin contended at the Monday hearing that Mr. Litt's interpretation would gut the Bail Reform Act as to white-collar defendants. He said prosecutors could win pretrial detention merely by raising the possibility a defendant at large would be free to sap assets that should be preserved for orders of restitution or forfeiture at sentencing. "[I]f you buy into his argument, then every defendant brought before this court should be incarcerated," Mr. Sorkin told the court.

Prior Rulings

In his papers, Mr. Litt quoted from the legislative history of the Bail Reform Act, in which the Senate Judiciary Committee stated, "The Committee intends that the concern about safety be given a broader construction than merely danger of harm involving physical violence." That language has been cited by at least three district courts, Mr. Litt wrote, including the Northern District in United States v. Persaud, 2007 WL 1074906 (N.D.N.Y. April 5, 2007), which stated "economic harm qualifies as a danger" under the act. In addition, two circuits have recognized potential economic harm as a justification for detaining a defendant after conviction but prior to sentencing, the U.S. Court of Appeals for the Ninth Circuit in United States v. Reynolds, 956 F.2d 192 (1992), and the Third Circuit in United States v. Provenzano, 605 F.2d 85 (1979). Mr. Sorkin answered with some case law of his own, including United States v. Khashoggi, 717 F. Supp. 1048 (S.D.N.Y), which he said held that "pretrial detention of an enormously wealthy businessman charged with several RICO violations was not warranted." Mr. Sorkin said the reliance on the Ninth and Third Circuits was misplaced because of the difference between pretrial and post-trial detention.

"Post-conviction detention analysis is conducted under an entirely different and less lenient provision of the Bail Reform Act," he said. "In addition, the government does not cite, nor was Mr. Madoff able to locate, any controlling Second Circuit case law to support the proposition that nonviolent, pecuniary harm constitutes a 'danger to the community' sufficient to justify a revocation of release." As to the legislative history, Mr. Sorkin argued that the broader interpretation of the danger to the community factor stressed by Mr. Litt was wrong. He said the committee report "cites only two specific instances where danger or harm is not limited to physical violence" - labor corruption in union activities and drug trafficking, both instances "where physical danger lurks close by." "Neither of these instances have any bearing on the matter at hand," he said.

Diamonds, Watches

The brief filed by Mr. Litt says there were multiple packages sent by the Madoffs, including one that contained 13 watches, one diamond necklace, an emerald ring and two sets of cuff links. Two of the packages, also sent to relatives, held a diamond bracelet, diamond Cartier and Tiffany watches, diamond brooches and other jewelry. Two other packages were sent from the other apartment to Mr. Madoff's brother and a couple in Florida that Mr. Sorkin says are in the process of being returned. Mr. Litt said the mailings disobeyed "an explicit court order" not to dissipate assets issued by Southern District Judge Louis Stanton in the related civil case, SEC v. Bernard L. Madoff, 08 Civ. 10791. "The need for detention in this case is clear," Mr. Litt wrote. "The continued release of the defendant presents a danger to the community of additional economic harm and further obstruction of justice." But Mr. Sorkin said Judge Stanton's Dec. 18 order makes it "impossible" for Mr. Madoff to dissipate, assign or transfer his assets. Mr. Litt also argued the transfer of assets to third parties also constitute the "changed circumstances" that would justify a de novo review of bail conditions by Magistrate Judge Ellis.

And with more emphasis than he used at the Monday hearing, Mr. Litt in his papers said Mr. Madoff poses "a serious risk of flight." "The defendant has assets that cannot be effectively restrained, and his ties to New York have been largely severed by the loss of his New York business and his loss of status in the New York community," Mr. Litt said. "Moreover, to conduct such a long-standing and large scheme, the defendant had to deceive investors and regulators, among others, on virtually a daily basis." Mr. Sorkin countered that the conditions of Mr. Madoff's pretrial confinement in his apartment, which include "round-the-clock physical and electronic surveillance" as well as the "notoriety" of this case render his flight an impossibility. The government is expected to file a rebuttal brief today. The matter will then be in the hands of Magistrate Judge Ellis, who can either sign the order or call the parties back for another hearing before deciding. The magistrate judge has not indicated when he will decide the matter. Mark.Hamblett@incisivemedia.com

9 comments:

Anonymous said...

Doesn't that make Mrs. Madoff an accessory to a crime as well? Put them both in Jail and throw away the key..In my eyes they're already quilty.

Anonymous said...

Unfortunately,the judges protect the powerful and the wealthy.If the average joe embezzled 50,000 dollars,he/she would be incarcerated without any bail.Don`t forget,Madoff is an attorney as well.He already belongs to the exclusive club of criminals.

Anonymous said...

A NOTE TO ALL COURT EMPLOYEES

The time has come to set aside your feelings of loyalty to your employee and to rekindle your loyalty to the people of the United States of America and to the Constitution.
WE the people desperately need your help ! We need you to post the illegalities that you are witnessing each and every day in the courts in which you work.It is your duty !
The people you see losing their rights today could easily be a member of your family or yourself tomorrow.

Anonymous said...

Considering what Bernie and his associates have done to the people who invested with him and the effect his ponzi scheme has had on the economy, the question is; Why is he (and his wife) getting such privileged treatment?

Who is it that is protecting him and why?

There is obviously a hefty money trail that Bernie has easy access to that he has kept well hidden.

Anonymous said...

Madoff is going to obey the court order and not flee or dispose of assets? The court can put its faith in Madoff just like all the other suckers. Mrs. Madoff won't help him skip bail because she has promised the LI and Florida houses as collateral? She has no possibility of retaining them; they are lost, so really nothing of future value has been pledged. Maybe the magistrate needs to see some con artist movies, start with "The Sting." Would Bernie fool a magistrate; Heavens,No. Or maybe, they want Madoff to flee and all his protectors are saved.

Anonymous said...

to follow-up to post of 9:35

Just like Meaghan Cheung who is now claiming that she is a victim, it certainly wasn't the people she was supervising that she was worried about pleasing. If she thinks that anyone she was helping or protecting is going to come to her rescue, she is clueless.

The best way she can protect herself, is to help get those responsible for facilitating this fraud.

While I am certain there are many honest court employees (although I haven't met them yet), they are really the best source to expose the corrupt inside workings of the courts.

I hope they can find a way to expose what is going on and to protect themselves at the same time.

Anonymous said...

As a long time court employee, I have written multiple articles regarding the crimes of the NY Office of Court Administration on this blog and I will continue to do so daily...I have so much to reveal!

I second the plea for all employees to come forward and report everything they have knowledge of, or have witnessed in their daily observations in their court line of duty.

As a former employee...I know the horrible things that are happening constantly and are being covered up, as you feel you are protecting the judiciary by letting them slide on these many non-ethical and illegal issues.

Court employees that are willing to clean the present violent court environments, that they now have come to know as a typical and common workplace atmosphere... will reward themselves with a psychologically free and non-hostile environment, promotions based on experience and seniority and not nepotism and hackism, and internal peace and quiet that will reflect on your personal homes lives, which I know to well does not exist for many of you...today.

The employees that are now steeped in negative harassment and OCA criminal participation will be fired.... and those of you that are ethical and willing to tell the truth... will be protected and valued by the taxpayer and yourself...for once!

I cannot express to all of you capable of coming forward with the truth about OCA...how important you are and how cowardly you are not. The cowardly employees will see the punishment of there actions very soon...so be a hero and show and tell for the sake of the American Justice system and the Constitution!

Anonymous said...

I am of two minds on Madoff's bail. The sole purpose of bail is to assure the return of the accused for their date in court and they are entitled to presumption of innocence. Having said that we all know that anybody else accused of such crimes would have been denied bail outright - see Marc Drier. My own personal belief is that the prosecutors claim are weak to revoke his bail based on the public information. The prosecutor is only relying on his advantage as a prosecutor because his legal reasoning does not pass any legal analysis. The real issue is how does Madoff get bail to begin with, having been accused of such serious, wide ranging and damaging acts to individuals and both for profit and not for profit entities. Further, this man should be treated like the pariah that he is and public outrage at the accused should not limited to the OJ's and Michael Vick's of the world.

Anonymous said...

Here's why they want Madoff to disappear. Link to Madoff's contributions. Schumer and Rangel were lapping up the cash. Would Bernie sell out his protectors? Is there honor among NY lawyers? www.newsmeat.com/fec/bystate_detail.php?last=Madoff&first=Bernard

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