mar 1, 2009 - Madoff Pleads Guilty

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In his statement, he insists that his trading operation was legitimate and that the fraud occurred solely on his business's investment advisory side. He admits his guilt and apologizes to his victims but doesn't shed much light on how the fraud occurred:

"The essence of my scheme was that I represented to clients and prospective clients who wished to open investment advisory and investment trading accounts with me that I would invest their money in shares of common stock, options, and other securities of large well-known corporations, and upon request, would return them their profits and principal. … or many years up until I was arrested … I never invested those funds in the securities, as I had promised. Instead, those funds were deposited in a bank account at Chase Manhattan Bank. When clients wished to receive the profits they believed they had earned with me or to redeem their principal, I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds."

In the wake of Madoff's arrest and confession, lawsuits are flying against the feeder funds. Sandra Manzke is facing a lawsuit from a pension fund and other investors who allege she failed in her obligation to do due diligence. She, in turn, has sued her accountants. Ezra Merkin is being sued for allegedly concealing where his clients' money is being placed. Frank Avellino, lawyers say, misled investors. Michael Bienes has hired a lawyer though no lawsuits have yet been filed. Fairfield Greenwich has seen multiple lawsuits filed with charges ranging from gross negligence to fraud.

Meanwhile, investigators are talking to Madoff lieutenant Frank DiPascali and others, trying to get to the bottom of the operation on the 17th floor and who was in on the fraud with Madoff.

Bernard L. Madoff is scheduled to be sentenced in June 2009.

http://online.wsj.com/public/resources/documents/20090315madoffall.pdf

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