Madoff Bail in Peril: $173 Million Scandal Puts Freedom at Risk

by Tina Kells | January 8, 2009 at 11:41 am

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With the world in the midst of a serious economic crisis the news that long time Wall Street fixture, and former head of the NASDAQ, Bernie Madoff had scammed investors our of more than $50 billion in an elaborate decades old Ponzi scheme was front page news.

Madoff was arrested on December 11, 2008 by the FBI after a long investigation had exposed the Ponzi scheme and has been out on bail ever since. A petition was made to revoke Madoff's bail after news broke that he had been sending inappropriate gifts to certain undisclosed individuals.

Today it has further been disclosed that shortly before his December 11 arrest Madoff had signed 100 cheques to various family members and close friends in an attempt to filter funds out of Madoff Investments coffers and in to personal accounts. The cheques totalling $173 million were seized by FBI agents from Madoff's desk at the time of his arrest.

The Madoff scheme has had international repercussions and left many people wondering how the SEC (Securities and Exchnage Commission) could have let the Ponzi scheme thrive unfettered for nearly 50 years. Allegations of corruption and improprieties have surrounded the case ever since it first broke.

This latest $173 million revelation is yet another chapter in an increasingly gloomy story of market corruption and greed. Prosecutors are asking that Madoff be remanded and that his bail be revoked, but defense lawyers are requesting house arrest in the posh Madoff penthouse on New York's Upper East Side. The court is expected to deide Madoff's fate this week.

In the filing, Assistant U.S. Attorney Marc Litt said Madoff cannot be trusted because he had long engaged in a "scheme that required the defendant to lie routinely to thousands of people and a scheme which has caused extraordinary damage to individuals, families, and institutions all over the world."

Defense lawyers say bail should not be revoked because he is not a risk to flee or a danger to community.

Investigators previously have said that Madoff had planned on distributing more than $200 million to his closest friends and family after he realized his scheme had unraveled. He also was accused of sending more than $1 million worth of jewelry to friends and family over the holidays, prompting prosecutors to ask a judge to revoke his bail.

Prosecutors say he presents "grave" economic harm to the community because of the wide range of his alleged fraud, and they cited the attempt to distribute some of his wealth in the past month as proof of the damage he can do.

"The only thing that prevented the defendant from executing his plan to dissipate those assets was his arrest by the FBI on Dec. 11," prosecutors argued.

The letter was a response to a letter Madoff's lawyers had submitted to U.S. Magistrate Judge Ronald L. Ellis on Wednesday.

The defense lawyers had noted that Madoff and his wife had offered to give up their assets, including four properties in Manhattan, Montauk, N.Y., Palm Beach, Fla. and Antibes, France, along with four boats and three cars. The U.S. properties alone were estimated to be worth more than $19 million.