Jan 12, 2009 6:55 pm US/Eastern
No Jail, Yet: Lucky Bernie Madoff Again
Disgraced Financier To Remain In $7 Million Penthouse While Awaiting Trial
NEW YORK (CBS) ―
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Bernard Madoff, 76, may have scammed the many investors who trusted him with their money out of $50 billion.
Hiroko Masuike/Getty Images
Bernard Madoff will continue to await trial from his $7 million Manhattan penthouse after a judge rejected a bid by prosecutors to have his bail revoked on charges he violated its terms by attempting to protect his assets from the investors he scammed in his infamous Ponzi scheme.
The decision is sure to further outrage investors who have been clamoring for Madoff to be sent to jail for allegedly carrying out the largest financial fraud in history. Prosecutors said the gifts were grounds to have his bail revoked because what's left of Madoff's assets will have to be returned to burned investors.
But the judge was not swayed by the prosecution's arguments that Madoff represents an economic danger to the community because of the size of the fraud and his sending of the gifts. Judges in bail decisions normally consider two main factors: whether the defendant is a flight risk or a danger to the community.
"The government fails to provide sufficient evidence that any potential future dissemination of Madoff's assets would rise to the level of an economic harm," Magistrate Judge Ronald L. Ellis wrote.
Experts say that the judge stuck to the legal basis for revoking one's bail, and not personal opinion.
"On a strictly legal basis, I think what the judge did was correct," Professor Leon Friedman of Hofstra Law School told CBS 2.
Ellis acknowledged in his ruling the widespread public interest in Madoff's bail and the case, but said that proper legal considerations must take precedence.
"The issue at this stage of the criminal proceedings is not whether Madoff has been charged in perhaps the largest Ponzi scheme ever, not whether Madoff's alleged actions should result in his widespread disapprobation by the public, nor even what is appropriate punishment after conviction," the judge wrote. "The legal issue before the court is whether the government has carried its burden of demonstsrating that no condition or combination of conditions can be set that will reasonably assure Madoff's appearance and protect the community from danger."
Friedman said he believed the government likely tried to go after Madoff because of the strong public opinion against him. "I think they're responding to the public feeling against him, that this is such a horrible thing that he did; so many innocent people who were affected," he said.
In a separate decision, another magistrate signed off on an extension for the deadline to indict Madoff until Feb. 11. That means Madoff will remain free for at least another month, provided he does not violate the terms of his bail during that time.
The anxiously awaited decision does put further restrictions on Madoff, including forcing him to come up with a list of items at his apartment and allowing a security firm to check on the items. The security company will also be allowed to search all outgoing mail from Madoff to ensure that no property has been transferred.
Defense lawyer Ira Sorkin says the "the opinion speaks for itself and we intend to comply with the judge's order." Sorkin has said the gifts were an innocent mistake and said he is neither a danger to the community nor a threat to flee.
Madoff has been confined to his lavish digs since his arrest, and was being monitored by an ankle bracelet. But prosectors claimed while out on bail, he sent $1 million worth of jewelry to friends and family as holiday gifts. Prosecutors said that the gifts were grounds to have his bail revoked because what's left of Madoff's assets will eventually be returned to burned investors.
The prosecution's argument appeared consistent with a discovery of 100 signed checks worth $173 million that Madoff was ready to send out to his closest family and friends at the time he was arrested last month. Investigators found the checks in his Midtown office.
In the court filing against Madoff, 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."
The defense says Madoff has offered to give up properties in Manhattan; Montauk, N.Y.; Palm Beach, Fla.; and Antibes, France -- along with four boats and three cars. The U.S. properties alone are valued at more than $19 million.
Litt said Madoff has attempted to distribute some of his wealth over the last month.
"The only thing that prevented the defendant from executing his plan to dissipate those assets was his arrest by the FBI on Dec. 11," Litt said.
Earlier this week the government said Madoff and his wife sent through the mail jewelry worth some $1 million, including 16 watches, some with diamonds from Tiffany and Cartier, four diamond brooches, two sets of cuff links and an emerald ring.
Madoff has posted $10 million bail, signed over three homes, and is under 24 hour house arrest. His attorney has said his clientis not a flight risk.
Madoff delivered impressive returns to investors for decades before authorities say he told his sons that it was "all just one big lie" and "basically, a giant Ponzi scheme."
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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