Bernard Madoff’s brother, Peter, has been sentenced to 10 years in prison for his role in the massive Ponzi scheme constructed at Bernard L. Madoff Investment Securities LLC, where he served as chief compliance officer and senior managing director.
The U.S. attorney’s office for the Southern District of New York announced that Peter Madoff was handed a 10 year jail term after he pled guilty to a two-count information that charged him with, among other things, conspiracy to commit securities fraud, tax fraud, mail fraud, ERISA fraud, and falsifying records of an investment adviser. Madoff pled guilty in June, and was sentenced in Manhattan federal court by U.S. District Judge Laura Taylor Swain.
He follows to prison his 74-year-old brother, who is serving a 150-year sentence after admitting he created a fraud so large decades ago that thousands of people lost $20 billion.
According to the information to which Peter Madoff pled guilty and other court filings: in his role as CCO, Madoff created false and misleading compliance documents, as well as false reports that were filed with the U.S. Securities and Exchange Commission (SEC) that stated that he had performed compliance reviews of the firm’s trading on a regular basis, when in reality, the reviews were never performed. The false statements were designed to mislead regulators, auditors, and clients, the U.S. attorney says.
Additionally, it says that he was involved with creating false and misleading statements in SEC registration filings; and that he participated in a tax fraud scheme involving the transfer of wealth within the Madoff family in ways that allowed him to avoid paying millions of dollars in required taxes.
“Peter Madoff was a gatekeeper, who was supposed to guard against fraud, but instead enabled it—facilitating his brother Bernie’s breathtaking scheme by falsifying compliance records and lying to both regulators and clients of BLMIS,” said Manhattan U.S. attorney, Preet Bharara. “The decade he will spend in prison and the disgorgement of his assets are a just result. Our efforts to hold to account anyone and everyone who played a role in this unprecedented Ponzi scheme continue.”
In addition to the prison term, Judge Swain sentenced Madoff, 67, to one year of supervised release. He was also ordered to forfeit $143.1 billion, including all of his real and personal property. This amount represents all of the investor funds paid into BLMIS from 1996—the start of Madoff’s involvement in the conspiracy—through December 2008, the U.S. attorney notes.
As part of the forfeiture, the government previously entered into a settlement with Madoff’s family that requires the forfeiture of all of the assets of his wife, daughter, and assets belonging to other family members. The surrendered assets include, among other things, several homes, a Ferrari and more than $10 million in cash and securities.
The U.S. attorney’s office also said that, in connection with the victim compensation process, this week the government filed a motion requesting that the court find restitution to be impracticable, permitting the government to distribute the assets forfeited by Peter Madoff to victims in accordance with Department of Justice regulations.
And, former head of the SEC, Richard Breeden, has now been retained to serve as special master on behalf of the Department of Justice to administer the process of compensating the victims of the Madoff fraud with the forfeited funds. As a result, the U.S. attorney’s office says it expects the victim claims process to begin shortly.
With files from Canadian Press