Legal News

With the Madoff Hearing Underway, Something to Tide You Over

By Ashby Jones

CNBC had a live ticker, counting down until 10 a.m. EDT. A breathless hush has settled over the WSJ’s offices. And the throngs are out at 500 Pearl Street. That’s right, it’s Bernie Madoff Plea Day. The “disgraced financier” (oh we love that phrase), accused of masterminding a $65 billion Ponzi scheme, is expected to plead guilty this morning to 11 counts of fraud. Click here for our preview post from yesterday afternoon.

We’ll of course have more on the situation later in the day. For now, let’s get you up to speed on the stories splashing about the Web-o-sphere this morning.

Why no conspiracy charge? It’s a question white-collar folks have been asking themselves since Tuesday, when the criminal information was revealed. According to this Bloomberg article, a conspiracy charge would have required him to say he worked with others, something Madoff has steadfastly refused to do since December, when the scandal broke.

“The information crafted by the government does not contain a conspiracy charge, and you can read what you like into that," Madoff attorney Mauro Wolfe told Bloomberg Wednesday, referring to a document listing the charges that was filed yesterday in Manhattan federal court. “The information speaks for itself.”

Experts think that’s one likely reason why the government didn’t agree to any sort of plea deal.

Gearing up for the Clawbacks: Investors who lost money with Madoff are girding for potential “clawback” suits that might be brought by the trustee in charge of liquidating Madoff’s firm. Click here for the WSJ story.

Such suits, which would seek to reclaim funds that some investors pulled out and redistribute them, are prompting some investors to protect their remaining assets by transferring them to irrevocable trusts, homes, annuities or life-insurance policies, according to attorneys.

According to Jerome Reisman, a Garden City, N.Y., lawyer who represents about a dozen Madoff investors, people are “shaking” with concern over having that money pulled back.

Do Not Pass Go: We tackled the issue of whether Madoff would be allowed to go free on bail pending his sentencing in yesterday’s post, but for another take, check out this NYT article from this morning, which reports that on the bail issue Madoff will have a tough case to make.

"There is no reason I can think of why he should remain at liberty after he pleads guilty," said Michael Shapiro, a former prosecutor for New York State whose firm is representing some of Madoff's clients. "With a lifetime in prison ahead, his risk of flight increases by a factor of infinity, in my view."

Full post as published by Law Blog - WSJ.com on March 12, 2009 (boomark / email).