Madoff Pleads Guilty, Faces 150 YearsOn Thursday morning in a packed courtroom in New York City, former Wall Street financier Bernard Madoff, now the face of greed in our distressed economy, pleaded guilty to 11 charges in what may be the biggest Ponzi scheme ever pulled. Afterward, he was immediately placed in handcuffs and led off to jail amid the applause and cheers from some 50 of the thousands of victims he swindled money from in the 13-year-long scheme that took as much as $64 billion from investors.
Madoff in his statement before U.S. District Judge Denny Chin apologized, saying he was "deeply sorry and ashamed." Madoff admitted, "When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come." Chin refused to let Madoff remain under house arrest in his Manhattan penthouse apartment, saying Madoff had the means to flee and the incentive to run.
With the guilty plea, Madoff will not be forced to name any family members or others in his company who helped him in the elaborate Ponzi scheme. It is speculated he is not cooperating with prosecutors, and he is under no obligation to give names or say where the rest of the money went.
Three investors Madoff swindled spoke at the hearing, but Madoff did not look at them, even when one tried to turn and speak to him directly.
Madoff was arrested on December 11 and immediately went from a respected investment professional and former chairman of the Nasdaq exchange to the pariah that turned up at the federal court house wearing a bulletproof vest.
The charges Madoff pleaded guilty to included fraud, perjury and money-laundering. The plea came three months after the FBI said arrested Madoff admitted to them he told his sons that the investment fund was based on nothing but a lie.
Madoff's maneuvers with the Ponzi scheme took entire fortunes away from thousands of investors, ruined charities and foundations, and two investors committed suicide after finding out about the scheme. Many of the people who Madoff swindled were Jews and Jewish charities, including Nobel Peach Prize winner and Holocaust survivor Elie Wiesel. Madoff will be held in jail until his sentencing, which is scheduled for June 16.
Record Fall In American Household Net Worth
The net worth of U.S. households fell by the largest amount in more than fifty years in the fourth quarter of 2008, says a Federal Reserve report issued on Thursday. The American household net worth dropped by a record 9 percent from the level in the third quarter of last year. This is the sixth quarterly drop in a row in net worth and exemplifies the struggles U.S. families are going through during the recession with unemployment on the rise and the values of homes and investments dropping.
Net worth is the total assets that consumers own, such as homes and checking accounts, less the liabilities such as credit card debt and mortgages. American family net worth hit an all time high of $64.3 trillion in the second quarter of 2007, but has dropped every quarter since then, and is now at $51.4 trillion, 20 percent below the 2007 peak.
Households have been hit by the recession that began in December 2007, already the longest recession in 25 years. Unemployment is also at a 25 year high at 8.1 percent.
Three-Day Charm on Wall Street
Wall Street investors continued the stock advances of the previous two days on Thursday and rallied for the third session in a row, as a better-than-expected retail sales report and GE's downgrade from a top credit rating helped buyers take advantage of lower priced stocks.
The Dow gained 240 points to move forward 3.5 percent. The S&P 500 index also gained 29 points, and Nasdaq's composite rose 54 points.
Other news that boosted investors was the announcement by General Motors that it won't have to take the $2 billion in additional federal money in March because of its cost-cutting has improved its cash position. Bank stocks were also mostly higher with Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley all up.
Late on Wednesday, mortgage lender Freddie Mac, now under federal conservatorship, reported its sixth quarterly loss and has requested another $30.8 billion of government bailout money.