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New York - Bernard Madoff's younger brother pleaded guilty to criminal charges that he helped advance the multibillion-dollar Ponzi scheme but denied knowing about the epic, decades-long fraud.
Peter Madoff's guilty plea in Manhattan federal court on Friday marks the first time since Bernard Madoff himself that a family member has admitted criminal wrongdoing at the investment advisory firm.
“I truly believed that my brother was a brilliant securities trader,” Peter Madoff told U.S. District Judge Laura Taylor Swain in Manhattan.
Peter Madoff, 66, had been chief compliance officer at Bernard L. Madoff Investment Securities LLC and said Friday that he did not know the business was a sham until Bernard Madoff confessed to him in December 2008.
“I want to apologize to anyone who was harmed and to my family,” Peter Madoff said, standing at the defense table and reading for 15 minutes from typed notes, his voice breaking at times.
Peter Madoff will be sentenced on October 4, and has agreed to accept a 10-year prison term. He was also ordered to forfeit a symbolic $143.1 billion, and is expected to be released on a $5 million bond.
Bernard Madoff, 74, is serving a 150-year prison term and was ordered to forfeit $170.8 billion.
About a dozen people have been charged in connection with Madoff's Ponzi scheme, and U.S. Attorney Preet Bharara in a statement suggested that prosecutors may not be done.
“Peter Madoff enabled the largest fraud in human history,” Bharara said. “He will now be jailed well into old age, and he will forfeit virtually every penny he has. We are not yet finished calling to account everyone responsible for the epic fraud of Bernard Madoff and the epic pain of his many victims.”
Prosecutors have not said whether criminal cases are also being prepared against Bernard Madoff's son, Andrew, who was co-director of trading, or his niece, Shana, who was a compliance officer at the firm.
Five people implicated in criminal wrongdoing related to Madoff's firm have pleaded not guilty: Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O'Hara and George Perez.
Among others to have pleaded guilty is Frank DiPascali, the firm's former chief financial officer, who has been cooperating with the government since his plea nearly three years ago.
At his plea hearing, Peter Madoff admitted guilt over a series of money transfers between himself and his brother, though he claimed to have once believed they were legitimate.
He also said he lied when certifying that he had conducted a thorough review of the firm's compliance with regulations.
“I made no effort to conduct a meaningful compliance review,” he said.
The FBI called Peter Madoff one of the “chief architects” of his older brother's Ponzi scheme, which was uncovered when Bernard Madoff was arrested on December 11, 2008.
“Peter Madoff played an essential enabling role in the largest investment fraud in U.S. history,” FBI Assistant Director Janice Fedarcyk said in a statement. “He made a pretense of compliance. He was really about complicity.”
Peter Madoff was arrested at his lawyer's office on Friday morning, FBI spokesman Peter Donald said.
He still faces a lawsuit by Irving Picard, the trustee seeking money for victims of the Ponzi scheme, who has sued Peter Madoff and other family members for $255.3 million.
The trustee charges they should have detected Bernard Madoff's Ponzi scheme at the firm that operated “as if it were their family piggy bank.”
Picard also sued Andrew Madoff; the estate of son Mark, co-director of trading who committed suicide in December 2010; and Shana Madoff.
The trustee has described Peter Madoff as a savvy investor who once served as vice-chairman of the board of governors of the Financial Industry Regulatory Authority. He is seeking $90.4 million from Peter, $81.3 million from Mark Madoff's estate, $73.8 million from Andrew and $15.3 million from Shana.
Lawyers for Andrew and Shana Madoff did not immediately return calls seeking comment.
Between 1993 and 2008, Peter Madoff was paid over $36 million in salary and bonuses, Picard said, and the firm funded a lavish lifestyle that included $140,000 for a Ferrari in 1995 and a home on Manhattan's upscale Park Avenue.
Picard has estimated customers of the Madoff firm lost about $20 billion. On Monday, the U.S. Supreme Court let stand a lower court ruling on the trustee's methods for calculating losses. That decision could help Picard repay customers faster. - Reuters