U.S. judge denies request to revoke Madoff's bail-Jan 12,2009

U.S. judge denies request to revoke Madoff's bail
By Diana B. Henriques Published: January 12, 2009

NEW YORK: A U.S. magistrate on Monday refused a government request that Bernard Madoff be jailed until he could be tried on charges of operating a $50 billion Ponzi scheme, saying that the government had not proved that he was a flight risk or a security risk.

The ruling, by Magistrate Judge Ronald Ellis, allows Madoff to remain in his New York apartment, wearing an electronic monitor and being watched around the clock by a security team paid for by his wife.

Prosecutors had asked the court to revoke Madoff's $10 million bail, secured by various family homes held in his wife's name, after he violated a court-ordered asset freeze by mailing out roughly $1 million in expensive watches and jewelry to family and friends on Christmas Eve.

"The decision speaks for itself, and we intend to comply with all the conditions of his bail," Ira Lee Sorkin, a lawyer for Madoff, said after the ruling was released. "But we have no comment with respect to its impact on his day-to-day life."

The judge did place additional restrictions on the bail requirements, many of which had already been imposed by Judge Louis Stanton of U.S. District Court, who is handling the civil suit against Madoff.

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"For the government's detention application to succeed," Ellis wrote, "the court would have to find that the government has met its burden of showing - by clear and convincing evidence - that no condition or combination of conditions will reasonably assure the safety of any other person and the community; or by a preponderance of the evidence, that there is no condition or combination of conditions that would reasonably assure the 'presence of the defendant at trial if released."'

"The court finds that the government has failed to meet its burden to either ground," the ruling said.

Included in the restrictions is one that bars Madoff from transferring any assets. Madoff's wife, Ruth, must also comply with restrictions on the transfer of assets.

In addition, the ruling said Madoff must compile an inventory of all "valuable portable items" in his New York apartment and give it to the government. A security company approved by the government must check the inventory every two weeks, the judge said. Madoff and the government must agree within a week on a threshold value of the items that must be declared.

The security company will also be required to examine all outgoing mail to assure that no property has been transferred.

Madoff was charged last month with securities fraud but has remained free since posting bail.

So far, Madoff has not been indicted, but he has been charged in a criminal complaint with a single count of securities fraud. Typically, such complaints contain fewer details about the crime than a formal indictment does.

Under U.S. government court rules, Monday would have been the deadline for the prosecution to indict Madoff or submit to a preliminary hearing to explain to a judge why a formal indictment had not yet been issued. On Friday, lawyers for Madoff agreed to a 30-day extension of that deadline.

Prosecutors first went to court last week to have Madoff's bail revoked for violating its terms, one of which was a requirement not to dispose of any assets.

Prosecutors said that Madoff and his wife sent at least $1 million worth of jewelry as gifts to family members and friends. In addition, prosecutors said, Madoff had plans to transfer $200 million to $300 million of investors' money to family members and friends. When the authorities searched Madoff's office desk, they found $173 million in signed checks ready to be sent off.

The packages Madoff sent, prosecutors said, contained 13 watches, four diamond brooches, a jade necklace, two sets of cufflinks and other jewelry. Most of the sent items have been recovered.

Sorkin and Daniel Horwitz, who represent Madoff, have argued that jailing him would be unfair and wrong. In addition, they said that Madoff was too widely known at this point, and too disliked, to get very far in any effort to flee.

Madoff's lawyers characterized the jewelry he sent as "a few sentimental personal items." The couple's decision to mail it, they said, was an honest mistake.

"Mr. Madoff gathered a number of watches that he had collected over the course of years, knowing that, due to the sudden change in his circumstances, he would never have an occasion to wear these watches again. To Mr. and Mrs. Madoff, the value of these items was purely sentimental," the lawyers wrote.

In asking to revoke the bail at a hearing a week ago, Marc Litt, an assistant U.S. attorney, said: "The case against the defendant is strong and it continues to grow stronger as the government's investigation continues.
"Given the defendant's age, the length of the likely sentence, the strength of the proof against the defendant, including his confessions, these facts present a clear risk of flight."

Madoff told FBI agents last month that he had overseen a financial fraud that he estimated had cost investors as much as $50 billion, according to the criminal complaint filed in U.S. District Court in the Manhattan borough of New York. The fraud was continuing just days before Madoff confessed it to the FBI, according to a lawsuit filed by a New York company that has claimed that Madoff took $10 million from it on Dec. 5.

A government-appointed receiver has now taken over his firm. Last week, the trustee overseeing the liquidation of Madoff's firm sent 8,000 claim forms to people who may have invested with Madoff, asking them to detail what they believe they are owed.

Benjamin Weiser contributed reporting.