NEW YORK (Reuters) –
Swindler Bernard Madoff should receive a sentence that ensures he will spend the rest of his life in prison, U.S. prosecutors argued on Friday, citing the "unique scope and duration" of his crimes.
Madoff will be sentenced on Monday after pleading guilty in March to 11 criminal charges including securities fraud, money laundering and perjury for orchestrating Wall Street's biggest investment scheme involving tens of billions of dollars.
"Madoff's crimes were of extraordinary dimensions," the prosecutors' memorandum to a Manhattan federal court judge said. "For example, the fraud loss known to date, which is greater than $13 billion, is more than 32 times the baseline level that would carry a sentence of life under the U.S. sentencing guidelines."
It said about $170 billion flowed into the principal account used by Madoff in his decades-long scheme. It said he bilked thousands of people and caused economic hardship to individuals, charities and corporations.
"A reasonable sentence in this case would be the guidelines sentence of 150 years, or alternatively, a term of years that both would assure that Madoff will remain in prison for life, and forcefully would promote general deterrence."
The government argued that the Madoff case bore no comparison to corporate frauds of recent years such as WorldCom Chief Executive Bernie Ebbers and Adelphia's John and Timothy Rigas.
Ebbers is serving 25 years and the Rigases 12 years and 17 years, respectively.
"Madoff's conduct is unique in its scope and duration," the memorandum to U.S. District Court Judge Denny Chin said.
It also cited a June 25 letter from counsel for the trustee winding down Bernard L. Madoff Investment Securities LLC saying that Madoff had not cooperated.
"Mr. Madoff has not provided meaningful cooperation or assistance to the Trustee since his arrest," the letter signed by lawyer David Sheehan said.
Madoff's lawyer, in papers submitted to the judge and made public on Tuesday, argued that a sentence of 12 years for the swindler would be sufficient. Lawyer Ira Lee Sorkin also asked the judge not to give in to the "mob vengeance" sought by those Madoff defrauded.
The government's submission cited statements sent to the court by defrauded investors, saying he "was not only responsible for wiping away the financial resources of many generations within families but also for causing profound levels of stress and emotional injury."
In its memorandum on Friday and in other court papers, prosecutors said that as of November last year, Madoff's firm issued account statements that held a total of about $65 billion when in fact he had not bought any securities on behalf of those customers.
Madoff and his wife Ruth have agreed to the sale of three of their luxury properties and other assets and valuables, according to court documents filed separately on Friday.
The properties to be sold include the couple's $7 million apartment and primary residence in Manhattan, an $11 million house in Palm Beach, Florida and a $3 million home in Montauk on New York's Long Island. The Florida property and several vessels have already been seized by the United States Marshals Service.
The case is USA v Madoff 09-213 in U.S. District Court for the Southern District of New York (Manhattan).
(Reporting by Grant McCool; Editing by Richard Chang)
NEW YORK (Reuters) –
The Nasdaq rose on Friday, on strong demand for Palm's Inc's (PALM.O) Pre smartphone, while the Dow was dragged lower by sliding oil prices and strength in some financial stocks helped cushion the S&P 500's decline.
The technology-heavy Nasdaq outperformed, helped partly by gains in Palm after it posted a narrower-than-expected loss late on Thursday and said demand was strong for its new Pre smartphone. Palm shares jumped nearly 16 percent to $16.22.
Weighing on sentiment, a jump in the savings rate suggested that the debt-burdened U.S. consumer may not drive the economy out of recession as fast as hoped.
Data showed that while consumer spending and income both rose in May as the government stimulus spread through the economy, much of the money was being stored away. Savings jumped to a record annual level of $768.8 billion, the highest level since record keeping began in 1959.
Robert Stimpson, portfolio manager at Oak Associates in Akron, Ohio, said that while he did not put too much store on the savings data alone, the trend in the United States was toward more saving and less spending.
"The U.S. markets are probably going to lag the rest of the world because we have a need to pay down debt, increase our savings rate and be better stewards of our own capital, which might lead to lower consumer spending versus the rest of the world," Stimpson said.
There was a strong surge in trade late in the session, pushing volume significantly above last year's daily average, as Russell Investments announced the final reconstitution of the widely followed Russell 3000 index(.RUA).
But the session was relatively quiet for most of the day after a busy week that included Federal Reserve Chairman Ben Bernanke's contentious appearance on Capitol Hill and the sale of a record $104 billion in U.S. Treasury debt.
The Dow Jones industrial average (.DJI) dropped 34.01 points, or 0.40 percent, to 8,438.39. The Standard & Poor's 500 Index (.SPX) fell 1.36 points, or 0.15 percent, to 918.90. But the Nasdaq Composite Index (.IXIC) gained 8.68 points, or 0.47 percent, to 1,838.22.
The Chicago Board Options Exchange Volatility Index(.VIX) or VIX, Wall Street's most popular indicator of investor anxiety, closed at 25.93, its lowest level since September 12, the Friday before Lehman Brothers went into bankruptcy.
For the week, stocks finished mixed. The Dow slid 1.19 percent and the S&P 500 fell 0.25 percent, while the Nasdaq rose 0.59 percent.
The S&P 500 has climbed as much as 40 percent since hitting a 12-year closing low in early March. But the rally has stalled in recent weeks as investors look for more signs of an economic recovery. Some analysts are expecting a significant pullback in stock prices over the summer.
"Today is a real mixed market without any significant trends," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. "Generally there is a lack of conviction about what the next direction for the market will be."
Oil settled below $70 per barrel, hitting energy bellwethers Chevron Corp (CVX.N), down 1.4 percent at $65.95, and Exxon Mobil Corp (XOM.N), off 1.2 percent at $68.05.
Goldman Sachs(GS.N) was among the financial sector's stronger stocks, up 1.6 percent at $146.74, while JPMorgan (JPM.N) added 0.9 percent to $34.45.
Analysts noted stocks were buffeted by profit taking after Thursday's 2 percent gain, as well as by end-of-quarter "window dressing." This can add volatility as portfolio managers sell stocks with big losses and buy some of the quarter's best-performing issues to help improve their returns.
Trading volume was heavy on the New York Stock Exchange, with about 2.35 billion shares changing hands, far above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 4.31 billion shares traded, sharply above last year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by 1,833 to 1,170 while on the Nasdaq, there were 1,714 advancers and just 937 decliners.
(Editing by Jan Paschal)
HOUSTON (Reuters) –
Financier Allen Stanford will remain in a Texas jail at least until Monday as a federal judge reconsiders his $500,000 bond at the urging of prosecutors who say the accused swindler is a flight risk, according to a ruling on Friday.
Stanford, who faces criminal charges for a $7 billion Ponzi scheme, arrived at the courthouse early on Friday dressed in a suit and ready to walk free after a magistrate judge set the terms of his release following a lengthy hearing on Thursday.
But federal prosecutors, who believe the billionaire is a serious flight risk, asked that Stanford's bail approval be postponed until U.S. District Judge David Hittner reviewed the matter.
Judge Hittner ordered that Stanford be held in custody at least until a hearing on Monday at 1030 CDT (11:30 a.m. EDT), where he will consider whether the magistrate's release order should be revoked.
"The evidence is clear and convincing that Allen Stanford is not a flight risk," Dick DeGuerin, Stanford's attorney said in a statement via email. "To the contrary, Allen Stanford has been spending the months since the SEC first accused him meeting with lawyers in Houston and Washington, D.C. preparing for the fight ahead of him."
On Thursday, U.S. Magistrate Judge Frances Stacy said Stanford may leave federal custody, provided he comes up with $100,000 for a cash bond, lives with his girlfriend in a Houston high-rise apartment and wears a tracking device.
Stanford, 59, pleaded not guilty to a 21-count indictment on Thursday. He has been locked up since last week when he surrendered to federal agents in Virginia.
Stanford, who appeared at Thursday's hearing in a prison-issued orange jumpsuit, was led into the courthouse by U.S. Marshals on Friday morning still shackled but smiling.
And even at his detention hearing on Thursday, the flamboyant sports patron seemed very relaxed, smiling frequently at his supporters, including his parents, estranged wife, two former girlfriends, his current girlfriend and at least four of his six children.
Paul Pelletier, a federal prosecutor, argued at the detention hearing that Stanford has the motive to flee because if convicted, he faces life in prison.
Stanford also has a "network of wealthy acquaintances" to tap for financial support and he may have access to large sums of money that the government has not been able to locate, prosecutors said.
Stanford and five others were charged last week with fraud, conspiracy and obstruction.
A 21-count indictment lays out a scheme where Stanford and others falsified records and bribed regulators who had oversight of Stanford's offshore bank in Antigua, bilking the bank's certificate of deposit customers out of $7 billion.
Stanford also faces civil fraud charges filed by the U.S. Securities and Exchange Commission. They have also accused him of a "massive" Ponzi scheme where CD proceeds were used to pay earlier investors.
(Reporting by Anna Driver in Houston, editing by Dave Zimmerman, Matthew Lewis and Carol Bishopric)