United States v. Madoff
Citation and Court
S.D.N.Y. (2009) — plea and sentencing; no full trial
Facts
Bernard Madoff operated the largest Ponzi scheme in history through his investment advisory business, defrauding thousands of investors of an estimated $65 billion in stated account values over decades. He was arrested in December 2008 after confessing to his sons. He pleaded guilty to 11 federal felonies including securities fraud, investment adviser fraud, wire fraud, mail fraud, and money laundering.
Issue
The criminal proceedings resolved by guilty plea; the core legal issue was the scope of the fraud and the appropriate sentence.
Holding
Madoff pleaded guilty to all 11 counts without a trial. He was sentenced to 150 years in prison, the statutory maximum.
Rule / Doctrine
Ponzi schemes constitute securities fraud under 15 U.S.C. § 78j(b) and Rule 10b-5 when they involve false representations about investment returns and the misappropriation of client funds. Mail and wire fraud statutes broadly reach any scheme to defraud using the mails or electronic communications. Sentences in major fraud cases reflect the scope of harm, number of victims, and deterrence objectives under 18 U.S.C. § 3553(a).
Significance
The paradigmatic modern example of large-scale financial fraud, Ponzi scheme liability, and the interplay of securities law and criminal statutes. Frequently used in criminal law and white-collar crime courses to illustrate the breadth of federal fraud statutes and sentencing.