Judge lets Bernard Madoff remain free
NEW YORK -- A Manhattan judge rejected a bid to jail Bernard Madoff pending trial, ruling Monday that prosecutors hadn't showed enough proof the alleged operator of a $50 billion Ponzi scheme posed a risk of fleeing, obstructing justice or endangering the community.
But Magistrate Judge Ronald Ellis barred Madoff, 70, who sent more than $1 million in gifts to relatives and friends around the year-end holidays, from transferring any property as a new condition of his $10 million bail. The prohibition also applies to Madoff's wife, Ruth.
Ellis also ordered Madoff to give prosecutors an inventory of all valuable portable items in the $7 million apartment on Manhattan's tony Upper East Side where he remains under house arrest.
A private security firm must update the inventory every two weeks, and prosecutors and defense lawyers must agree on the items' value by next week, Ellis wrote in the 22-page ruling.
A private security firm approved by the government must search all outgoing mail to ensure that Madoff doesn't transfer any property, he ruled.
A legal burden unmet
"For the government's detention application to succeed," wrote Ellis, "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 government has failed to meet its burden as to either ground," Ellis concluded.
Acting U.S. Attorney Lev Dassin declined to comment. Madoff defense attorney Ira Lee Sorkin said, "The decision speaks for itself, and we intend to comply."
The ruling drew mixed reaction, heightening outrage among worldwide victims of what may be the largest Ponzi scheme in history, while drawing support from some legal experts.
"It is outrageous," said Bette Greenfield, 71, a Florida retiree who estimates her family trust lost $350,000 in the alleged Madoff scam. "Why should he have the comforts of living in a gorgeous place when so many others, like me, will now have to sell our homes?"
But Columbia University Law School Professor John Coffee called the ruling a "correct and courageous" decision under the Bail Reform Act, which says most defendants should be released on the least restrictive conditions that reasonably assure appearance at trial and community safety.
"Although it will puzzle the public and anger some, it does affirm the constitutional right to bail and refuse to accept new inroads on that right based on a vague claim of economic harm," he said.
Madoff was arrested Dec. 11 and charged with one count of federal securities fraud. The arrest came after he told his two sons that his investment advisory business was "basically a giant Ponzi scheme," a federal court complaint shows.
Since then, victims ranging from Hollywood moguls to colleges and universities, hedge funds and ordinary retirement savers have said they collectively lost billions of dollars to an alleged scam that enticed investors with annual returns of about 10% and abnormally few losses.
Mailings posed danger, prosecutors say
Although neither prosecutors nor pretrial services investigators initially recommended jailing Madoff, his bail conditions were tightened recently.
He's now confined to his apartment except for court hearings. He is also monitored by an electronic ankle bracelet and has video cameras focused on his apartment doors. And an armed security guard is stationed around the clock outside his building.
Federal prosecutors argued that Madoff violated his bail conditions by sending more than $1 million worth of watches, brooches and other jewelry and gifts bearing luxury brands such as Cartier and Tiffany to relatives and friends in late December.
Madoff's lawyers termed the move an innocent mistake. Authorities later recovered the items.
Prosecutors also argued that a search of Madoff's office desk turned up some 100 checks totaling roughly $173 million "ready to be sent out." They said the incident posed a community danger, showing Madoff might shift assets and reduce anything left for victims if left free.
But Sorkin and fellow defense lawyer Daniel Horwitz argued in a Jan. 7 letter to Ellis "that there are simply no legal or factual grounds that warrant Mr. Madoff's detention."
Before the bail ruling, prosecutors and defense lawyers agreed to a 30-day extension of the legal deadline to bring a criminal indictment against Madoff. A preliminary court hearing scheduled for Monday was postponed.