Disgraced Madoff is trading his penthouse for prison

NEW YORK -- Bernard Madoff was expected to awaken at 6 a.m. Friday in a federal jail that over the years has held blind Islamic terrorist Sheik Omar Abdel Rahman, reputed Bonanno crime family boss Vincent "Vinny Gorgeous" Basciano and an assortment of other criminals and suspects.

Breakfast was scheduled for 6:30 a.m. at the Metropolitan Correctional Center, the lower Manhattan lockup where Madoff, 70, was taken in handcuffs after he pleaded guilty Thursday to masterminding what may be the largest Ponzi scheme in history.

And lights out was set for 11 p.m. — unless defense attorney Ira Lee Sorkin succeeded with a scheduled federal appeals court hearing today of U.S. District Judge Denny Chin's decision to revoke Madoff's $10 million bail and order him jailed pending a June 16 sentencing at which he'll face up to 150 years behind bars.

U.S. Bureau of Prisons spokesman Scott Sussman confirmed Madoff was among prisoners at the jail just blocks from the Ground Zero site of the Sept. 11 terrorist attacks. Fellow inmates include Arthur Nadel, a Florida financier charged with bilking investors of as much as $350 million in an alleged Ponzi scheme dwarfed by the nearly $65 billion prosecutors said was reported in Madoff's records.

But Sussman said he could not disclose whether Madoff, among the most publicly reviled scam architects in memory, was being held in protective custody to shield him from other inmates.

"Housing status would be based on security needs," Sussman said.

Barring a 2nd Circuit Court of Appeals decision overruling Chin, Madoff's temporary home was likely to be a typical 7½-by-8-foot cell equipped with a sink and toilet.

The start of the disgraced financier's descent from penthouse to penitentiary came after a dramatic plea hearing in which he pronounced himself "deeply sorry" for running a massive financial scam whose thousands of victims include Nobel Peace Prize winner Elie Wiesel, retired baseball great Sandy Koufax, Hollywood star Kevin Bacon and average investors around the globe.

Financially crippled or even wiped out by the scam, charities and philanthropic organizations have been forced to shut down, and individual investors have been forced to sell their homes.

So there seemed little surprise that about 25 angry victims in the packed 24th-floor Manhattan federal courtroom applauded as Madoff was led to the jail in handcuffs. Even President Obama "is glad that swift justice will happen," White House Press Secretary Robert Gibbs said in Washington.

Besides a prison sentence likely to ensure he dies behind bars, Madoff faces billions of dollars in restitution, fines and forfeitures.

Dressed in a gray suit and lighter gray tie, Madoff stood and firmly repeated "guilty" 11 times as Chin ran through each count of the securities fraud, investment adviser fraud, mail fraud, wire fraud, money laundering, false statements and perjury charges against him.

Madoff did not agree to a plea-bargain deal, so federal prosecutors demanded that he plead guilty to all counts. In a quiet yet firm voice, he carefully claimed he acted alone as he spoke publicly about some details of the massive scam for the first time since his Dec. 11 arrest.

"I am actually grateful for this opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed," Madoff told a hushed courtroom that was crowded with attorneys, federal agents and reporters. Others watched on closed-circuit audio and video feeds in a second courtroom and a jury assembly room.

Madoff said he initially believed he would be able to end the scam quickly, but "this proved difficult, and ultimately impossible."

"As the years went by, I realized that my arrest and this day would inevitably come," he said. "I am painfully aware that I have deeply hurt many, many people, including the members of my family, my closest friends, business associates and the thousands of clients who gave me their money."

"I cannot adequately express how sorry I am for what I have done," Madoff added.

When it began

Although prosecutors charge that the scam began at least as far back as the 1980s, Madoff in court said his best "recollection" pegged its origin to the early 1990s.

Instead of investing clients' funds in stocks, options and other securities as promised, Madoff said, he put the money into a Chase Manhattan Bank account. He used that account to pay individuals, charitable organizations, pension funds, trusts and hedge funds as they requested withdrawals. He outlined a basic Ponzi scheme, in which money from new investors is used to pay earlier ones.

Madoff, who attracted eager clients with reports of eerily steady investment gains, said he "never promised a specific rate of return to any client." However, he said he realized investors expected to out-perform the stock market. So he concocted a bogus investing strategy "to falsely give the appearance to clients that I had achieved the results I believed they expected."

Madoff insisted his other firms — one for proprietary trading, one for matching stock buyers and sellers, and a third the London arm of his New York operation — were not connected to the fraud and were "legitimate, profitable and successful in all respects." Those businesses were run by Madoff's brother, two sons and other associates.

"Clearly, he seemed to be trying to shield people," from being implicated and charged, said Karl Buch, a former federal prosecutor who's now a defense lawyer at Chadbourne & Parke in New York.

At the conclusion of Madoff's allocution — a formal, in-his-own-words recounting of his crimes — Chin accepted his guilty plea and asked whether any of the approximately 25 victims in the courtroom wanted to object.

Ronnie Sue Ambrosino, who with her husband, Dominic, lost $1.6 million in life savings to Madoff, asked Chin to delay acceptance of the guilty plea.

"You have the opportunity today to find out where the money is, and who else is involved in this crime," said Ambrosino, arguing that Madoff's admissions that he'd lied under oath made his courtroom plea unreliable.

Afterward, she added that investigators should focus on Madoff's wife, Ruth, as well as the financier's other relatives. None of the relatives appeared to be in the courthouse Thursday.

Another victim, Maureen Ebel, similarly urged Chin to reject the plea, saying, "If we go to trial we have more of a chance to comprehend the global scope of this horrible crime."

Madoff did not turn to look at either woman as they spoke at the courtroom podium. Nor did he turn when George Nierenberg, the only other victimized investor who addressed the court, glared at Madoff and said, "I don't know if you had a chance to turn around and look at the victims."

Addressing the victims' objections, Assistant U.S. Attorney Marc Litt said federal investigators are continuing an intensive effort to find Madoff's assets and seek repayment for scam victims. A court trustee appointed to recover assets on behalf of Madoff's victims has so far found about $1 billion.

"Today is Step 1 in an ongoing investigation," said acting U.S. Attorney Lev Dassin in a statement after the hearing. "We are continuing to investigate the fraud and will bring additional charges against anyone, including Mr. Madoff, as warranted."

After accepting the plea, Chin heard arguments from Sorkin, who asked that Madoff remain under house arrest in his $7 million Upper East Side Manhattan apartment until sentencing. Madoff had been confined there under 24-hour guard and electronic monitoring since late December.

Sorkin stressed that Madoff "didn't attempt to flee," at any time since confessing his crimes to his sons on Dec. 10 and making a separate confession to arresting FBI agents the next day.

Several victims erupted in derisive laughter, drawing a warning from Chin, when Sorkin said Ruth Madoff had used "her own assets" to pay for the private security detail that had monitored her husband during house arrest.

Any risk of flight "is virtually nil," argued Sorkin, who noted that Madoff's assets had been frozen.

Litt moved to object, but Chin waved him off, saying, "I don't need to hear from the government. It is my intention to remand Mr. Madoff."

"He is no longer entitled to the presumption of innocence," Chin said. "The exposure is great, 150 years in prison. In light of Mr. Madoff's age, he has an incentive to flee, he has the means to flee, and thus, he presents a risk of flight."

At that, the victims joined in light applause.

Immediately afterward, Chin set Madoff's sentencing date, federal authorities moved in, cuffed Madoff's hands behind his back, and led him away.

Sorkin filed a notice of appeal on the bail ruling late Thursday afternoon, but the appeals court clerk's office said the issue would not be heard until the next day.

"I'm happy he's in jail," a smiling Ambrosino said after the plea hearing. "It's a first step."