The brother of a man who became an icon of financial crime is poised to plead guilty to criminal charges, taking his place alongside Bernard Madoff, the man behind the largest Ponzi scheme ever prosecuted in U.S. history.
The Madoffs' company was once believed to be the world's largest hedge fund. In reality, it was a fraud that ripped off thousands of high-profile clients for up to $20 billion.
The plea was to take place at same courthouse where Madoff's now-74-year-old brother was taken away in handcuffs after being condemned to 150 years in prison in 2009 for cheating thousands of people out of billions of dollars. The two are the only Madoff family members to face criminal charges.
Madoff is agreeing to serve 10 years in prison for conspiracy and falsifying records and surrender his assets. The agreement will let investigators show what they have learned about the Ponzi scheme since BernardMadoff revealed in December 2008 that his investment business was a sham.
The government has used the cooperation of six former employees and associates of the Bernard L. MadoffInvestment Securities LLC to learn what went on inside the secretive business which bogus financial statements claimed held $65 billion in assets.
Peter Madoff kept firmly behind the scenes as Bernard Madoff provided the face of the investment firm that attracted rich and famous clients with too-good-to-be-true returns.
In his 2009 guilty plea, Bernie Madoff maintained that his brother had nothing to do with it — and for more than three years, his brother agreed.
Peter Madoff's lawyer hasn't commented on the plea deal.
Peter Madoff was the firm's top technocrat. He was credited with creating a computer trading system for the firm in the late 1970s and early 1980s that was considered groundbreaking at the time. He ran the daily trading operation, while his brother focused on the more secretive investment advisory arm.
When Bernie Madoff was arrested, Peter Madoff broke the news to Madoff Securities employees. Through attorneys, he denied any wrongdoing.
But the denial didn't stop federal authorities from moving to freeze Peter Madoff's assets. He agreed not to dispose of his substantial fortune and promised to curtail his personal spending as the investigation moved forward. His living expenses were capped at $10,000 a month.
A complaint filed in bankruptcy court by a court-appointed trustee alleged that the Madoff investment business had transferred more than $77 million to Peter Madoff. It said that between 1993 and 2008, he was paid a total of $36 million in salary and bonuses.
Given Peter Madoff's "level of financial experience and sophistication," the trustee alleged that he either knew or should have known that he reaped gains "derived from purported transactions grounded in fraud and deception."
Defense lawyers called the complaint "a sensationalistic attempt to lump together members of the Madofffamily and create liability by association." Their court papers claimed the scandal has "left Peter Madoff mired in litigation, and has devastated his family emotionally and financially."