A judge allowed disgraced money manager Bernard Madoff to remain free on bail Monday, rejecting an attempt by prosecutors to send him to jail for mailing more than $1 million in jewelry to family and friends over the holidays.
The decision is sure to outrage investors who have been clamoring for Madoff to be sent to jail for allegedly carrying out the largest financial fraud in history - a scheme authorities say he has described as a Ponzi scheme.
If bail had been revoked, Madoff would have been forced from the comfort of his $7 million penthouse where he has been under house arrest and await trial living in a jail cell with nothing but bunkbeds, a sink and toilet.
Prosecutors said the gifts were grounds to have his bail revoked because what's left of Madoff's assets will have to be returned to burned investors.
But the judge was not swayed by the their arguments that Madoff represents an economic danger to the community because of the size of the fraud and his action in mailing the gifts.
Judges in bail decisions normally consider two main factors: whether the defendant is a flight risk or a danger to the community.
"The government fails to provide sufficient evidence that any potential future dissemination of Madoff's assets would rise to the level of an economic harm," Magistrate Judge Ronald L. Ellis wrote.
The decision means Madoff will be spared having spend his days and nights in a dreary Manhattan lockup that has been home to terrorists, mobsters like John Gotti and range of other criminals who have gone through the Manhattan system over the years.
The anxiously awaited bail decision does put additional restrictions on Madoff, including forcing him to come up with a list of items at his apartment and allowing a security firm to check on the items. The security company will also be allowed to search all outgoing mail from Madoff to ensure that no property has been transferred.
"It is highly suspect that a man as sophisticated as Madoff appears to be did not pause to consider the possible ramifications of this proposed course of action on his release conditions," the judge said. "Given Madoff's failing in this regard, it is appropriate that his ability to transfer property be restricted as completely as possible."
Ellis also acknowledged the widespread public interest in Madoff's bail and the case, but said that proper legal considerations must take priority.
"The issue at this stage of the criminal proceedings is not whether Madoff has been charged in perhaps the largest Ponzi scheme ever, not whether Madoff's alleged actions should result in his widespread disapprobation by the public, nor even what is appropriate punishment after conviction," the judge wrote.
"The legal issue before the court is not whether the government has carried its burden of demonstrating that no condition or combination of conditions can be set that will reasonably assure Madoff's appearance and protect the community from danger," Ellis wrote.
Deadline for indictment decision extended
In a separate decision, another magistrate signed off on an extension for the deadline to indict Madoff until Feb. 11. That means Madoff will remain free for at least another month, provided he does not violate the terms of his bail during that time.
Defense lawyer Ira Sorkin says the bail opinion "speaks for itself and we intend to comply with the judge's order." Sorkin has said the gifts were an innocent mistake and said he is neither a danger to the community nor a threat to flee.
Yusill Scribner, a spokeswoman for prosecutors, said the government had no comment on the ruling.
The judge also noted that it is quite common for defendants to be granted bail, even those charged with violent offense.
"Even for the most serious offense, more than half of all defendants are released on bail conditions, including 51 percent for violent offenses, 57 percent for property offenses and 73 percent for fraud."
In another development, a bankruptcy judge ruled that a trustee can issue subpoenas to investigate the flow of money in the investment fund run by Madoff. U.S. Bankruptcy Judge Burton Lifland gave permission to the trustee, Irving Picard, to subpoena witnesses. The trustee is overseeing the liquidation of the fund for the bankruptcy court.