Bernard Madoff won the latest round in his fight with prosecutors over his bail package Wednesday as a judge ruled he can remain free, brushing aside arguments by the government that the money manager needs to be in jail because he cannot be trusted.
The judge ruled prosecutors did not make a compelling argument that Madoff is a danger to the community or a flight risk — the two considerations in deciding whether to grant bail.
Madoff did not speak or show any emotion during the hearing, although he privately conferred with his lawyers on a couple occasions. He left the courthouse and returned to his $7 million Upper East Side penthouse, where he has been under house arrest and under the watch of armed guards around the clock. His outgoing mail is also being searched to ensure he doesn't try to pass along any assets that could be used to reimburse burned investors.
Defense lawyer Ira Sorkin told the judge that such extreme restrictions make it "close to impossible to dispose of anything valuable."
"I think the chances of Mr. Madoff fleeing at this point are as close to nil as you can get," he said.
The government believes he should be jailed because he sent more than $1 million in jewelry and gifts to family and friends over the holidays.
Prosecutor Marc Litt said the gifts are further proof that Madoff "cannot be trusted under any set of conditions short of detention."
But the defense said the government is using "inflammatory rhetoric and hyperbole" to make a flimsy argument, and called the gifts an innocent mistake.
Investors who lost billions to Madoff are furious that he has been allowed to remain on free on bail while being accused of such a sweeping fraud.
A magistrate judge rejected the original request that Madoff's bail be revoked on Monday, and prosecutors appealed, setting up Wednesday's hearing.
Authorities say the 70-year-old veteran money manager has confessed to running a $50 billion scam that defrauded investors worldwide, paying investors with money raised from new clients.
He has been living under guard on $10 million bail at his penthouse. But prosecutors argued he needed to be sent to jail because he cannot be trusted under any set of bail conditions after he sent more $1 million in jewelry and gifts to family and friends over the holidays.
Madoff, who has been charged with securities fraud and faces the possibility of spending the rest of his life in prison if convicted, is only allowed out of his apartment to go to court.
Madoff investors are fuming that he remains on bail and holed up in his luxurious home. But legal experts say white-collar defendants typically are granted bail pending trial as long as they are not risks of flight or dangers to the community.
Prosecutors did not initially oppose bail for Madoff after his December 11 arrest, saying in the court papers that when the alleged fraud first came to light, Madoff “had confessed” and “had indicated through counsel a willingness to assist the government in doing whatever possible to make victims whole.”
But they said they now believe jailing him is the only way to ensure that Madoff does not try to disperse more assets and cause further harm to his victims, who are trying to recover money they lost. Tighter bail restrictions on Madoff that were imposed on Monday were inadequate, they said.
Among the new restrictions was an order for Madoff to provide the government with a list of portable valuables to be checked every two weeks.
“Checking the contents of his apartment against that inventory every two weeks would only mean that the government would learn after the fact that assets had been dissipated,” the prosecutors argued in appeals papers filed late on Tuesday.
Prosecutors said the inventory check also only applied to Madoff’s Manhattan home and not his other properties, which according to court filings include homes in Long Island, New York and Palm Beach, Florida.
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