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Prosecutors hint Madoff plea deal in works

Prosecutors have filed a motion indicating that Bernard Madoff may be ready to plead guilty to a sweeping financial fraud.
/ Source: news services

Prosecutors filed a motion Friday indicating that Bernard Madoff may be ready to plead guilty to charges that he carried out one of the biggest financial frauds in history.

The U.S. Attorney's office suggested in a brief court filing that the money manager is ready to waive an indictment. Such language is often used when plea deals are near.

The timing of a possible plea deal is unclear, and no court hearings were immediately scheduled. Prosecutors have a deadline of next Friday to bring an indictment against Madoff under the speedy-trials law.

NBC's Pete Williams, citing an unnamed law enforcement official, said Madoff may plead guilty next week. The official said under the terms of the deal, Madoff will serve prison time and be required to help the government put together a full accounting of what happened.

CNBC's Scott Cohn reported that Madoff has two hearings scheduled next week. The first, on Tuesday, is to resolve a potential conflict of interest with defense attorney Ira Sorkin.

The second hearing, on Thursday, is expected to be an arraignment, Cohn reported.

The filing was the latest sign pointing toward a possible plea deal with Madoff, who has been confined to his Manhattan penthouse since his arrest in December. Madoff has never contested the allegations and recently surrendered millions of dollars in major assets, actions that typically precede plea deals.

Investigators have spent the last three months trying to untangle Madoff's complicated financial operation while attempting to return what is left of his assets to investors who lost billions. Madoff's cooperation could be key to explaining the mysteries and intricacies of his business, and also explain if others were involved in the fraud.

Daniel J. Horwitz, a Madoff defense lawyer, would only say that "we've waived the right to indictment and the case will proceed by information."

Typically, a defendant is brought before a judge, waives indictment and enters a guilty plea the same day to a charging document known as an "information." It resembles an indictment but is brought by prosecutors rather than a grand jury.

Prosecutor's spokeswoman Rebekah Carmichael declined to comment.

Matthew Fishbein, a former chief of the criminal division in the federal prosecutor's office in Manhattan who is now in private practice, said a waiver of indictment is often followed quickly by a guilty plea but it does not have to be imminent.

"This seems to be a more complicated information and more back and forth going on. It may simply be that this basically buys them some time," he said.

Madoff already has surrendered rights to his business and any of the assets held by the business. A trustee overseeing his assets said he has identified nearly $1 billion in assets that are available to reimburse investors who have lost money.

Shortly after his arrest, Madoff offered to relinquish many of his and his wife's assets, including properties in Palm Beach, Fla., and Antibes, France, as well as his boats and cars, according to a Jan. 13 court filing signed by Horwitz and Sorkin.

Meanwhile, a financial organization has sent out the first checks to reimburse Madoff victims.

Stephen Harbeck of the Securities Investor Protection Corp. tells The Associated Press that the checks were sent to two investors on Friday.

The Securities Investor Protection Corp. is an industry-funded organization that steps in when a brokerage firm fails. It has been helping process hundreds of claims by investors hoping to recoup losses.

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