Madoff Clan May Still Face Microscope

Early Show - madoff wife - March 10, 2009
As he awaited his eventual 150-year sentence Monday, Bernard Madoff reiterated a point he made during the investigation into his multi-billion dollar Ponzi scheme - no one in his family knew anything.

"I cannot offer you an excuse for my behavior," he said in court. "How do you excuse lying to your brother and your two sons? How do you excuse lying and deceiving a wife who stood by you for 50 years and still does?"

"I have left a legacy of shame to my family and grandchildren," he added.

But one thing he seems intent on not leaving his family is a legacy of blame.

Since Madoff's stunning admission to his sons in December that the financial empire he built was a mirage, he has insisted that he alone was responsible. He described a separate wholesale stock-trading firm run by his sons and brother as honest and legitimate.

His wife, Ruth Madoff, also claimed no knowledge of her husband's scheme, saying in a statement Monday that she felt "betrayed and confused" by his actions.

So far, those claims have been uncontested. Aside from an accountant accused of cooking Madoff's books, no one else has been criminally charged.

But the family, including wife Ruth, have come under intense scrutiny by the FBI, regulators and a court-appointed trustee overseeing the liquidation of Madoff's assets.

In bankruptcy filings, Trustee Irving Picard said family members "used customer accounts as though they were their own," putting Madoff's maid, boat captain and house-sitter in Florida on the company payroll and paying nearly $1 million in fees at high-end golf clubs on Long Island and in Florida.

Last week, a judge issued a preliminary $171 billion forfeiture order stripping Madoff of all his personal property, including real estate, investments, and $80 million in assets his wife Ruth had claimed were hers. The order left her with $2.5 million.

The terms require the Madoffs to sell a $7 million Manhattan apartment where Ruth Madoff still lives. An $11 million estate in Palm Beach, Fla., a $4 million home in Montauk and a $2.2 million boat will be put on the market as well.

Of the $2.5 million left for Ruth Madoff, some may yet be subject to Securities and Exchange Commission claims, reports the Wall Street Journal. The same report also speculates on how Ruth Madoff might adjust her opulent lifestyle to live on what amounts to around $125,000 a year.

The trustee and prosecutors have sought to go after assets to compensate thousands of burned victims who have filed claims against Madoff. How much is available to pay them remains unknown, though it's expected to be only a fraction of the astronomical losses associated with the fraud.

The $171 billion forfeiture figure used by prosecutors merely mirrors the amount they estimate that, over decades, "flowed into the principal account to perpetrate the Ponzi scheme." The statements sent to investors showing their accounts were worth as much as $65 billion were fiction.

The investigation has found that in reality, Madoff never made any investments, instead using the money from new investors to pay returns to existing clients - and to finance a lavish lifestyle for his family.

And though his confessions seek to spare them any culpability, the fate of the Madoff family is still unknown.