The brother of a man who became an icon of financial crime said Friday he will plead guilty to criminal charges, taking his place alongside Bernard Madoff, the man behind the largest Ponzi scheme ever prosecuted in U.S. history.
Peter Madoff, 66, told a judge he is "deeply ashamed and terribly sorry." But he said he didn't know about the epic scam until his brother revealed it in December 2008, and he was in "total shock."
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.
Bernard Madoff was sentenced to 150 years in prison in 2009 for cheating thousands of people out of billions of dollars. The brothers are the only Madoff family members to face criminal charges.
Peter Madoff is agreeing to serve 10 years in prison for conspiracy and falsifying records and surrender his assets. Court papers charge him with concealing the fraud by signing off on regulatory documents claiming the business was legitimate.
"My world was destroyed" on hearing about the fraud, Madoff told the judge. "I lost everything I worked for."
The plea deal permits him to remain free pending his Oct. 4 sentencing. He was being released on $5 million bail, secured by $1 million in cash or property, pending sentencing. Prosecutors said he agreed to give up all his assets.
"Peter Madoff enabled the largest fraud in human history. He will now be jailed well into old age, and he will forfeit virtually every penny he has," U.S. Attorney Preet Bharara said.
The government has used the cooperation of six former employees and associates of the Bernard L. Madoff Investment 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. Peter Madoff ran the daily trading operation, while his brother focused on the more secretive investment advisory arm.
In his 2009 guilty plea, Bernard Madoff maintained that his brother had nothing to do with it _ and for more than three years, his brother agreed.
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.
Peter Madoff sometimes signed many weeks of compliance reports in one sitting, intentionally changing pens and ink colors to make it appear he had signed them at various times, Assistant U.S. Attorney Lisa A. Baroni told the judge Friday.
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.
Defense lawyers called the complaint "a sensationalistic attempt to lump together members of the Madoff family and create liability by association."
Peter Madoff revealed in court that he agreed to assist his brother in sending out the only money left to favored people, including friends and family.
"I was shocked and devastated but nevertheless I did as my brother had said, as I had consistently done for decades," he said.
The checks never went out.