The brother of imprisoned financier Bernard Madoff has been sentenced to 10 years in prison for crimes committed in the shadow of his notorious sibling by a judge who said she disbelieved his claims that he did not know about the epic fraud.
Peter Madoff, 67, had agreed when he pleaded guilty in June to serve the maximum sentence allowable to the charges of conspiracy and falsifying the books and records of an investment adviser.
He follows to prison his 74-year-old brother, who is serving a 150-year sentence after admitting he created a fraud so large decades ago that thousands of people lost US$20 billion.
On Thursday (Friday, NZ time) United States District Judge Laura Taylor Swain urged Peter Madoff, of Old Westbury, Long Island, to tell the truth.
The judge said Peter Madoff, wearing a well-tailored charcoal suit, was "frankly not believable" when he claimed at his plea that he only learned of the fraud when his brother revealed it to him just before he surrendered to authorities.
Peter Madoff spoke briefly on Thursday and less emotionally than in June, saying: "I am deeply ashamed of my conduct and have tried to atone by pleading guilty and have agreed to forfeit all of my present and future assets."
He added: "I am profoundly sorry that my failures let many people down, including my loved ones."
Two investors, among 40 who wrote victim impact statements, spoke during the proceeding, each describing the financial ruins of their extended family.
Investor Michael T De Vita, 62, also called for truth, saying he believed "it to be physically impossible for a single person to carry out such a gargantuan task all by himself".
De Vita said investors had "waited four years for others to accept responsibility for this massive crime. We are still waiting for that today".
"All of this was preventable if only one person was willing to do the right thing and stop this in its tracks years ago. Peter Madoff could have been that person," he said.
Amy Luria Nissenbaum, 49, choking up at times, also complained Peter Madoff had chosen even after his plea to "turn a blind eye," saying her home was in foreclosure and some days she struggles to "clothe and feed my children".
Nissenbaum said Peter Madoff was part of his brother's fraud for more than 30 years and he should serve the same amount of time in prison.
When Swain announced Peter Madoff would not have to report to prison until February 6, Nissenbaum laughed out loud bitterly. The delay in reporting to prison will let Peter Madoff attend his granddaughter's Bat Mitzvah on January 19. He got into a BMW after he left the courthouse.
The judge noted 10 years was the maximum sentence allowed by the charges and repeatedly urged Madoff to relieve the pain of investors by revealing more about the Madoff business.
"I challenge you to be honest about all that you have done and all that you have seen. In other words, all that you know," she said.
The magnitude of the damage done by the Madoffs could not be underestimated, she said.
"Trust in financial institutions, thousands of individual lives and numerous charitable organisations have been blown apart."
Assistant US Attorney Lisa Baroni said it would have been easy for Peter Madoff to blow the whistle if he had even minimally carried out his duties.
Instead, she said, he even teamed up with his brother to distribute the remaining $300 million in the company's accounts to family, friends and favoured clients before the FBI ended that scheme by arresting his brother.
The sentencing comes four years and a week after Bernard Madoff first revealed the fraud, which occurred as the former NASDAQ chairman built a reputation for delivering unparalleled investment results, even in bad times.
The revelation came only days after the business sent out statements that made investors think their investments had grown to a total of more than $65b.
Peter Madoff said at his plea he had no idea his brother was running a massive pyramid scheme, paying off longtime investors at times with money from newer investors.
Peter Madoff, who joined his brother's firm after graduating from Fordham Law School in 1970, has been free on $5m bail after he agreed to surrender all assets. He has conceded he was paid more than $40m by the Madoff firm in the final years of the fraud.
Prior to sentencing, his lawyer, John Wing, said in a memorandum that Peter Madoff would "almost certainly live out his remaining days as a jobless pariah, in or out of prison".
He called him a victim of his loyalty to his brother, saying he had been mistreated by the sibling who was eight years older and was viewed as "the prince" by his mother.
As part of a forfeiture agreement, Madoff's wife, Marion, and daughter Shana must forfeit nearly all of their assets.
The government said those assets and assets that would be forfeited by other family members included several homes, a Ferrari and more than $10m in cash and securities. It said his wife would be left with $771,733. Besides the Madoff brothers, no other family members have been arrested.
Though Madoff had been the firm's chief compliance officer for nearly four decades, the government marked his start in the conspiracy as 1996, when he created false and misleading compliance documents and false reports for the Securities and Exchange Commission.
Since the fraud was revealed, a court-appointed trustee has reached agreements to recover approximately $9.3b and is hoping to recover another $3b over the next 18 months. About $3b has been approved for redistribution to victims through an ongoing claims process.
Besides his brother, Peter Madoff is among six who have pleaded guilty in the case, including the former finance chief, a payroll manager, an accountant, a comptroller and a securities trader.
Five others face trial next year, including Bernard Madoff's longtime secretary. All have pleaded not guilty.