Prosecution Motion To Jail Madoff Denied

Bernard Madoff remains out on bail following the denial by the court of the government’s motion to have him detained pending trial. In denying the motion of the government, the Court imposed additional conditions on Mr. Madoff’s pretrial release suggested by the defense. U.S. v. Madoff, No. 08 Mag. 2735 (S.D.N.Y. Ruling: Jan. 19, 2009).

Last week, the government requested that the court revoke Mr. Madoff’s bail and order him detained pending trial. The motion argued: (1) that there was a clear risk of flight and obstruction of justice; and (2) the current conditions of release are not sufficient to protect the safety of the community. The motion was based on claims by the government that on or about December 24, 2008, Mr. Madoff and his wife mailed packages to family and friends as “gifts” which contained jewelry and other personal property that may have a value of up to $1 million. Most of these items have been returned.

At the time the gifts were sent, Mr. Madoff had been released on a $10 million personal recognizance secured bond. The bond was secured by his apartment and properties owned by his wife and brother. The conditions of release also required Mr. Madoff to file confessions of judgment with respect to these properties, be subject to home detention 24 hours per day with electronic monitoring and have a security firm monitor the apartment on a continuous basis. Although not a condition of his bail, at the time of the actions in question Mr. Madoff was subject to a consent decree in the SEC’s civil action against him which essentially precluded the dissipation of assets.

In ruling on the government’s motion, the court began by noting that the accused is to be released on personal recognizance or an unsecured appearance bond unless that will not reasonably assure the appearance of the person or will endanger the safety of others or the community. The government can seek detention if there is a serious risk that the defendant will either flee or obstruct or attempt to obstruct justice. To support detention based on danger, the government’s proof must be clear and convincing.

Here, the government admitted during the hearing that the prior bail orders substantially diminished the risk of flight. The Court rejected the government’s claim that because those restrictions did not diminish the risk to zero that they were insufficient.

The Court also rejected the government’s claim that there was a risk of obstruction. The question in this regard is not whether Mr. Madoff’s actions can be considered obstruction “but whether there is a serious risk of obstruction in the future.” The Court found it unnecessary to address this issue because the government failed to demonstrate “that no conditions can be set to reasonably protect the community from this form of obstruction.”

In this regard, Mr. Madoff offered to add specific restrictions into the terms of his bail to satisfy the concerns raised by the government. These include an offer to incorporate the terms of the SEC injunction into the bail requirements. In addition, he offered to compile an inventory of all valuable portable items in the apartment where he is confined and to have an inventory taken every two weeks. These requirements, coupled with the earlier bail restrictions, were sufficient, the Court concluded. This is particularly true since the government failed to even address their adequacy. Accordingly, Mr. Madoff, whose counsel postponed the preliminary hearing that had been scheduled, will remain out of jail on bond pending trial.