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Madoff Pleads Guilty to 11 Counts, Faces 150 Years; Madoff Victims Sound Off About Plea; Business Leaders Discuss Madoff's Crimes
Aired March 12, 2009 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: We begin with Madoff, charged with stealing billions of dollars from more than 4,000 investors. Our Allan Chernoff is in the courtroom now, waiting for Madoff to plead guilty to 11 felony counts. There is no word of a plea deal, though, and it's really not clear if Madoff will say anything to the judge who could sentence him to 150 years in prison. Or if he'll stay anything to his alleged victims.
(BEGIN VIDEO CLIP)
BENNETT GOLDWORTH, BERNIE MADOFF VICTIM: I got a call from my sister who informed me that he had been arrested, and it's turned my life inside out, upside down. Just really has changed everything. I was retired, I had moved to Florida. I was starting over, and now I've had to move back to New York, move in with a parent, at 52 years old, start over with my business. Which I had retired from. So, you know, it's really, really difficult.
(END VIDEO CLIP)
COLLINS: CNN senior legal analyst Jeffrey Toobin standing by now in New York to talk a little it more about this. Jeff, nice to see you.
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Hello, Heidi.
COLLINS: There's all these questions about whether anybody is going to get their money back, and if he is really going to get this full 150-year sentence, which is, you know, obviously very substantial. Take us through exactly if you would what's going to happen in court today.
TOOBIN: Well, the official business in court today is the formal entry of the guilty plea. And that's mostly routine, but there is one interesting question there. Most judges don't simply allow a defendant pleading guilty to say the word "guilty" and be done with it. Most judges say, OK, Mr. Madoff, tell me in your own words, what did you do?
COLLINS: Right.
TOOBIN: So we will hear for the first time Madoff describing in his own words how he did the ponzi scheme. What he did. Now, he may not say it in much detail. But he will have the opportunity to say, this is how I conducted this elaborate scheme, and he will also perhaps express some remorse about what he did.
COLLINS: OK. So we do know that now. We do know that he had - we know he had the opportunity, but whether or not he will take it, is that not still a question, or we're pretty sure he's going to say something more than just his plea?
TOOBIN: Well, he will have to say something more in his plea -
COLLINS: OK.
TOOBIN: Because most judges will not accept a guilty plea, simply under the words "guilty."
COLLINS: Got it.
TOOBIN: How much he says, that's very much up for grabs. The other big issue that's unresolved today, and this one is a really hard one, is will Judge Denny Chin revoke his bail. Because he has been out on bail.
COLLINS: Yes, people are mad about that.
TOOBIN: Because he has been out on bail since he was arrested in December . A lot of people are mad about it, and it's a very hard legal question. Because if you look at the strict legal standards, there are two questions a judge asks about bail, is the person a danger to the community, and is the person a risk of flight.
Now, frankly, at this point, Bernie Madoff is not much of a danger to the community. There is not much he could do. And frankly, he's probably not much of a risk of flight. He is sitting there with security guards, surrounded 24 hours a day. So his lawyers are going to say, you know, under the law he should stay out on bail. But a lot of people feel it's an outrage to be still out on bail. Lots of people with much less serious crimes are locked up.
COLLINS: Yes.
TOOBIN: Plus, after today, he is a convicted felon. So then should he stay out on bail? That's going to be what I'm watching today. That's the really hard question.
COLLINS: Yes, and investors are not going to get their money back, even though they found this 900 million or so, when they spread it all about these 4,000 different people and the different organizations, as well, it's probably going to be just a few bucks, if that, right?
TOOBIN: That's the real tragedy of this case, is that on - in the vast majority of cases, most of the money is just going to be gone. You know, if the investors get pennies on the dollar back, frankly, they'll be fortunate. The rule in these fraud cases is that the money is just gone.
COLLINS: Gone. Got it.
TOOBIN: And so I don't think there is some pot in a Swiss bank account they're going to find.
COLLINS: I wonder how much his penthouse is worth. Jeffrey Toobin, I'm going to get you go on that.
TOOBIN: They say $7 million, but you know the market, it's probably less than that now.
COLLINS: That's true. All right. Senior legal analysts Jeffrey Toobin, nice to see you, Jeff. Thank you.
TOOBIN: See you, Heidi.
COLLINS: A disgraced billionaire is sealing his lips. (inaudible) testify or offer any accounting in the government's fraud investigation against him. His finance officer also pleading the fifth. That's according to court documents that were filed yesterday. Stanford and his top officers are accused of an $8 billion scheme involving his bank in Antigua. Today the government is expected to ask for continued control of Stanford's company assets.
The economy. Well, you know very well it's been volatile, unpredictable and all too often even worse than expected. This morning, unfortunately more examples of that. Just a few minutes ago, we learned that a record number of people are getting unemployment benefits. The number, 5.3 million.
Just one year ago, that number was 2.8 million. Last week, we also saw a jump in people filing for benefits for the first time. And the new number on that, 654,000 was even worse than expected.
Another unexpected blow to the economy now. New numbers on home foreclosures. We have seen yet another jump. 74,000 homes were lost to bank repossessions in February. That shocked experts. They had predicted the numbers to drop last month. Those repossessions are up, a staggering 60 percent from February of 2008.
President Obama's money man is back on the hill and on the defense. This house, Treasury Secretary Timothy Geithner likely to face tough questions on bank bailouts and higher taxes. Also this hour, does this add up to trouble? One accountant's number crunching can move markets and cost you money. Lawmakers are demanding answers. We are following those two hearings and more importantly, we'll explain why you should care about them. The bottom line, this is all about your money and your investments.
Brianna Keilar is on Capitol Hill for us this morning, and Christine Romans is in New York. So let's begin with you, Christine. Lawmakers in the House are looking at the so-called practice of mark to markets. We have been hearing a lot about it, but it's really complicated. Go ahead and give us your best shot at how to explain this for the people at home.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I'm going to give you my best shot. It's complicated, and it goes to the heart of entire crisis.
COLLINS: Yes.
ROMANS: Mark to market accounting. What is it? OK, this is how we're valuing what's on the banks' books, by using mark to market accounting. Imagine you had a house. You paid $300,000 for your house, Heidi, and now that house is worth $230,000. You have to write down those losses. $70,000 is your write-down. That's because the mark to market accounting rules want you to show what that's worth right now, and what you have lost. That's what the banks are doing. They have to mark - mark to market the value of the assets they have on their books. Those derivatives instruments they don't even know what they're worth now, bad mortgages that - there is no market for them, so how do you even value them.
COLLINS: Yes. And that's what we're talking about - is the toxic assets, because somehow there has to be value placed on them.
ROMANS: Right.
COLLINS: And unfortunately, what I understand happens here is that basically, you've got a really unhealthy company who is trying to get rid of their assets, they're going bankrupt or whatever, then the companies who are strong who might be able to sell their assets at a good price have to mark them down.
ROMANS: That's absolutely right. And so you'll hear a lot from people who will say, yes, the banks and these big companies made bad decisions but now mark to market accounting is making it worse. And also like in your 401(k), your 401(k) is down 35 percent. It feels 30 years to weigh it out. So on paper you're down 30 percent, but really you're not. Because you're going to have a long time to wait it out.
Mark to market accounting doesn't allow the banks to wait it out. They have to tell you immediately what the value is, what they think the value is of these bad assets and then they get in this downward spiral, when investors see all of these bad assets then they're worried about the bank and they you know sell the stocks. So it's this vicious cycle.
One of the reasons, Heidi, the important point here, the reason why we do mark to market accounting, is because you don't want companies to be able to hide something, a bad investment and say, you know what, it's going to eventually get better, so we're going to put it over here, and because it's going to get better in 15 years, we're not going to count that. Investors, and frankly taxpayers, we need to know about those - so you're going to hear a couple hearings about this, you're going to hear people blame mark to market accounting, and you're going to hear people defend it. But it is, there is not a doubt, it is critical to how we're valuing these toxic assets on the banks' books.
COLLINS: OK. Very good. Maybe we'll have a chance to talk about it next week, too.
ROMANS: Was it clear?
COLLINS: Yes, you did a great job. Great job. Thank you, Christine.
ROMANS: You're welcome.
COLLINS: We sure do appreciate it.
Now let's go to Capitol Hill, the grilling of Timothy Geithner, the Treasury secretary is appearing before the Senate Budget Committee this hour, and congressional correspondent Brianna Keilar has more on that. So what's going on today here, Brianna?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, Heidi, you see this man right there, that is Kent Conrad, the democratic chairman of the Senate Budget committee. He is among the democrats who are going to be putting some tough questions, yes, democrats putting some tough questions to Treasury Secretary Timothy Geithner.
Today he is answering questions about President Obama's budget proposal for 2010, and not only does the president have some problems with republicans, he's got some problems with democrats. They even made it clear they're going to have to make some changes to his proposal, or there just won't be the votes, Heidi.
COLLINS: Yes, no question. One of those sticky issues in particular, though, is the whole cap and trade policy. The president outlined it in his budget for 2010. Are we going to see any action on that today?
KEILAR: Yes, and it goes like this. In you're a corporation that pollutes, refineries, power plants, under this proposal you could pollute only so much, then you have to pay to pollute. And that money, that revenue, would pay for alternate energy developments, a big thing that President Obama has touted. Some of that money would also go to help poor people pay their utility bills, which are expected to go up, because the expectation is these companies would pass those costs on to consumers.
But democrats, especially in these rural energy-producing states, say enough of that money won't be passed on to poor folks. It's going to be really hard for the consumers, Heidi.
COLLINS: All right. CNN's Brianna Keilar on Capitol Hill for us this morning. We sure do appreciate that. We've got a whole lot going on this morning. First I want to get back to the numbers, though, and take a check of the Dow Jones industrial averages. We are still to the positive. That's a good thing. Up about 28 points or so, resting just below that 7,000 mark that we have been watching so closely.
Getting your money back. Some of the big banks say they're trying to pay it back as soon as possible. But how realistic is their plan? We're going to get into that, coming up a little bit later in the hour.
Also, I want to get back to this story, some breaking news that's come into the CNN NEWSROOM now. We told you about a helicopter with 18 people aboard that crashed into the Atlantic Ocean, off the coast of Canada's island new Foundland province. It happened this morning and Halifax search and rescue says a life raft was actually seen in the water.
So Reynolds Wolf has been working on this story for us. Reynolds, obviously that is a very good sign. We hope, anyway.
REYNOLDS WOLF, CNN METEOROLOGIST: Absolutely. These were terrible conditions for a helicopter. We had gail warnings in effect in Halifax. We're going to zoom in and show viewers at home. First of all, the location of where this took place, right here on the Atlantic. You've got that current that pulls right along towards the north, strong storms often form in this area. You have less than pristine conditions. You got Halifax in this corner of the screen. The aircraft was actually taking some 18 workers out to an oil rig. I'm sure this is a normal flight for them, but in these conditions, not so much. Certainly a big danger when you have, of course, the breezy conditions. At the same time, you have just very, very cold water.
COLLINS: Hey, Reynolds?
WOLF: Water just 34 degrees. Yes, Heidi.
COLLINS: I so hate to interrupt you and I apologize, because we asked you to do that for us, to get more information. But I want to give viewers an update, because we have been following the Bernie Madoff case now for quite a while, obviously, and we have just learned that he did officially plead guilty. We have been telling you that he was going to be in court today. He pled guilty already just a few seconds ago to all 11 of the federal charges against him.
Again, he has been accused as the ponzi scheme swindler. Bernard Madoff has pleaded guilty in court today. 11 federal charges against him. We're going to keep our eye of course for you. We have our Allan Chernoff inside the courtroom. Jeffrey Toobin is also, I believe, standing by to talk a little bit more about this.
So Jeff, if you can hear me, obviously, it's official now. And now as you were telling us earlier, we wait to hear what he has to say in addition to that plea. Unfortunately, it doesn't look like Jeffrey can hear me very well. But he did tell us earlier that what happens next today in court is Bernie Madoff has a chance now to take the stand and talk a little bit about what he says went on in this ponzi scheme.
The judge will be asking him, because Jeff explained to us earlier that you don't get to go to that microphone and just plead guilty or not guilty. You have to explain yourself at least a bit. We don't know how much detail he's going to give, but we will certainly be watching for that.
And as I mentioned, our Allan Chernoff is inside that courtroom so we'll get those reports to you just as soon as they happen.
The economy sinks, and depression - desperation, I should say, soars. And conmen seem to cash in. A rundown of some of the top scams to be on guard against.
(COMMERCIAL BREAK)
ANNOUNCER: Covering the angles, uncovering the details. See for yourself in the CNN NEWSROOM.
COLLINS: Well, it is official. We are learning that Bernie Madoff - we have been telling you, he is in court today. He has officially pled guilty. We see him walking into the courtroom there. 11 felony charges, including money laundering, perjury, false filing with the SEC, and fraud. We have also been telling you this morning there is a maximum sentence here of 150 years in jail and as you well know, he is an older man.
He is 70 years old, so obviously this would pretty much translate into a life sentence, even if it's significantly less than 150 years. We understand that the judge has not yet accepted the plea. But we are following all of that for you. We have Jeffrey Toobin standing by now, our senior legal analyst and talk a little bit more about this.
So Jeff, the thing that I'm interested in is the fact that we also know there were several seats reserved for the victims in this ponzi scheme. Bernie Madoff' victims. And they will have a chance to see him, possibly tell his side of the story, at least give a little bit of information about what went on here. I just wonder, you know, how they're feeling right now.
TOOBIN: Well, you know, one of the big changes in American law, Heidi, in the past 20 years, is that victims have a great deal more say in the process than they used to.
COLLINS: Right.
TOOBIN: This really started after the Oklahoma City bombings in 1994, the victims there were very outspoken, demanded seats at the trial, and some kind of voice in the proceedings, and that's really changed how criminal law is conducted in the United States, in a significant way. It most often comes up at sentencing.
COLLINS: Right.
TOOBIN: Certainly, at Madoff's sentencing. We will hear a lot, probably all day from some of his victims. But even today, Judge Denny Chin has said he is going to allow some victims to speak on the issue of should Madoff be allowed to remain out on bail, pending his sentencing. So that is going to be a very dramatic moment, because we know there are many, many people whose financial lives have been completely ruined.
COLLINS: Yes, I mean, a lot of them really gave their life savings to this guy.
TOOBIN: And many charities turned over enormous amounts of money to Madoff. So the charities that rely on those funds have been wiped out themselves. The cascading effects of this are enormous. COLLINS: Sure. And there is also quite a bit of discussion still about whether or not he acted alone, if you will. And if there is any involvement, specifically from his own family.
TOOBIN: Well, certainly that's what the U.S. attorney and the FBI is going to be looking at going forward. His two sons were intimately involved in the business.
COLLINS: Right.
TOOBIN: His brother was intimately involved in the business. His wife had boasted that she was involved in the business. Well, they're not boasting about being involved anymore. In fact, their lawyers have said they didn't know anything about the illegal side of his activities. Well, you can be sure that the investigators are going to test those assertions, look at all the e-mails, Look at all the records of the business, see if they have evidence that these family members and others were participants.
COLLINS: Or that it would be impossible not to know by being, you know, record keepers and having access to those books.
TOOBIN: Well, but you can't build a case on, well, they must have known.
COLLINS: That's true.
TOOBIN: They have to find evidence.
COLLINS: See this is why you're the lawyer and I'm not.
TOOBIN: But they have to find evidence. Well, remember, they are going to have access to all of the electronic records, all of the paperwork, and it's hard to run a scheme like this without some sort of paper trail or electronic trail...
COLLINS: Well, exactly.
TOOBIN: Or who knew.
COLLINS: I guess that's what I'm trying to get at here. It seems to me, again, You know just looking at it from the outside, there would be a paper trail of investments being made or not being made. And with a ponzi scheme, you know, they're just kind of paying from the top, and not really investing.
TOOBIN: Exactly, and as the U.S. attorney's office said in the formal complaint, there were lots of papers generated about investments that never took place.
COLLINS: Yes.
TOOBIN: So the question is, who made the decision to say that well, we bought 100 shares of IBM when they knew they didn't buy 100 shares of IBM.
COLLINS: Exactly.
TOOBIN: That's going to be the intersection that the investigators are going to be looking at
COLLINS: OK. See? I might still go to law school. Jeffrey Toobin, sure do appreciate it.
TOOBIN: We would be happy to have you, Heidi.
COLLINS: Well, thank you.
We will continue to watch that, because I think you're absolutely right as we hear the testimony from some of the victims here, it will be extremely compelling. Jeffrey Toobin, our senior legal analyst today.
A booming business in an ailing economy, and it could come at your expense. Con artists are cashing in on all the buzz about the economic recovery package money. So we want to warn you about some of their scams. Here with some details, CNN personal finance editor Gerri Willis. Gerri, this is not good. What exactly is going on here?
GERRI WILLIS, CNN PERSONAL FIANNCE EDITOR: No. Hi there, Heidi. Well look, as soon as that stimulus bill was passed last month, scam artists went to work devising a way to part you with their money. I want to show you what they've been up to. We got this from the Better Business Bureau. Take a look at this. This is actually an ad from the web, and this says you can order what they call an easy grant solution kit. It says you can get thousands of dollars in government grants. No, not so much. It's a big scam.
What they do is take your credit card number, and they charge it, and then they charge it again and again and again. You do not want to deal with this. And it looks so right, because there is the picture of the president there, if it you go to the website.
COLLINS: Cutting and pasting, huh?
WILLIS: Yes, well if you go to the website, there is even the CNN logo.
COLLINS: Really?
WILLIS: Yes.
COLLINS: That's really not good. And there's a lot of opportunities, too I bet for these scam artists.
WILLIS: Well, right. You know, here is another scam that people are getting tripped up on, and somebody at CNN actually got this e- mail into their inbox. It says after the last annual calculations of your fiscal activity, we have determined that you are eligible to receive a tax refund under the IRS code and that amount is $189.60. It sounds so real, right?
COLLINS: Yes.
WILLIS: You look at that number like and that sounds about - I think I will get that money.
COLLINS: That's a nice dinner out. Really nice.
WILLIS: Heidi, Heidi.
COLLINS: It's a scam.
WILLIS: The IRS does not e-mail taxpayers for any reason. At all. Period. Full stop. If it you see somebody claiming to be the IRS e-mailing in your inbox, throw it away. It doesn't mean anything. They also don't talk to you by telephone. You'll know when the IRS is getting a hold of you.
COLLINS: Yes, I bet we will.
All right. So where can you go if you think you've been contacted by a scam artist? Because, you know, it makes you really mad. There is a guy who has been contacting me and told me I have $30 million coming my way. They're writing a lot.
WILLIS: And you don't believe him?
COLLINS: Yes, well, I would like to believe him.
WILLIS: Yes, I know. That's just the problem, you know, everybody is so at risk because times are so tough, and the scam artists know that. So turn them in. Go to the federal trade commissions website, ftc.gov. The FBI is a good place to go. Ic3.gov, and, of course, the Better Business Bureau.
COLLINS: OK. So what do you, just forward it, or you call them, or logistically, what do you do?
WILLIS: You can file a complaint. The BBB can actually tell you if it's something they're seeing a lot of. If it's really a scam, they'll help you navigate that, but if you want to see them in jail, if it you really want to bring the law to bear, FBI.
COLLINS: OK. All right.
WILLIS: A good place to go.
COLLINS: Very good. Gerri Willis, sure do appreciate it.
WILLIS: My pleasure.
COLLINS: And we do want to help you through this troubled economy, want to guide you a little bit and give you some more information that you can actually use to help your situation. Next week, we bring all of our resources together. Join us for "Road to Rescue," the CNN survival guide. That's next week, beginning Monday, both here on CNN and of course online at cnn.com. Some great, great tips coming your way. Buying your own he insurance is not exactly cheap. We'll tell you how to do it and show you what to avoid.
(COMMERCIAL BREAK)
COLLINS: Quickly, breaking news to tell you about here in the CNN NEWSROOM. We have learned that Bernard Madoff, who is in court today, has now officially pled guilty to 11 felony charges. Just a quick reminder here, including money laundering, perjury, false filings with the SEC and fraud. Again, just some of those charges.
Now, we are waiting for the sentence. We are also waiting to hear from some of his victims who are in that courtroom. The judge is giving them an opportunity to come to the microphones and say their piece, if you will.
In fact, we have one of them standing by for us right now outside of the courthouse. His name is Richard Friedman.
Richard, I want to give you an opportunity. I know you lost a whole lot of money in this scheme.
RICHARD FRIEDMAN, MADOFF VICTIM: I understand that he has accepted the plea of guilty.
COLLINS: The judge has accepted the plea.
FRIEDMAN: Yes. My feeling is this. If this is what will - if there will not be a trial as a result of this, then a lot of this information that people want to hear about, whether there are other members of his family involved, employees, where the money is offshore, much of that may not come to light and I think it's important that that be established. And I don't know if having a trial is a good thing or not.
I think that the government does not want to have a trial because the SEC negligence will probably come out. And they don't want it to. If the SEC does not take responsibility for allowing this fraud to continue for so long and so unabated, then what hope do we have in the future that there will be any protection for the American investor?
COLLINS: Well, Richard, it sounds to me that your words and your anger is a little bit more for the SEC here, and for the accountability there than it is for Bernie Madoff.
FRIEDMAN: Bernie Madoff is somebody I just want to get by and put into my past. Expressing an anger to him doesn't do me good. I can only go forward. And in going forward, my objections are to the SEC, to (inaudible) for making it so difficult for people to recover money, and for their clawbacks against investors, and for the IRS not issuing any guidelines as far as amended returns or carry back losses. People are just waiting. There are people who have to sell their homes to find the next meal, while Madoff continues the last few months in his $7 million penthouse. It's not right. COLLINS: Yes, that's obviously a big bone of contention in all of this, and something that will be talked about in the courthouse today. Why he is out on bail. You lost more than $3 million. How has your life changed since this happened to you?
FRIEDMAN: I was in the process of retiring. I was an accountant. Most of my clients had been transitioned to other accountants. I've been working for the last few months much harder than ever, ironically its with Madoff, filing claim forms.
COLLINS: Really?
FRIEDMAN: Attending conferences with other accountants, having to do with just what we have to do to get as much tax money back. I mean, as you probably know, Madoff investors paid in hundreds of millions if not billions of dollars in income taxes on phantom income that never existed.
COLLINS: Right.
FRIEDMAN: The IRS should not be allowed to keep that money.
COLLINS: Well, that's actually...
FRIEDMAN: It's fraudulent money.
COLLINS: ... that's actually something we haven't talked a whole lot about. But it's an interesting point. What have you been hearing on that? I mean, obviously, you're talking with attorneys. Is there any possibility that that could be a way that you might be able to retire some of your losses here?
FRIEDMAN; It is. But there will be certain laws that will have to be changed. For instance, you can only amend three years going back. We're not trying to make a special case for the Madoff victims, but in this particular case, where everybody knows that the SEC supposedly investigated Madoff but really didn't, that they had a road map from Harry Markopolos. The government is grossly negligent, and because of that, they should change laws and make it that we can amend returns going back many more years than three years.
COLLINS: Yes, we saw some of that testimony from the whistle- blower, if you will, a very, very compelling -- how many times he had gone back and gone back and provided information to the SEC and basically got zero response. What do you want to have happen to Bernie Madoff?
FRIEDMAN: You know, he's going to be sentenced for 150 years. I hope he lives a very long life.
COLLINS: You think he's going to get the maximum today?
FRIEDMAN: I think so. He deserves it. He's a very deserving individual.
COLLINS: Moving forward for you... FRIEDMAN: I mean, he...
COLLINS: Go ahead, go ahead.
FRIEDMAN: Yes. No, I mean, the crime is really unimaginable that tens of thousands of people, not just his direct investors but those in the feeder (ph) funds were affected. His friends, neighbors, people retired.
I mean, the charities that have had to close down. People -- unemployment because of that. I mean, it's just not a typical Ponzi scheme. He affected society as a whole. You don't have to be a Madoff investor to have been affected by this.
COLLINS: Yes. Do you think he acted alone? Do you think he acted alone? Because obviously, there's been a lot of talk about his family here, as well.
FRIEDMAN: If Madoff acted alone, and people believe him, then those people are being scammed by Madoff today. There is no way in the world he could have acted alone. His operations were just too immense. Too many statements had to be sent out. He could not go through "The Wall Street Journal" every day and pick out stock prices that fit into his statements.
There had to have been plenty of other people. His wife, his bookkeeper, who earned $62 million. I mean, the whole thing is ridiculous. The whole family, as far as I'm concerned, once proof is available, should be put in jail forever.
COLLINS: How long are you going to stick with this? How long are you coming back to court? Obviously the sentencing phase, just not sure how long all of that could last.
FRIEDMAN: Well, I'm here today because I wanted to just make a statement on behalf of other Madoff victims that our government is not giving us a fair shake. We're not asking for a bailout. We're just asking for SIFIC (ph) to pay the money that they should be paying. They're not following the formula that is set up. The IRS hasn't issued guidelines yet. We just want the proper things to be done to get a fair shake on this ourselves.
Well, Richard Friedman, we sure do appreciate your time here today and wish you the best of luck, certainly after losing...
FRIEDMAN: Thank you.
COLLINS: ... more than $3 million to Bernie Madoff's scheme here. Thanks again. Appreciate your time.
Out of a job. Then, like millions of Americans, you'll probably also be without health insurance. But buying medical coverage can be hard to do, and it sure can cost a lot. CNN medical correspondent Elizabeth Cohen has some tips now in this week's "Empowered Patient."
(BEGIN VIDEOTAPE) ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Shopping for health insurance on your own can be a daunting task, but it's a task that millions of people may have to do. Let's take a look at some recent job numbers. What happened in January and February of this year is that 1.25 million jobs were lost, and it's estimated that half of those people also lost their health insurance along with their job.
And they now have a choice. They can either try to go for COBRA, which can be very expensive, or they can just go on the open market and find a private health insurance policy of their own. Now, doing this on your own, as I said, can be very difficult.
So, at "The Empowered Patient," we wanted to give you some tips for how you can be a smart shopper for health insurance. Take a look at these three pieces of advice.
First of all, you need to ask when you're shopping, will my premiums go up? Maybe they tell you what your premiums are, but those may not be your premiums forever. So, ask if there is a point at which your premiums will go up. Also, find out if the insurance company is licensed in your state. Sometimes companies will sell in states where they're not licensed. That can be a big problem for you down the road. Also, make sure you understand and make sure you see it in writing what are your deductibles and your copays. A deductible is how much do you have to spend out of pocket before the insurance kicks in. With some insurance policies, you have to spend thousands of dollars before the insurance will start paying.
And then, let me talk about copays for a minute. Even when the insurance does kick in, usually you're responsible for a portion of any bill. So, for example, when you go to the doctor, you might have to spend $25 as your copay. So, make sure you see those deductibles, and those co-pays in writing. To learn more about how to be a smart shopper for private health insurance, go to CNNhealth.com.
(END VIDEOTAPE)
COLLINS: Thirty billion more for Freddie Mac. The mortgage giant is asking for more of your money. Should we hand it over?
(COMMERCIAL BREAK)
COLLINS: More now on a breaking story this hour. Bernie Madoff pleads guilty to fraud that robbed investors around the world of billions of dollars. We just heard from one of Madoff's victims, and how more reaction from an industry insider. Joining us now from New York is Joe Plumeri. He's with Willis Group Holdings.
We sure do appreciate your time here, Joe. Obviously, you are an insider. You spent years and years. You were with Citigroup, you were with Citibank, you were the CEO there, Shearson Lehman. You've been around. What's your reaction to what's going on here with Bernie Madoff?
JOE PLUMERI, CHMN. & CEO, WILLIS GROUP HOLDINGS: Well, first of all, I heard that interview, and I thought it was terrific. And it's chilling. It's unfortunate. And I feel for all of the people that were scammed by this guy. I think there's a couple of things that come out of this that are overriding, one of which he mentioned, is this whole idea of transparency today, Heidi, becomes a big deal.
Not only a big deal as it relates to people like asset managers and the Madoffs of the world, but anybody doing business with anybody has to be totally transparent. And I think we're in a world of transparency, and I think that's an overriding factor.
COLLINS: And somehow, as an investor, you've got to know what you're getting into. It seemed like in this case, there were a lot of people who were pretty darn savvy who invested millions of dollars and were surprised.
PLUMERI: Well, I think they were surprised, because they trusted the guy. I think that what's going on in the world today is the whole idea of trust, the whole idea of confidence, the whole idea of the government making people feel like they're watching the countryside.
You heard them talk about the SEC, so if there is an air of transparency, there's a feeling that regulators are actually watching and protecting their interests. That's what's got to come back into the equation until this whole trust factor emerges. And I think that's important as it relates to Madoff or anything in our economy.
COLLINS: Yes, and obviously, the trust factor sort of relates into consumer confidence, as always, too. And then people start spending their money.
PLUMERI: That's exactly right.
COLLINS: There is so much we could talk about with you. We've got Freddie Mac. They're asking for another $30.8 billion from the treasury. We've got some of these banks who are trying to now give back some of their bailout funds. That's an interesting story, too.
But what you just said, talking about confidence, we found this interesting poll that was done by "The Wall Street Journal" and NBC (INAUDIBLE). They talked to 49 economists, and they're sort of trying to grade the performance of President Obama, and, of course, his treasury secretary, Timothy Geithner. Here's what they found -- look at this, now.
They were given a ranking between 1 and 100. They gave President Obama a 59. They gave Secretary Geithner a 51. Some of those economists were saying things like the Obama team has blown it. And another one said the package already passed, was too much, too late. Of course talking about the economic recovery and reinvestment package.
You tell us what you see that they have done right. I mean, as we move forward, we're trying to talk a little bit more about hopeful things. Is there anything they've done that people can say, all right, well, I'm going to glom on to that, and I'm going to turn that into something good for me. PLUMERI: Well, first of all, I think there's a lot of good. You can talk about -- I think those scores, by the way, Heidi, reflect the confidence level.
COLLINS: Right.
PLUMERI: If you look at the stock market, the stock market will tell you if people aren't confident. If you look at the savings rate, which is close to 7 percent, which is unheard of in this country -- it's been minus 3 or 4 for 30, 40 years and now all of a sudden people are saving money -- I think what that suggests is, is that the confidence level is low. So that score that you just put up on the screen suggests that the confidence isn't there.
And people, you know, in this country especially want things to happen tomorrow. And as a result, you're seeing it in the stock market. The stock market goes up and down based upon a sentence or two...
COLLINS: It's all over.
PLUMERI: ... in terms of what people say. And that's the feeling that's going on here. If you can transfer all of those savings after people become confident, you're going to get a turn around in the economy pretty quickly.
COLLINS: Yes. Absolutely. Well, look, you know, you work for an insurance company. You're the CEO for Willis Group Holdings, which is obviously an insurance group. There's a lot of news out, as I'm sure you're well aware, of AIG. Well, give us an idea, a picture of the insurance industry as a whole. What is the condition across the board?
PLUMERI: If you take AIG and put AIG aside, I think the insurance industry is probably the most stable form of capital that you have today.
COLLINS: Can you really do that, though? Can you put AIG aside with the way that it's intertwined in everything?
PLUMERI: Well, you asked me about the industry, and I'll talk about both. As far as the industry is concerned, if you wanted to buy insurance today, you could buy it. It's accessible. We at Willis are placing insurance all over the world. It's not only accessible, the money's available to be able to mitigate risks for our clients.
But it's available at a pretty cheap price because insurance is nothing but stand-by capital that you pay for in case something bad happens. So, from that point of view, it's more accessible than bank money or investment bank money, whatever the case may be. From the point of view of AIG, it's owned by the United States government.
COLLINS: It is now.
PLUMERI: It's still rated A or better. I think the moves that they've made to box off the insurance entities against the toxic assets of credit default swaps have been pretty good. You can look at a P and C company now called AIU of AIG. You can look at personal lines. They've been boxed off, kind of ring-fenced, if you will. So, I think people should feel pretty good about AIG, and I think the government has acted properly in coming in and saving AIG...
COLLINS: OK.
PLUMERI: ... because I think it's important for consumers. It's important for commerce.
COLLINS: All right. Understood. Well, things can't be all that bad with Willis. What's the deal with the Sears Tower?
PLUMERI: That's a terrific deal. Last October, Heidi, we bought a company called Hillborough, Gall & Hobbes (ph), which now we have 200 offices across the United States, which is terrific. And we find ourselves with five offices in and around the Chicago area with 500- plus employees. And what we wanted to do was to get all of the associates in one place, consolidate in one place, so people could work together.
And we found a great opportunity, a great deal, in the Sears Tower, and we couldn't -- a deal we couldn't refuse, as they say. So as of today, we will dedicate sometime this summer. The Sears Tower will be called the Willis Tower. The economics are fantastic.
COLLINS: You're changing the name. You got the naming rights. We're not going to know it as the Sears Tower anymore.
PLUMERI: No, we're not going to call it the Sears Tower anymore, and hopefully people will call it the Willis Tower. And it will be an icon. It's the largest building in the western hemisphere. It shows progress, and it shows, I think, more than ever, you know, what we feel about the future of this country. And that's what this conversation should be all about.
COLLINS: All right. Joe Plumeri, we could talk to you all day. Congratulations on that. Joe Plumeri, CEO of Willis Group Holdings. Thanks for joining us from New York today.
PLUMERI: Thanks, Heidi. Thank you.
COLLINS: A quick break here. We're back in a moment.
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COLLINS: Big news today now. Bernie Madoff pleading guilty to investor fraud just about a half an hour ago, and we want to get an update what is happening inside that federal courtroom. So, we go to CNN Radio reporter Steve Kastenbaum. He's joining us now live from right outside the courtroom. So, listen, Steve, some really interesting things have already happened inside there.
STEVE KASTENBAUM, CNN RADIO CORRESPONDENT: Yes, Heidi, we know that Bernard Madoff has pleaded guilty to the 11 felony counts that were filed against him, those charges pertaining to the Ponzi scheme. CNN's Allen Chernoff is still in the courtroom. We're waiting for him to come out to let us know whether Bernard Madoff has been remanded or whether he'll be walking out of this building today. But we are getting information from inside the building now, some quotes from Bernard Madoff.
The judge asked him to speak to say what he did. He said, I operated a Ponzi scheme. He said, I'm grateful to speak for my crimes. I thought it would end quickly, but it proved impossible. He was talking about the Ponzi scheme, about the beginning of it, and what happened there.
He went on to say, I am ashamed for these criminal acts. I cannot express how regretful I am for my crimes. Madoff went on to say, I always knew this day would come.
COLLINS: Wow.
KASTENBAUM: So, somewhat remorseful, Bernard Madoff in court today. Whether that gives the folks who were victimized by him any sort of, you know, feeling of satisfaction, it's hard to say. The folks that we spoke to outside the courthouse here today really didn't seem to gain any satisfaction from are this at all.
COLLINS: Well, yes. Well, Steve, what did he look like? How did he appear? Was he nervous?
KASTENBAUM: That's what we're hearing from inside the courthouse. The word is that he seemed nervous, that he was ringing his hands, at which point the judge suggested to him that he take a glass of water. That's what we know so far from inside the court. Of course, again, we'll get more information about how he appeared inside that courtroom as soon as Allen Chernoff is able to make his way out here.
COLLINS: Yes, absolutely. Well, we're also -- I'm reading a couple of different sources here that apparently, he may have also told the judge that this whole scheme began back in the early 1990s. Did you hear any of that?
KASTENBAUM: Well, we know it goes back that far. So, it's not a surprise that he would admit to this in court. He was going to have to admit to something. We know that he did not enter into any sort of plea agreement with the prosecutors, so it really wasn't clear what he was going to admit to having done here today.
COLLINS: Yes, I guess, just to hear him...
KASTENBAUM: If he had been involved in a plea agreement, he would have had to admit more.
COLLINS: Yes. I guess just to hear him say that. I'm picturing myself as a victim inside that courtroom watching him say things like this. Really, really pretty remarkable. All right, Steve, we sure do appreciate your time. Thank you.
KASTENBAUM: Thank you. My pleasure.
COLLINS: And want to take a moment now to get back to some of the other breaking news that we have regarding this helicopter crash that we told you about that happened off Newfoundland Province in Canada. The aircraft actually went down in the Atlantic ocean. We understand, or we believe -- at least when we were initially telling you about this -- that there may have been 18 people on board. And Reynolds Wolf has kind of been working this story for us. He's joining us now with a little bit more information. Hey there, Reynolds. What more do we know at this point?
REYNOLDS WOLF, CNN METEOROLOGIST: Well, the latest we know is that there was a gale warning that was in effect for the area. So, we're talking about a helicopter that was dealing with poor visibility, of course very windy conditions right off the Halifax coast, heading out to an oil rig.
Eighteen people were on board this helicopter including, I believe, the pilot and co-pilot. The latest that we have for you, if you zoom in this location, you can see it's a waterbound area, leaving Halifax Harbor heading out to the oil platform. Water temperatures in this area, Heidi, where the aircraft was believed to have crashed, water temperatures around 34 degrees, so we're talking about frigid continues conditions. So,hypothermia's obviously a tremendous concern for many people.
Take a look. Here's what we have. Some of the buoy (ph) reports in that area show you that wave heights around six feet, water temperature, as I mentioned, around 34 degrees, wind direction out (ph) of the west, wind speeds at 25 miles an hour. So, plain and simple, not pristine, not perfect flying conditions for an aircraft of this type.
We think it may have been a Sikorsky. As I mentioned, 18 people were on board this aircraft. One of other things to really consider is, you've got two issues when one of these aircrafts strikes the water. One, of course, is the impact. The second thing you have to deal with, of course, the freezing water conditions. Above freezing, but still hypothermia. I mean, if it's below your body's core temperature, you're going to have some issues with that.
So, again, good news that there's been a lifeboat sighted and two people in it. But, again, you've got 16 more to account for. Let's zoom back to you.
COLLINS: All right. Reynolds, we sure do appreciate you keeping your eye on that one for us. We'll keep everybody updated just as soon as we get more information.
Obviously, the other breaking news story that we've been telling you about, Bernie Madoff, he has pled guilty in a federal courtroom today. We know that there are victims inside that courtroom. They are going to be going to the microphones and telling their stories, how they were affected.
Bernie Madoff has done the same already. We've been hearing some quotes from him. Some things like, I'm grateful to speak for my crimes. I thought it would end quickly, but it proved impossible. I am ashamed for these criminal acts. Just some of the words from Bernie Madoff today, waiting to be sentenced.
Well, also, it is your money, but is it being spent wisely. We're talking about the economic and reinvestment plan -- economic recovery and reinvestment plan. Waiting to hear from President Obama on that. He's talking to individual states about how to use those dollars.
(COMMERCIAL BREAK)
COLLINS: Back to breaking news now from the federal courthouse in New York. Accused swindler Bernard Madoff has pleaded guilty to 11 federal counts, including money laundering, perjury and fraud. Thousands of people invested billions of dollars with him, only to discover he'd taken it all. Madoff faces up to the rest of his life in prison. And several of those people who lost money in Madoff's Ponzi scheme were in court for his plea. I talked with one victim, Richard Friedman, who lost more than $3 million.
(BEGIN VIDEO CLIP)
RICHARD FRIEDMAN, LOST $3.1 MILLION: If Madoff acted alone and people believe him, then those people are being scammed by Madoff today. There is no way in the world he could have acted alone. His operations were just too immense. Too many statements had to be sent out. He could not go through "The Wall Street Journal" every day and pick out stock prices that fit into his statements.
There had to have been plenty of other people. His wife, his bookkeeper, who earned $62 million. I mean, the whole thing is ridiculous. The whole family, as far as I'm concerned, once proof is available, should be put in jail forever.
COLLINS: How long are you going to stick with this? How long are you going to keep coming back to court? Obviously, the sentencing phase -- not sure how long, you know, all of that could last.
FRIEDMAN: Well, I'm here today because I want to just make a statement on behalf of other Madoff victims that our government is not giving us a fair shake. We're not asking for a bailout. We're just asking for SIFIC (ph) to pay the money that they should be paying. They're not following the formula that was set up. The IRS hasn't issued guidelines yet. We just want the proper things to be done to get a fair shake on this ourselves.
(END VIDEO CLIP)
COLLINS: One of the victims of Bernie Madoff, Richard Friedman.
I'm Heidi Collins. Join us again tomorrow morning starting at 9:00 a.m. Eastern. For now, CNN NEWSROOM continues with Tony Harris.
