The I.R.S. announced today that victims of Bernie Madoff's ponzi scheme will be entitled to tax refunds if they paid taxes on phantom profits.

Madoff investors should have been reporting earnings from their investments with him through the years and thus paid taxes on those earnings. Given that some of those were "phantom" profits, investors have said they should be entitled to refunds of the taxes they paid.

....By some estimates, the IRS could be out as much as $17 billion in lost tax revenue from refunds to investors who earned fictitious profits in the Madoff scheme.

IRS Commmission Douglas Shulman told Congress today the IRS will be issuing guidelines to Madoff's bilked investors: [More...]

Of all the ways to get rid of a prosecutor, this is not one of them:

A scorned Denver woman, who police say was working as an escort, now is in jail, accused of trying to have her ex-husband, a Pitkin County prosecutor, killed....On Saturday, Dvir allegedly offered an undercover police officer posing as a hit man $2,000 to kill her former husband, Richard Nedlin, court records say.

...."If the body disappeared that's fine, but I'd prefer it to look like an accident, like stuff his body with cocaine, like an overdose," Dvir said, according to the affidavit. "It's got to be done in a very smart way. I just don't want it to backfire on me."

The couple are in midst of a messy custody battle. Ms. Dvir is entitled to the presumption of innocence and I'm somewhat skeptical because she was set up by a jailhouse snitch, but the charge alone is not likely to go over well in divorce court. And it's definitely not the way to beat your opponent in court.

After 7 years, Sara Jane Olson, now 62, is leaving prison. She's scheduled to return to Minnesota on parole, but Gov. Tim Pawlenty is trying to block that and force her to remain in California.

As I wrote here, Sara Jane Olson is not a yo-yo and they should stop treating her like one. Here are some older posts I wrote on Sara Jane's life in prison, on how her prison term got extended and how the extension was later thrown out.

Here's more on her guilty plea to the second degree murder charge. And from CNN on her re-arrest after being paroled the first time.

Unless Minnesota is unable to supervise Ms. Olson, she should go back to Minnesota where her family is. The Governor and the police organizations need to get off her case. It's not up to them, nor should it be.

Last year, over at 5280.com, I wrote about the case of Montana county prosecutor Robert Eddleman who was charged with cocaine offenses (pdf). Eddleman's co-defendant and significant other, Terri Jabs Kurth, is the daughter of Denver furniture mogul Jake Jabs, who is very familiar to Coloradans as he is a staple on late night television commercials.

This week, Eddleman and Kurth pleaded guilty. Eddleman was jailed pending sentencing, Kurth was not.

It's interesting that the charges here are not that the couple sold drugs....it's that they bought drugs and held parties at their homes where people used them.

It's hard to have sympathy for a prosecutor who breaks the drug laws, but jailing him pending sentencing seems over the top. I also wonder whether Kurth got bond because she's less involved or because she agreed to forfeit $50,000. to the feds. [More...]

Former Qwest CEO Joe Nacchio is trying hard to avoid reporting to federal prison on March 23. In the past week, he's filed a motion for new trial based on newly discovered evidence in the trial court and, in the 10th Circuit, a request for continued bail pending the disposition of an as-yet unfiled petition for a writ of certiorari to the Supreme Court.

The Tenth Circuit dismissed his bond request (pdf)saying he should have filed it in the trial court. It said if he gets denied there, he can come back to the appeals court.

He filed the request yesterday in the trial court and today it was denied (pdf) -- because the Bail Reform Statute doesn't apply to petitions for cert that haven't been filed yet. The trial court said the denial was without prejudice, meaning if he cites the correct authority for allowing bail before the writ is filed, he can try again. [More...]

There's wild speculation all over TV and the internet about where Bernard Madoff will serve his ultimate sentence. A hyper-ventilating legal pundit on Fox News was yelling he'd go to a maximum security facility. Not so fast.

The Bureau of Prisons has a 108 page manual (pdf) (P5100.08), titled "Inmate Security Designation and Custody Classification", on designations. In Chapter 5, it identifies public safety factors and notes they can be waived. Generally, see page 50: [More...]

Final Update: Here's the statement Madoff made in court today (pdf). Here's the transcript of today's plea hearing (pdf)

Update: 11:16 am: Sentencing will be June 16. The Government asked for immediate jailing. CNBC and CNN report the Judge said he intends to grant the request and order Madoff into custody immediately. It's done.

Update 10:55 am: The Judge has accepted the guilty plea. The Government is telling the judge how the scheme operated. The victims who object to the plea are now being heard. Next issue should be bail.

Update: 10:47 am ET: CNBC Updates: [More...]

Does anyone find it unusual that Bernard Madoff's lawyers didn't file a motion today for bail pending sentencing? I just checked the court docket and the only thing they filed were their entries of appearance. The only filing by the Government was the emails it received from victims, which it filed under seal.

Has the Government agreed to let Madoff stay out on bond pending sentencing? If not, why wouldn't Madoff's lawyers file a big brief arguing for it? The Judge said yesterday it's one of two issues he will take up tomorrow./

Here's Reuters and Bloomberg's latest articles with speculation from lawyers and sources they interviewed about why Madoff may have agreed to plead guilty, but it's still not adding up for me. I have a long post ready on other possibilities, but I'm holding off in case some real information emerges tonight or tomorrow. I don't feel like just fueling more speculation. [Updates below]

There is no Sixth Amendment exception for accused criminals who are particularly out of favor with the public. Bernard Madoff is entitled to a lawyer, just like everyone else who is charged with a crime. Why, then, do some idiots feel the need to threaten Madoff's lawyer, Ira "Ike" Sorkin? The man is just doing his job (and as Jeralyn pointed out, he's done it by pleading Madoff straight up to all the charges against him -- hardly a strategy that should enrage the public).

Memo to the crazed loons who are threatening Sorkin: You're likely to need your own lawyer one day. You might want to rethink your animosity to those who spend their lives defending the accused.

Yesterday I wrote about the details of the Bernard Madoff non-plea agreement in which he pleads straight up to all 11 counts against him and receives no sentencing concession, no promises about non-prosecution of family members and no agreement that the Government's continuing investigation won't affect his wife and other family members' assets.

He's 70 years old. Even if he gets a 25 year sentence with good time, he's likely to die in prison. He's not going to a minimum security camp. So why is he pleading guilty? Are there secret agreements we don't know about?

It's customary in a death case for lawyers agree to a deal where the client gets life. For some, life without parole is preferable to death. I may not agree, but I can understand it.

But this? He's pleading guilty to a sentence of up to 150 years. The Government says it's no longer bound by its earlier promise at the time of the bond hearing not to take $70 plus million assets in the name of his wife. The Wall St. Journal now reports that prosecutors say the investigation is continuing and her ability to keep her assets depends on what they find.

[More...]

Details of Bernard Madoff's expected guilty plea emerged today when he appeared in court for a hearing to waive any conflict of interest his lawyer might have from past representation of other clients.

Madoff will plead straight-up -- no plea agreement-- to 11 charges in the Criminal Information.

“There is no plea agreement,” Assistant U.S. Attorney Marc Litt said at the hearing, meaning Madoff must plead guilty to 11 counts that he now faces in a criminal information filed today.

Madoff is charged with securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission and theft from an employee benefit plan, Litt said.

The Government filed a letter with the Court today outlining its sentencing guideline calculations. (Available on PACER) [More....]

Friday it was reported that Bernard Madoff had reached a plea deal with Government. He is expected to enter a guilty plea Thursday to whatever charges were agreed upon on.

Today, the Government asked the Court to notify potential victims of their right to seek to be heard at the plea hearing. So far, 78 e-mail responses were received, 25 indicating a wish to be heard.

Will they be heard? The relatively recent victims rights law allowing victims to be heard at hearings involving release on bail, plea, sentencing and parole (which, on Nov. 1, 1987, was abolished for offenses committed after that date) is 18 U.S.C. 3771. [More...]