It is stunning to me that Bernard Madoff has been allowed to continue to live in his multi-million dollar Manhattan penthouse apartment instead of being housed in a jail cell. It has been over two months since he was picked up for what is “believed to be the largest financial fraud in history.” (CBS News) How is it that someone can swindle (read that steal) billions of dollars from people and not go to jail? Granted, he is under “house arrest,” but that allows him to stay in his lavish surroundings. Any regular person – you or I – would have been not only in jail, but “under the jail,” as my mother used to say.
I guess that technically I should say that he “allegedly” stole billions since he is accused and has not been convicted. Yet there seem to be a lot of people who have documents bearing the name of his Wall Street investment company that they thought entitled them to funds that just do not exist because he never invested any of their money. There is no evidence that he ever bought a single stock or bond. He never made a single trade (at least not since 1993, according to Harry Markopolos, the man who figured out Madoff’s scheme), even though he took money -- 50 billion dollars in money – from his “investors.” That would make every statement that he sent to each of his investors a fabrication, a lie. And no one seems to know where all of that money is now.
And while he sits in that Madison Avenue penthouse? Hundreds of people who trusted him have had their lives turned upside down. One woman waiting outside of a bankruptcy court told reporters, “I’ve lost everything. I’m now on food stamps and may have to move into my car.” Another told of having to move her elderly mother into a Medicaid-funded assisted living facility, as she packed up their apartment to move in with a friend, “while this man sits in his penthouse and smirks.”
The people he stole from run the gamut from the extremely wealthy of New York and Palm Beach and Hollywood celebrities to people who were in on the investments by virtue of their being part of a retirement program, e.g., the Carpenters’ Pension Fund of Syracuse, New York. (CBS News)
According to a segment on the CBS news show, “60 Minutes,” Madoff’s modus operandi was an “affinity scam,” described by Harry Markopolos as an operation where the investor preys on groups similar to oneself. Madoff is Jewish, so one group on which he ran his scam was Jewish investors. One such investor was Elie Wiesel. Wiesel is an author, political activist, and Holocaust survivor. In 1986 he was awarded the Nobel Peace Prize for his “powerful message of peace, atonement and human dignity.” What does this man of peace have to say about Bernard Madoff? He told CNN news that Madoff is “[o]ne of the greatest scoundrels, thieves, liars and criminals.” Wiesel cited the devastation to foundations, hospitals, and educational institutions (to name a few) caused by Madoff.
Wiesel’s foundation, which takes care of over 1,000 Ethiopian children in Israel, lost over 15 million dollars and will be unable to add the center for which they had plans in Jerusalem. Asked if he could forgive Madoff for what he has done, Wiesel replied, “No.” He explained that Madoff would need to beg forgiveness, and he knows that Madoff would not ever do that.
Wiesel’s punishment for Madoff is well thought-out, I believe. Appropriate to the crime, as it were. His plan would be for Madoff “to be in a solitary cell with a screen, and on that screen, for at least five years of his life, every day and every night there should be pictures of his victims, one after the other, always saying, “Look, look what you have done to this poor lady; look what you have done to this child; look what you have done.” And that, of course, would be a minimum punishment. Wiesel is quoted in news stories as saying, “It shows, again, a human being is capable of both very great, good things and very horrible things.”
As of today, Madoff is fighting to keep $62 million in bonds and cash that he says is “not related to the fraud charges against him,” he continues to live in that 7-million dollar Manhattan penthouse, although he is possibly on the verge of making a plea deal.
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Well stated, Patti. You captured many of the thoughts I've had about this situation. I understand and am grateful that we have a system which purports "innocent until proven guilty." However, it seems that we do not have an incredible amount of equity in how that gets applied in our society. Many people who cannot afford the legal counsel that Madoff has or any legal counsel at all and may be innocent do spend this same time in jail or as your mother said "under the jail." This also leads me to think of the number of people that the Innocent Project and others like it have assisted in overturning truly wrongful convictions. I wonder what the average net worth of these people actually is compared to Madoff . . .
ReplyDeleteThis also leads me to think about adults and juveniles who live with mental illness who get involved with our justice systems. Unless they can secure legal counsel with knowledge and understanding of mental illness and effective treatment, these people would rarely have an outcome that includes "house arrest"--sometimes because they do not even have stable housing.
I know I've drifted from the topic of Madoff, Patti. I think you hit a nerve in your piece that I didn't realize was so sensitive. Thank you so much!!
This kind of thing really burns me up. I have a good friend that did 5 years in the state prison here in Arizona because he was 17 and got caught with a 15 year old girl (he was 'almost' 18 and so was tried as an adult). My nephew is schizophrenic and has been in jail for 15 years because he went off of his meds and help up a convenience store. It seems increasingly that the law is the law is the law in this country, unless you have money. Still, it is hard to deny that Madoff hasn't been found 'guilty' of anything yet. To convict him in the public circus without a fair trial would be un-american, and the sort of thing we ought to stand up and fight against no matter whether the crime is drug possession or a billion-dollar Ponzi scheme.
ReplyDeleteChris Wickersham
Patti--As I wrote before, your selection of this topic really did strike a nerve in me . . . moreso than I originally thought. Then, Chris' post gives "real life" examples about the inequity in our justice systems.
ReplyDeleteI share Walter Mondale's Op-Ed that appears in today's Washington Post that highlights more on this issue of inequity. I am the first to admit I don't know a lot about the justice system. However, Mondale's piece took me totally by surprise . . . the barriers to people obtaining legal counsel seem to continue to mount. These barriers definitely compromises the idea of "fair trial" for those who unlike Madoff do not have the connections or resources to secure legal counsel. Read on . . .
A Key Legal Right at Risk
By Walter F. Mondale
Tuesday, March 10, 2009; A13
More than 45 years ago, as attorney general of Minnesota, I joined with the attorneys general of 21 states in asking the Supreme Court to ensure that counsel would be appointed for all people facing criminal charges who could not afford it. The court answered our plea. Yet today, its historic decision in Gideon v. Wainwright is at risk.
In Gideon, the Supreme Court ruled that Florida violated the Constitution when it refused to appoint counsel for Clarence Gideon, a defendant who lived in a rooming house and had just $25 to his name. The opinion recognized the "obvious truth" that "in our adversary system of criminal justice, any person hauled into court, who is too poor to hire a lawyer, cannot be assured a fair trial unless counsel is provided for him."
Yet states across the country routinely fail to appoint counsel to people who are genuinely unable to afford representation on their own. A report published by the Brennan Center for Justice at NYU Law School last fall, "Eligible for Justice," found that if Gideon were to face criminal charges in Florida today, he might well be denied a public defender. Under Florida law, he could be disqualified for counsel if he has assets exceeding $2,500 (excluding a house), a car valued above $5,000, or had posted bail of more than $5,000, even if none of those assets permitted him to pay the retainer -- often several thousand dollars -- that defense lawyers routinely charge.
Even in Minnesota, things are grim. The Office of the State Public Defender absorbed a $1.5 million budget cut in 2008 and faced a $4.7 million shortfall at the end of fiscal 2009. The office announced late last year that it may need to cut 61 full-time equivalent attorney positions.
Sadly, Gideon's chances of getting counsel would be worse elsewhere. In New Hampshire, he could be found ineligible for counsel if he had a home valued at more than $20,000, even if he could not sell the home in time to finance his defense and even if selling it would leave him homeless. Courts in Virginia could deny him counsel because of the amount of money possessed by family members, even if Gideon had no power over that money.
These standards effectively work to deny counsel to people who truly cannot afford to hire representation. As a result, people are forced to defend themselves and can be wrongly convicted. That is what happened to Clarence Gideon. In his first trial, in which he represented himself, he was found guilty and sentenced to five years in prison. After the Supreme Court required the appointment of counsel, he was retried and acquitted.
A number of lawyers groups, led by the American Bar Association, have endorsed an expansion of the right to counsel recognized by Gideon to noncriminal matters where important legal rights, such as loss of housing, are at stake.
Many European countries provide such representation to indigent civil litigants. The backtracking that we are experiencing in the area of criminal representation undermines these efforts to move forward in the civil area. Our justice system depends on the idea that everyone is to be treated fairly, but a lack of resources is affecting the progress the Gideon decision brought to our criminal justice system and is blocking progressive efforts to extend the right to counsel in certain civil cases.
This month marks the 46th anniversary of the ruling in Gideon v. Wainwright. It is crucial that the states rededicate themselves to providing competent defense counsel to all people facing criminal charges who cannot afford to pay. The federal government, too, has an important role in providing the states with technical assistance, monitoring their compliance and enforcing the constitutional right to counsel. The promise of Gideon is ringing hollow, both for defendants, who count on competent counsel for their freedom, and for our society, which counts on the courts to achieve fair and reliable results. We cannot move forward until we stop the erosion of Gideon's promise to criminal defendants. My hope is to celebrate the 50th anniversary of Gideon -- not to have to use that occasion to mourn our continuing failure to heed its call.
The writer, a Democrat, served as vice president in the Carter administration and served two terms as a U.S. senator from Minnesota.
Interestingly, today I see that on Thursday, Madoff is expected to plead guildtin to 11 criminal counts without a plea deal. According to the Associated Press, there is a potential prison term of 150 years(Yahoo News. 10 March 2009).
ReplyDeleteguildtin? Of course, I meant guilty. Here is an illustration of what not to do in the blog...
ReplyDeleteIt's interesting to see wealthy people getting convicted of a crime. I think most of the public is waiting to see what happens to them, usually just waiting to say, "Psh, see, I knew it, rich people never go to jail..." or something along the like. In the reading from Wolterstorff, it says on pg 327, "The wealth of a human being contributes nothing to the worth of that human being, any more than, say, being born in January." However, this is not what we seem to see in the world because the wealth of the human being ultimately matters a lot in determining what rights they have, or are given. I guess this was the case for Paris Hilton, too, not long ago. It almost seems like a battle between the wealthy and the law system in order to prove just how wealthy and powerful they are. And all of this just seems to destroy the idea of human rights and dignity that's supposed to be "innate" in everyone.
ReplyDeleteWhile I agree that Madoff is a crook and that he should suffer the consequences of his actions (and as of today it looks as if he might!), and while it is unfortunate many innocent men and women (and children) have suffered due to his profligacy, we have to remember that those individuals who chose to invest with Madoff shared in some of Madoff’s greed, and maybe some of his guilt.
ReplyDeleteEven an amateur investor would be able to see that the returns Madoff was garnering for his clients were staggering. A December 8, 2008 Wall Street Journal article stated that he was regularly delivering returns of 10 to 17% to investors. In fact, the reason Madoff was caught was because the fund that he managed behaved so consistently that it could only be a Ponzi scheme.
Those people who invested with Madoff wanted to believe the lie. They weren’t content with returns that any sensible investor should be pleased to receive. Since when is 7% return on investments not enough? Right now those people who lost their money to Madoff probably wish they hadn’t been so greedy. I’m sure they would be very happy to be getting the 1.5 to 2% earnings that represent just about the best of the best right now. I’m sure they just wish they had even a quarter of their investment back.
While not everyone who suffered at the hands of Madoff were complicit in the way that I am suggesting, many of them were. We are in our current economic malaise largely because Americans could not be content with letting a good thing (economic stability) be a good thing. No, it had to be more. For those who cannot live with reasonable prosperity, I have very little sympathy.
Steven, the only problem I have with your comment is that you are lumping normal Americans into the category of 'Investors' who did nothing more than what their banker suggested. Most people do not look at their mortgage as an 'investment', rather it is the cost of the home they live in. While I wish that more people understood the ins and outs of lending and finance, you must accept that for most people it is nothing more than voodoo. I don't take the culpability from those investors who pushed the boundaries, but the majority of people who invested with Madoff and the other crooks who caused this mess we're in were simply doing what their trusted banker suggested. You're wasting money in a fixed rate mortgage, you're wasting money paying interest on car loans or credit cards that isn't tax deductible. In my opinion, the majority of the blame falls on those that ran banks irresponsibly and preyed on people with limited understanding of finance. Just to take it a step further, this is why I am so against the privatization of Social Security and why I oppose the move that this country has taken towards private investment for retirement instead of pensions and other instruments that promise people a comfortable twilight. Simply put, the majority of people in this country should not be investors because they do not understand the risks involved and in my opinion we are worse off when so many facing retirement have failed as investors.
ReplyDeleteAdding on to Suzanne's comment, I think by pleading guilty, he won't have to say what happened to the money. I'm not mad about the scheme entirely, as to side with Steven's comment about everyone trying to be greedy, but I'm more mad that this guy is so greedy that he won't say a word as to where the money went.
ReplyDeleteSteven --
ReplyDeleteAnd while I agree that there is plenty of greed to go around, I stick to my original statement. Madoff STOLE 50 billion dollars (which, as Jon said remains unaccounted for) and on the backs of some pure innocents. I just happen to think that he should be cooling his heels in a jail cell, not in a 7-mllion dollar penthouse. I realize that it is just my opinion, not an ethical argument.
I found it ironic that the same list of news articles that said Madoff had pleaded guilty included the headlines that the President Bush shoe thrower had received three years of jail time. I realize, different countries, cultures and legal systems. Back to Madoff, while I agree that investors must make prudent investing decisions, I think that the fiduciary responsibility given Madoff to invest the funds carries a greater weight. And it is the seemingly lack of sense of obligation to that responsibility that grieves me.
ReplyDeleteGood news! Bernard Madoff finally has come to go to the jail by the law. Patti, your post made me think about the law of the world. There is a Korean saying that “you are not guilty if you have money, but you are guilty if you don’t have money” which has something to do with American saying that “money talks.” I thought that these saying express well today’s materialism. Money would be able to change or create the law for the rich. Nevertheless, I believe that the law is the minimum expedient for justice. Although morality is higher level than the law of the world, it could not bind Madoff. But, he finally was restricted by the law. This made me come up with the saying that the law is the minimum morality to keep social justice.
ReplyDeleteJon, by pleading guilty, he also won't have to face a jury trial and face his victims and his accusers. Presumably, his victims and accusers will have a chance to speak at the sentencing hearing. But that's not the same as listening to wrenching testimony over days of a court trial. I wonder if it had gone to trial, if he would have received a harsher sentence. We'll have to wait and see what the judge decides.
ReplyDeletePatti, great topic. One that makes me mad. Indeed there are other players involved in this scam which spreads even across the atlantic. I feel like there are other people who are being protected either by Madoff or the authorities.This is a case which really makes you think is justice served in this country anymore.
ReplyDeleteThe sad part of it is nobody knows how much was actually lost as all the statements Madoff provided were fake. I agree with Steven, the returns promised were outlandish and some people wanted to believe it to be true. It is similar to the ongoing Foreclosure crisis where people obtained loans well beyond their means. Atleast in Madoff's scandal tax payer did not have to pay a big bill.
I would thank Patti and Elaine for their honest and rational approach.
ReplyDeleteThe events of 9-11 and the war of Iraq, reminded me about the wise phrase of the 'father of modern political history'; Niccolo di Bernardo dei Machiavelli who said "The end justifies the means".
The idea which used to afflict me very often was the injustice in the political world or the injustice in our society. But the theory of Machiavelli and the dominant political situation overthrowed my innocent attitude.
The testimonies of iraqi civilians about the situation in iraq, are different than we see in the news, and totally different from the speaches of iraqi and american political leaders. Therefore what's the truth?
Or the events of 9-11 were presented in a way, but the russian intelligent agencies proved another things. Therefore what's the truth?
For me, the case of Bernard Madoff is one of those mysterious events which needs more time or a decadeto come to a conclusion. His case is as heavy as the above mentioned events, for causing troubles to Elie Wiesel’s foundation for helping childeren in Israel.
Therefore who is getting the benefit from those huge amounts?
Very often political interests and social justice are contradictory to each other.
Therefore before claiming for justice or human rights, let's study such cases more deeply by whishing that, one day we'll know about the person or the organization who will be in a more favourable situation than the social justice.