Bernie Madoff’s Guilty Plea Isn’t Good Enough
In his allocution, Bernie did admit to repeatedly wiring investors’ money, a total of $64 billion, through his supposed legit brokerage business. Since it was used to prop up that business, I am wondering why his sons and brother did not ask the source of the capital entering the business. I suspect that they knew but did not ask. For that, they may be guilty (along with JP Morgan, Madoff’s banker) of deliberate ignorance. This legal concept was successfully used to uphold the conviction of Jeffrey Skilling, CEO of Enron. It is a crime that rises above the strict criminal standard of reasonable doubt.
As the English would say, there should have been others in the dock with him. First to be on trial should be the SEC. Due to the failure to act on repeated warnings from Harry Markopolos and others, it is clear that the SEC is guilty of malpractice and negligence. It seems that standard operating procedure at the SEC was to take Madoff’s word rather than performing an independent verification. This seems as negligent as the cops taking the word of a serial killer that he is innocent.
I am hoping that a brave judge will allow aggrieved Madoff investor Phyliss Molchatksy‘s lawsuit against the SEC to go forward. As a government agency, it is usually exempt from lawsuits, but Chairman Cox has already admitted that the SEC failed to respond to specific and credible allegations of wrongdoing. We need to know what happened.
The argument against the success of this lawsuit — that it will discourage regulation — does not hold water with me. More than anything else, the SEC’s failure to find fraud in the case of Madoff, a former chairman of the NASDAQ exchange, raises the possibility that the SEC is not capable of regulating powerful people on Wall Street. If that is the case, maybe it should be disbanded. A thin veneer of regulation may be worse than no regulation at all. At least with no regulation, the buyer will know to be careful. Now they are under the mistaken notion that the SEC is looking out for them.
Madoff’s accounting firm should also be prosecuted. When I am evaluating the accuracy of the returns of a hedge fund, the first place that I turn to is the accountant. Madoff’s accounting firm, Friehling and Horowitz, need to be held responsible for certifying false results. It is clear that they were doing nothing but sitting back and collecting fees. In addition, they may have deliberately deceived the American Institute of Certified Public Accountants by telling them that they do not conduct audits.
Certainly, the victims themselves bear some responsibility, although they refuse to accept it. One victim that was invested in a feeder fund told me, “I knew that my money was managed by someone in New York, but I did not know who.” It is hard for me to understand how anyone can invest a million dollars without asking who is actually investing the money.
Joe Nocera‘s assessment in the New York Times starting with the title, “Madoff has Accomplices: His Victims” seems harsh, but he does have a point. Many of Madoff’s victims, obviously wealthy people, made major decisions about their wealth without consulting with financial experts. These same people use a trained accountant to file the taxes on the fictitious gains from this investment, but yet did not consult with anyone before investing with Madoff.
Many of these formerly rich victims, including Nobel Prize winner Elie Wiesel, are asking for a bailout from the federal government. Although have great sympathy for the victims, the government is not in the business of bailout out rich people who make bad investments.
Great article. Brings up some very interesting points about responsibility. I definitely agree that the government (meaning me) should not be expected to “bail out” people/companies who make mistakes and then say “oops”. Dear Officer Krupe, it’s not my fault that I’m a juvenile delinquent (West Side Story) – well, it is about time that people and companies start owning up to the fact that you can’t do what ever pleases you and then get someone else to pay the bill.
So “deliberate ignorance” is a chargeable crime?
This could be good news when it comes to dealing with Rahm Emanuel and the 2,000 others just like him that are pulling the strings of Puppet obama.
Guaranteed rates of return, no matter what the overall market is doing?? Please. Just goes to show, having money does not equate to having intelligence. Trust is only as good as the one you trust.
allocution (not elocution)
Ruth needs to cough up the cash and sell the penthouse apartment. She’s complicit in all of this somehow.
The speed with which the court proceedings were done tells me that Bernie had lots of help running this scam. And given the huge amounts of money Bernie and his “friends” gave to politicians I’m willing to bet somebody important in Washington ran interference for them with the SEC. Too many people complained to them (the SEC) to have their lack of oversight be simple incompetence.
“they stole from unsuspecting investors.” How often do you hear of theft from suspicious investors?
Louis is right. It’s hard to feel too much sympathy for people who blew off due diligence out of greed. Greedy is as greedy does. Investing isn’t for the lazy, risk averse, or the greedy. In the end, it was their own greed that got these suckers.
Bernie Madoff’s partners in crime: The Bush Administration and the conservative delusion of a self-regulating market.
if he had a bit of honor sense he should hang himself, Judas made it !
How about we offer Bernie Madoff and a few other’s as sacrifices to Islam. It seems to me that we could supply enough of these types to satisfy their hunger to cut the heads off some infidels. That way the Muslins could run around and tell Allah that they have done their call to duty by killing non believers. It would really work wonders we could even include some of our criminals that are taking up more and more room in our crowded jails. I think we could keep a steady supply of these types to Islam and they could practice their cutting the heads off. So anytime the feel that they need to pratice their eveilnesss would could just throw a few of these guys over the fense.
Someone75…..Yawn. We know liberals have a limited vocabulary but geez, this is pathetic.
Is it just me, or does the Madoff image that runs with this story look a lot like George Washington?
It is difficult to believe that someone such as Mr Madoff can exempt himself from further involvement in uncovering his fraud by a simple guilty plea and an “I’m sorry.” While his “investors” were themselves the victims of their own greed, Mr Madoff none the less remains culpable for creating the image that he was a genius in achieving greater than prevailing returns on investments, when in fact there were no investments at all. It was simple fraud.
13. Diane:
“Is it just me, or does the Madoff image that runs with this story look a lot like George Washington?”
~
LOL! You’re right. He does look like Georgie in that picture.
His swath of destruction runs throughout the Jewish community.
Reminds me of the folks that dug up Cromwell’s body and beheaded it. Everybody that Madoff fleeced was a greedy prick that deserved to be fleeced. If you are not a greedy prick, the con man cannot get you. Case closed. Financial Darwinism at it’s finest.
What party affiliation is Bernie Madoff? Republican.
How could Madoff be a scam? His compliance officer was his brother. You can’t trust a guy’s brother to give an honest opinion about him? Also, he cashed out his entire portfolio every quarter so that he didn’t have to file SEC disclosures. Doesn’t your broker do the exact same thing? And he was up 72 months in a row.
Excellent article. I don’t understand what happened to professional responsibility and accountability. To me, anyone with any financial experience or credentials that steered money or helped him in any way is just as guilty and at the minimum should get a lifetime industry ban.
18, linky?
As for the business of him “getting off” by copping a plea, there’s a reason why he simply plead guilty instead of working a deal. Now, the prosecution can’t compel squat. Counterintuitive as it may seem, sometimes the easy way off is a straight guilty plea. Now he doesn’t have to tell anyone where the loot’s buried.
Sorry, that’s just the way the law works.
He was the Dr Kevorkian of Wall Street – helping people commit financially assisted suicide.
I’m glad to see this egghead take a fall like Humpty-Dumpty.
#20 Boomer,
Exactly right. There is much more to this story than is being told, there is way too much funds missing and unaccounted for. I bet there are skeletons buried somewhere as well.
Looking Back Eilliot Spitzer was initiating intensive investigations into New York Banking and securities industries before he was sent off packing….i bet there are some Fed and SEC officials hoping this is quietly shoved under the carpet