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30 Jun 2009 08:59
The master fraudster may be behind bars. But victims of Bernard Madoff’s $65-billion (£39,5-billion) Ponzi scheme are becoming increasingly impatient for prosecution of the corrupt financier’s family, friends, colleagues and advisers.
On Monday Madoff was sentenced to 150 years in prison.
The United States district judge Denny Chin described the fraud as “staggering” and said the “breach of trust was massive” and that a message was being sent by the sentence.
Madoff pleaded guilty in March to 11 counts of fraud, theft and money laundering.
Madoff has steadfastly refused to point the finger at anybody surrounding him. But few believe the 71-year-old financier could have spent two decades pulling off Wall Street’s biggest scam without cooperation from others in the offices of Madoff Securities on the 17th floor of Manhattan’s Lipstick building.
“It strains credulity to believe this man could have perpetrated this fraud single-handedly for so many years,” said Jeff Zwerling, a New York lawyer representing Madoff clients. “The sheer volume of paperwork involved alone would render that practically impossible.”
Last week, the US Securities and Exchange Commission filed civil charges of securities fraud against four individuals and a Madoff-linked investment advisory firm, Cohmad Securities. All are accused of recruiting clients to Madoff’s fund while “knowing or recklessly disregarding” facts indicating that Madoff was a crook.
Meanwhile, criminal charges are outstanding against David Friehling, owner of a one-man accountancy firm based in a roadside shopping centre in suburban New York, which supposedly audited the books of Madoff’s global fund management empire. The Serious Fraud Office is investigating the London end of Madoff’s firm.
But to the frustration of those who lost money, a painstaking investigation into Madoff’s relatives has yet to yield much. The fraudster’s brother, Peter, who served as chief compliance officer at Madoff’s firm, has had most of his assets frozen by regulators. But he was given a living allowance of $10 000 a month after his lawyer complained he had insufficient cash to buy himself medicine, food or “even a cup of coffee”.
Madoff’s sons, Andrew and Peter, have disassociated themselves with their father despite holding senior roles at Madoff Securities. Neither of them are on speaking terms with Madoff. The younger of the two, Andrew, recently got into a street brawl outside a Manhattan chicken take-away shop with a former colleague who accused him of involvement in the fraud.
The object of greatest popular vitriol, however, is Madoff’s wife, Ruth, who still lives in the couple’s $7-million penthouse on New York’s Upper East Side. Although she has not been charged with anything, she regularly visits her husband in jail and has repeatedly refused to express any public sympathy for victims of his fraud.
Madoff’s wife has been banned from her neighbourhood hair salon and from a favourite Italian restaurant. US officials have seized her seaside retreat in Palm Beach, Florida. Trailed by tabloid photographers on the New York subway this week, she snapped: “Are you having fun embarrassing me—and ruining my life?”
Fury towards Madoff and his family remains raw. At least two suicides have been linked to the Madoff scandal. Thierry de la Villehuchet, a French hedge fund manager, slit his wrists in December, leaving a note blaming Madoff-related losses. In a recent television interview, De la Villehuchet’s wife accused the fraudster of “murder” over her husband’s death.
“I would like to ask him how he can be alive and wake up every morning and breathe, not only knowing he did such horrible things to thousands of lives, that he shattered so many dreams, but that he killed my husband,” said Claudine de la Villehuchet.
There is a lingering suspicion among many victims that Madoff has money stashed away somewhere. Bradley Simon, a New York lawyer specialising in white-collar crime, said: “They want him to spend the rest of his life in jail but they also want him to ‘fess up so they can get some of their money back.”
For Madoff, the prospect of many years in prison looms large. Once he settles into his new cell, he is likely to be put to work, despite his age, unless he can provide a convincing health reason for opting out. A spokesperson for the US bureau of prisons said: “All inmates medically able are required to work.”
Typical jobs include food service, cleaning, filing, factory work, teaching or, if he is lucky, shifts in the prison library. Hourly pay rates vary from 12 cents to 40 cents an hour and part of Madoff’s meagre wages are likely to be confiscated and used towards compensation of victims.
According to one former long-time prison inmate, Madoff is unlikely to get much respect from his fellow prisoners, given that he ripped off members of the public, rather than institutions.
“The biggest shock will be that he’s a nobody,” said Larry Levine, who spent a decade behind bars for crimes including securities fraud and drugs trafficking. “No one’s going to give a shit who he is.”
Levine runs Wall Street Prison Consultants, an outfit advising white-collar criminals on coping with jail life. He said the fact that Madoff’s victims were members of the public, rather than corporations, will weigh against him: “People are going to look down on him because he ripped off ordinary people. If he’d robbed a bank or an insurance company, people might respect that.”—guardian.co.uk
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