Bernie Madoff: The Man We Love To Hate Had Help
Bernie Madoff will be sentenced on June 29, 2009 by the Hon. Denny Chin, a judge notable for his legal probity as well as his general distaste for white collar crooks. In these difficult times, Madoff has become our ideal villain -- we hiss with hatred when he appears on our television screens, and cheer the anonymous photographer who, when shoved by Madoff, struck him in the chest so hard that it knocked him back two steps and briefly wiped the smirk from his face. Judge Chin's courtroom will be packed with Madoff's victims, a number of whom will be permitted to address the court and seek catharsis by describing the various ways in which Madoff ruined their lives. Many of Madoff's other victims have submitted letters to the court, comparing him with Hitler and Saddam Hussein. So look forward to some major hyperventilation.
It is easy, and fun, to hate Bernie Madoff. Watching his smug countenance as he went to and from from the courthouse to his penthouse (before his bail was revoked) inspired fury. The result of his wrongdoing has been financially catastrophic for many. His cheerful preying on people who trusted him is sociopathic. And watching the jail door slam behind him forever will provide most of us with some seriously needed schadenfruede. Even though Madoff's sentence will exceed the lifespan of even the eldest of the land tortoises, even if no one said another word, people want to go to the courthouse to participate in his punishment.
And yet.
Madoff could not have done most of this without the cooperation of his victims. Like all successful con-men, he did not try to sell his victims on his schemes. No, his victims came to him and begged him, sometimes literally begged him, to take their money. He appealed to people's greed--their desire to make even more money without actually working for it. He appealed to people's sense of exclusivity--"Oh, we have our money with Madoff" sniffed a member of the indolent rich over drinks. "Really!" said the wannabe. "He wouldn't take our investment. Said it was to small and he is only taking major clients." "Well, I'll speak to him about you, see if I can change his mind." Hence, the sheep recruit new sheep and amble them off to the abattoir. OK, so I made up the conversation, but I am pretty sure that is the way it went down. After a while, Madoff probably saw himself as an instrument of financial natural selection--his victims were just too dumb to be trusted with money.
And the greed has not stopped. A while back a woman filed a claim, asserting that Madoff had stolen two million dollars from her. A closer look at the claim revealed that she invested a million dollars with Madoff ten years ago. She received a return of 10% per year, which she drew out annually. Her totally bogus financial statement revealed that, even after receiving a million dollars in payouts, she had a balance of two million. When she discovered that the statement was phony, she claimed a two million dollar loss. Of course, by normal math, she lost nothing except the return she would have realized had she invested with someone legitimate--she put in a million and took out a million over a decade. It is through math like this that we arrive at the $50 billion dollars in loss figure. And when people say they lost "everything" to Madoff, they often have a very different view of "everything" than most of us. I know a couple who lost "everything" as part of the Madoff scam. "Everything" except a $7,000,000 townhouse in one Manhattan's most expensive neighborhoods. Most of Madoff's victims still have more money than you, my dear reader, will ever see in your life. Insert small violin music.
I know that some of his victims were really very nice and decent people, who ended up with Madoff through the advice of friends and family whom they trusted. And some of his victims actually worked for their money, rather than expecting their money to work for them. And these will probably be the victims who are showcased during the two minutes' hate on June 29th. But behind every little old lady who lost her life savings there are multiple, greedy, rich folk who cannot forgive Madoff for the unpardonable sin of showing them that they were not as smart as they thought they were.
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You conveniently forgot to mention the foundations, universities and other charities who were devastated by Madoff's greed.
Ron, I love you even more than Kirtzman does. I also have to disagree with much of what you say, even though it's articulated as masterfully as I've ever seen. The outrage at Madoff is just and necessary. The victims have every right to be shouting their outrage from rooftops, and even non victims should be. This is especially true since Madoff's lawyer is asking for a mere 12 years as his sentence. Where is the outrage?? The mere thought of such a sentence for such a horrible criminal should incite universal outrage! " Fool me once shame on you, fool me twice shame on me". Unless, Madoff's victims were descendants of Charles Ponzi's, you really can't blame them for trusting someone they thought was a financial genius and hadn't been known to be a con man. Additionally, I think the other people we should be looking at holding accountable are the SEC and government regulators who for too long IGNORED repeated warnings on Madoff's shady dealings specifically and on other instances of corporate malfeasance, fraud and abuse in general. I agree wholeheartedly that the victims who are also trying to scam the system are also indecent and dishonest. But to put them in the same league or even the same sport as Madoff, is the corporate equivalent of saying someone who has their car broken into and then exagerrates their losses to get a bigger tax deduction, is almost as bad as the vandal. It's simply not the case.
That tendency for 'easy money' is just another part of Hedonism. Now we just need ten years of regret and clean living instead of greed replacing need. From the bottom up is going to be tough for some.
Lets hope that Madoff and Enron and people like that don't fade from the memory too quickly.
Ron - you know I love you, but that is a really cruel take on this. I've sat in the kitchens of more sobbing Madoff victims than I can count in researching my book. There are so many retirees who put their life savings into their Madoff accounts feeling blessed that they'd found a safe and consistent return on their money. Many have now had to sell their houses and move in with their children. Others have been wiped out and forced to leave their assisted living communities.
"Expecting their money to work for them" is not immoral. Investing is not unethical. If these victims - even the rich ones! - thought their investments were legit, and they obviously did, why on earth would you fault them? This is truly blaming the victim.
It's pretty easy to make a cartoon out of the wealthiest of Madoff's victims. But a 75 year-old retiree who's lost everything and suddenly needs to go back to work as a result of a corrupt Wall Street titan is the kind of person who usually calls Ron Kuby for help. What's come over you?
-Andrew Kirtzman
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I love you too, Andrew. And I always appreciate your comments. I genuinely feel bad for the working victims who lost their retirement accounts and other hard-earned assets. But the wealthy investors who helped legitimize Madoff deserve no more sympathy than the bankers who clamor for their bonus money from taxpayer funds (the comparison is more than apt--the rich will reap huge tax deductions for their improvident investments with Madoff, meaning that the middle class will once again bail out the rich). These folks had the financial acumen to know that getting a 10%plus return when everyone else is getting 5% cannot be kosher. But they were greedy and thought they were smarter than everyone else. It is a strange culture where someone makes "untold milions they have never toiled to earn" loses some of those millions to a Bernie Madoff and still is called a "victim."
Ron! So good to see you had the time to respond to this post. It seems that your point is that although there are some Madoff Victims who are suffering, you feel it important for the world to know that some of these "Victims" are "rich," and should have known better.
It doesn't seem that your point is gaining much traction here considering I am one of three people to comment. So here's what you might consider: send this article to Irving Picard, the custodian of the SIPC and send it to all the brokerages on Wall Street. They'd love to circulate this article around and say, "Check it out, even the guy who writes at The Huffington Post and broadcasts on Air America has got our back!"
That will give them a big sigh of relief, because then the big pile of money they've given to the SIPC (1.6. billion), to protect against exactly this scenario, can remain intact. Thank God, they started building that money in the SIPC thirty years ago to encourage investors to invest more, "Come on in!" they said, "it's perfectly safe. In fact, should one of our approved brokerages steal your money, we'll guarantee your last statement up to $500,000!" Only now they've decided they're not really interested in doing that.
(END PART 1)
One more question for Attorney Ron Kuby. Ron, the Madoff Victims could really use your help as an attorney. Many, you see, have lost all of their money in Madoff and can't afford lawyers, and the interest and level of commitment you have shown to uncovering all the facts would lead them to believe that your counsel would be immeasurable.
You see, according to Josephine Wang, the SIPC's general counsel, Madoff victims are entitled to what's on their last statement. She said this right after the story broke, but when the SIPC found out there actually were statements, she has disappeared and not commented on this statement. Now, Madoff Brokerage was protected by the SIPC, a fact I'm sure you're aware of, otherwise I can't imagine why you'd be writing about it. There is also a case called the New Times Case, in which a federal judge "ordered SIPC in 2002 to pay $500,000 to customers whose statements reported nonexistent trades by actual mutual funds." I'm not sure how much stake Madoff Victims should put in that. I mean, it was just a ruling of a federal judge, after all.
Let me ask you, Ron Kuby, your legal council for the Madoff Victims? Many of them have sold their homes and have elderly parents who have moved in with them, so a timely answer would be greatly appreciated.
Wow, what an incredible compassionate article. I particularly enjoy the way Ron Kuby says "But behind every little old lady who lost her life savings there are multiple, greedy, rich folk..." Yes, and behind every innocent man who has been sent to the gas chamber, there's been many guilty murderers too. So let's kill them all.
The problem with sites like this (which I love by the way) are that any person with a gut reaction based on no facts can say anything they want, and Rob Kuby? You have no facts. The truth is that for every super rich person who lined up "sniffed, 'Oh we have our money with Madoff,'" there were a hundred hard working Americans who did not.
One other little fact you leave out is that Madoff is an SEC approved, SIPC protected brokerage - same as Smith Barney or Oppenheimer. His customers received monthly statements citing exactly the purchases made. I'm certain, Rob Kuby, that if your money were in one of these brokerages and lost overnight, you might learn a little bit more about what options might be available for you to gain back just a fraction of your loss.
Finally, someone says it likes it really is. One rich guy rips off a bunch of other rich people. Where's the crime?
In the "ripping off" part.
Not only did the author miss the real story by more than a mile - but most of these comments do too. The SEC publicly endorsed Madoff starting in 1992. This was followed up by their failure to properly execute routine audits required of the Madoff firm for decades, and their totally ignoring - or hiding - the detailed Markopolos reports beginning in 1999 detailing the fraud that could have shut Madoff down then. Of course, that leaves the small matter of the IRS that publicly endorsed Madoff's firm as a non custodian bank on its public website beginning in 2004. This makes all Madoff investors.
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