Bernard Madoff on The Huffington Post

Bernard Madoff Transferred From Prison To Medical Facility

2009-12-23T16:02:41Z

BUTNER, N.C. (AP) -- Bernard Madoff has been moved from a North Carolina federal prison to a prison medical facility.

Federal Bureau of Prisons spokeswoman Traci Billingsley said Wednesday that Madoff was moved Friday.

She says the bureau won't publicly discuss the reasons for an inmate's transfer.

Madoff has been imprisoned since March. That's when he pleaded guilty to fraud charges and admitted cheating thousands of investors out of billions of dollars.

The 71-year-old was arrested a year ago after he confessed his private-investment business was a fraud.

He is being treated at the Federal Medical Center, part of the Butner Federal Correctional Complex in Butner, N.C.

Madoff's Motto: "F*ck My Victims" (VIDEO)

2009-12-21T08:00:13Z

The Wall Street Journal passes along this video profile of K.C. White, a fellow inmate of Bernie Madoff's at the Butner Federal Correctional Complex in North Carolina.

When Madoff sat for a portrait with K.C. White -- who sketches in his free time -- he insisted that he not be depicted in his prison uniform. White depicted him in a suit and tie. Madoff, who White says was pleased with the work, signed the portrait -- which the artist is now trying to sell.

According to White, Madoff was less than repentant for defrauding his clients of billions of dollars. "His whole motto was 'F*ck my victims,'" he said. "That's all he would say." And White didn't take to Madoff's "smirk," either: when he looked at his face, White says, what he saw in his expression was: "I got you."

Watch Madoff's former prison friend describe his impressions below:

Robbie Vorhaus: Tiger, Letterman, Madoff And More: Eight Lessons From The Decade's Biggest Flameouts

2009-12-16T12:32:57Z

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Fortune 's Stanley Bing: Why Didn't the Enforcers Enforce?

2009-12-16T10:38:07Z

USA Today reports this morning that "Federal prosecution of serious financial crime plummeted as the nation headed toward one of the worst economic meltdowns in U.S. history." The story then goes on to note that, according to government records, between 2003 and 2009 "the number of federal corporate fraud cases plunged 55%; securities fraud charges dropped 17%; and bankruptcy fraud cases fell by 44%."

This, of course, on the heels of prior reports that the SEC had investigated Bernie Madoff and instead of prosecuting him ended up inviting him in for tea and crumpets and a little consultation when he was in town.

The mind boggles. What could be the possible reasons why the government, charged with prosecuting white collar criminals who exploit our sacred financial institutions and the people they serve, would fail so egregiously to pursue their brief with aggression and verve? I'm considering several possible reasons:

They were very busy making sure that the corporate annual reports of legitimate enterprises were properly formatted and all footnotes in order;

The Administration during the period in question made sure to staff all Federal regulatory agencies with senior officers who were hostile to their core functions;

Nobody in Washington at that time considered making a lot of money by any means possible to be a crime;

The cat ate their homework.

People at the agencies correctly saw that if they started prosecuting anybody for a variety of crimes, they'd have to go after most of the people then doing business in certain portions of the market;

There was no perceived institutional upside in going after certain types of criminals;

Everybody forgot what a crime was.

These are just a few possibilities. Students of the situation will note that the number of new cases prosecuted for corporate fraud took an immediate hockey stick upward in 2009. Studies are now underway to ascertain the cause of this increase.

Stanley Chais, Investor Tied To Madoff, The Subject Of New Criminal Probe

2009-12-11T17:48:01Z

NEW YORK — A criminal probe of a prominent California investment manager parallels a civil investigation that concluded he fed nearly $1 billion of investor money to Bernard Madoff, earning a quarter billion dollars in fees along the way, prosecutors said Friday.

Prosecutors filed papers with a judge in U.S. District Court in Manhattan asking that the civil case brought against investment adviser Stanley Chais by the Securities and Exchange Commission be delayed six months while they determine whether to bring criminal charges.

Bernie Madoff Makes Friends Behind Bars

2009-12-11T01:05:51Z

A description of Mr. Madoff's prison life has emerged from interviews with current and former inmates at Butner and various lawyers, including some who have met with him in prison.

Bernie Madoff Scandal: One Year Anniversary

2009-12-10T22:55:21Z

NEW YORK — The FBI agents who arrived at Bernard Madoff's luxury penthouse apartment on the morning of Dec. 11, 2008, found a broken man in a bathrobe who knew his time was up.

The one-time titan of finance confessed he had "paid investors with money that wasn't there." A year after Madoff's scheme collapsed – with headlines of $50 billion in losses – investigators and investors are still struggling to measure the full scope and impact of the largest securities fraud in history.

Sharon Meers: Boys Gone Wild: The Mine's Bigger Than Yours Market

2009-12-10T16:36:42Z

December 11 is the anniversary of Bernie Madoff's arrest. Though Madoff's fraud was different from the willful blindness that caused so many Wall Street firms to lose their way, there's an important similarity: Market discipline was replaced by boys gone wild.

Free markets assume the Economic Man: the rational actor who weighs risk against reward. In the era that led up to the collapse, that guy was AWOL, replaced by a relentless game of king-of-the-hill.

What drove the frantic one-upmanship was greed -- but what drove the greed? Here's a hint: A businessman, about to take off on his own private plane, spotted the Gulfstream V owned by a friend. "Someone's **** is always bigger," he joked.

This ethic is so common it's often assumed to be an essential part of business culture. Economists-turned-biologists often claim this kind of competition reflects natural selection, as primitive men sought to spread their seed.

Maybe so. But we can avoid speculation about sex-in-the-wild. A 2008 study in the Journal of Personality and Social Psychology points out that because "men are made, not born," manhood is seen as precarious, requiring continuous social proof. This means that many men feel an urgent need to protect their place in the pecking order. In hyper-masculine environments -- like Wall Street -- where money is the measure of a man, it is these cultural understandings that drive excessive risk-taking.

It's bad for business when men's worries impair their common sense. According to Harvard Business Review, a major oil company cut accident costs by 84% when it insisted that oil-rig workers stop ignoring basic safety precautions like double-checking key equipment as a way of proving their mettle. The workers were trained to discuss their fears in what some considered a "female" way, and to separate manhood from risky business. That's why large employers like Volvo and Ernst & Young are spending money to educate managers about how unexamined ideas about "manliness" can undermine good management.

These ideas often leave women baffled. For example, when a fund manager (a woman) asked what risk controls Societe General had in place when it lost billions in a 2008 trading fraud -- second only to Madoff's -- a male executive replied: "You can't hold back a young trader when he is on fire!"

Actually, you can -- and should. A series of recent studies document that women investors, by avoiding excessive risk, produce more consistent returns than their male peers. And researchers on a new 15-year study of the S&P 1500 find that having more women in top management predicts measurably stronger results. This body of research says that women tend to be more deliberative and risk averse. Another way to see it: because women aren't drawn into the negotiations over whose is bigger, they more soberly weigh benefit and risk.

Plenty of men resist these pressures too. We know from the management classic, Good to Great, that the best CEOs are not amped-up macho-men. Break-out leaders in businesses as diverse as Abbott (medical products) and Kimberly-Clark (household goods) dramatically outperformed the market for many years by nurturing talent and building enduring value with cultures of trust and teamwork.

So it's time to stop scolding business leaders and MBAs about greed, and follow the lead of Volvo and Ernst & Young. What's needed is more thoughtfulness about how to free certain work cultures from masculine bravado. The result will be a lot more co-ed common sense.

Sharon Meers is a former Managing Director at Goldman Sachs and the co-author of Getting to 50/50; Joan Williams is Distinguished Professor at University of California, Hastings College of the Law, and Director of the Center for WorkLife Law.

Meredith C. Carroll: Neiman Marcus Goes Budget

2009-11-23T17:10:14Z

Last week Neiman Marcus unveiled its 2009 Christmas Book. As usual, the extravagant offerings in the 83rd annual catalog do not disappoint, particularly the A5 Sports Aircraft and Pilot Training for $250,000, Algonquin Round Table Experience with such luminaries as Henry Louis Gates, Jr., Nora Ephron and George Stephanopoulos for $200,000, and cupcake car with a 24-volt electric motor, customizable frosting and sprinkles and a matching hat for $25,000.

This year, however, in an apparent nod to the continued economic woes plaguing the country, not only are there none of the traditional million dollar-plus selections, but there are some surprisingly recession-conscious gifts.

Livers everywhere are expected to be tickled and pickled as Neiman Marcus invites customers to drink their troubles away Kennedy-style with the opportunity to become a Maker's Mark Master Distiller for a day. For just $7,500, you and friend can participate in the unique whiskey-making process step by step. Or skip the demo, go directly to the bar and do shots until you throw up or black out. For another $500, a confidentiality agreement will be signed and notarized guaranteeing the video of you passed out in the parking lot with a red wax stamp on your forehead will not be posted on YouTube.

Whiskey not your cup of tea? Then why not opt instead for the Hall Artisan Wine and Art Experience for $20,000. An exclusive immersion into the art of winemaking, you can have the chance to create your own vintage in a private blending session. Unemployed? Ask to swap out the wine estate tour for bartending lessons (while supplies last).

For $12,000, become the owner of a custom-made C.F. Martin & Co. six-string acoustic guitar and try to sing away your financial blues (Zoloft prescription sold separately). Guaranteed excellent acoustics for street corner performances (guitar case also sold separately). And should you lose your shirt, and house, to the bank, you can always burn the guitar and use the heat to roast a Neiman Marcus hot dog (made from grass-fed pork parts, bien sûr).

Also for $12,000, a sustainable design art tree chandelier made from 366 recycled soda bottles sends a strong message to the gardener that you might be nearly broke, but you're still too good for a tiki torch. There's also a considerably less expensive version for $18.30 -- Neiman Marcus will sell you 366 empty soda bottles for recycling and throw in a complimentary votive candle that you're welcome to try and shove inside a bottle (extra long lighter not included). Perfect for those who'd still like something by Neiman Marcus under the Christmas tree despite not being able to afford something from Neiman Marcus to hang on a real tree.

A limited edition, preserved 8.5-inch beetle posed in mid-flight and festooned with "gears, dials, springs, and other mechanical thingamabobs" from antique pocket watches displayed under glass on a walnut base and adorned with a brass plaque can be yours for $8,500. Because even Neiman Marcus runs out of gifts ideas every once in a while.

And for $199, Neiman Marcus sympathetically offers the tools to fake a luxury vacation to St. Barts to those who lack the funds to be seen among the rich and famous in the Caribbean this holiday season.

It starts with a limousine ride timed perfectly for when your most obnoxious neighbors step outside to retrieve their morning newspapers, at which time the driver will carry a set of rented Louis Vuitton luggage from your front porch to the car. While you spend the week at a Motel Six in your town (Dominos and Netflix coupons may be requested upon check-in), you will be provided with photoshopped pictures of you partying with P. Diddy on Paul Allen's yacht, his and her NetJets baseball caps and a five-punch pass to the nearest tanning salon.

Upon your "return," a detailed bill from the Hotel Guanahani & Spa will be "accidentally" emailed to the secretary of your office nemesis. And for an additional $39, Neiman Marcus will arrange for a Victoria's Secret model to interrupt your conversation with a golf club acquaintance at the neighborhood dry cleaner's. She'll shyly ask if you're the same person who gallantly retrieved her bikini top while she was body surfing at La Page Grand Saline a few days earlier. For another $11, she'll wink at you suggestively and press her calling card into your palm.

Some restrictions and exclusions apply, particularly to employees of Goldman Sachs and anyone named Madoff.

Fortune 's Stanley Bing: What Are You Thankful for?

2009-11-23T13:38:23Z

Thanksgiving is upon us. And it's the rare individual among us who doesn't have a lot to be thankful for. As we prepare for Thursday's festivities, I thought it would be nice to ask you what you would put on that list. Personally, here are some of the things that give me a warm and fuzzy:

I am thankful that Bernard Madoff is now a big kingpin in prison, both because it means he is in prison and because I also get a laugh at the mental image of two old farts indulging in a pushing match from which the despicable swindler emerges triumphant. I like to think that a background in high finance prepares you for anything.

I am thankful that most of my friends still have at least modest expense accounts. It means I can still sponge off them now and then.

I am thankful that my house is still worth basically what it was assessed at when I got my mortgage.

I am thankful that Wall Street is still a festering sump pump of illogic, hubris and greed, and will continue to provide me with plenty to write about for the foreseeable future.

I am thankful GM still exists and is making a new Camaro.

I am thankful for Tim Geithner's temper. It makes him do funny, interesting and sometimes very satisfying stuff.

I am thankful that fewer people than ever can talk about the benefits of a deregulated, free-market system without laughing. Of course, I'm not thankful that they'll keep trying until, in the end, they win again.

I am thankful that I haven't needed to speak to a single attorney on a matter of personal importance this past year.

I am thankful that my medical insurance company paid a small percentage of my costs back to me, even if it was under protest and after repeated bludgeoning. Actually, I'm not that thankful. I think they stink. But I'm grateful that I have this opportunity to say so.

I am thankful for newspapers and magazines. I know that every smug aggregator out there must be too, since they provide 95% of all content you get on the web.

And in that regard, last of all, I'm thankful that a new system of communication exists by which I can write whatever the hell I'm thinking on any given day, with no benefit of research, no fact-checking and very little personal responsibility attached. In short, I'm very thankful for the Internet.

How about you? What do you find yourself appreciating at this potentially festive season?

Steven Mesler: Imagining a Post-Bernie Madoff New York City

2009-11-19T16:14:25Z

It's not often we get to see video surveillance of a crime in progress, but that's one of the many fascinating things you'll find on the website of the Philoctetes Center for the Multidisciplinary Study of the Imagination. It's Bernie "the perp" Madoff during a round-table discussion titled "The Future of the Stock Market". He's there sitting among his peers, an employee, and in the house his clients built expounding on what a mensch he is. You see, according to Bernie, it isn't luck and it isn't pure mathematics, it's the blend of these things and his own cunning instincts for the perfect transactional moment that make him such a successful money manager. In short, he's an 'outlier' and you need Bernie.

Screen shot of Bernard Madoff (left) and Robert Stampfli (right) from "The Future of the Stock Market".

The video was recorded on October 7, 2007 which coincided with the cracks in the housing market bubble beginning to let the light in. There are jaw dropping moments in light of the revelations of Bernie's massive fraud but I will not rehearse them here, I want you to watch the video instead. Co-founders of the Philoctetes Center Francis Levy and Edward Nersessian won't rehearse that moment or any of the other private feelings they have about the turn of events. The most I ever got out of them was a response to Bernie's statement regarding how impossible it was to break the law given the current regulatory environment. Edward wrote, "To me, as a student of human psychology, his exaggerated assertion is not surprising."

You can watch that video on the Philoctetes website, here.

It's hard enough to live in New York City without Bernie gutting a great institution. While I will agree the city is less Urban Cowboy than it used to be, it remains our country's most challenging urban environment to get by in for all but the wealthy. Debates of the pros and cons of remaining here take place in every apartment, office, and studio on a daily basis. In Chicago they ask where you went to high school, Seattle if you work for Microsoft, and in New York how much you pay to live here.

E.B. White wrote in his essay, "This is New York" (1948): "Every facility is inadequate-the hospitals and schools and playgrounds are overcrowded, the express highways are feverish, the unimproved highways and bridges are bottlenecks; there is not enough air and not enough light, and there is usually either too much heat or too little. But the city makes up for its hazards and its deficiencies by supplying its citizens with massive doses of supplementary vitamin-the sense of belonging to something unique, cosmopolitan, mighty and unparalleled."

Edward Nersessian M.D., Co-founder

Last year I attended a screening of a documentary by Marion Cajori on the painter Chuck Close, of whom I am a great fan. It not only was a fantastic documentary but the subject stopped by for a chat before the curtain fell. He then took his seat in my isle three seats down. Talk about "unique, cosmopolitan...and unparalleled"; I skipped home all the way to Brooklyn and used the slimmest of segues all week to bring the event up in conversation. I'm still talking about that evening.

Francis writes, "We are interested in the intersection between science and art. In his
famous Two Cultures essay C.P. Snow inveighed against the separation
of these cultures. In short where these two modalities of experience
come together is in the notion of thought process in both what
neuroscientists call the higher brain activities and in emotion which
is related to the limbic areas of the brain. We are interested in
originality, in creative process, in innovation."

Unfortunately we are on the cusp of losing this organization. Every dime of the money to support the institution was swallowed up by Bernie's deception. It's gone. It's never coming back. The moment they were made aware that they'd been eviscerated by Bernie, Francis and Edward put out a clarion call to the community for donations to support the institution while they imagined a new way forward. The response exceeded their expectations.

Francis writes, " We have received grants from Bloomberg LP, from the Department of
Cultural Affairs of the City of New York, from the Templeton
foundation, the Leon Levy Foundation, yesterday we were informed that
the New York State Council on the Arts will be making grants to us in
both poetry and music categories and our large following on line (our
videos have received over 300,000 hits on You Tube on which we have
our own channel) and in person have contributed. Still even bare bones
this is an expensive enterprise. I think we are determined to keep
Philoctetes alive. We need to find some major donors. We need a Paul
Mellon, some one interested in art and the mind. We need someone
interested in psychoanalysis, neuroscience and art, the three areas
that constitute our mission. We need a patron."

Co-founder Francis Levy

There is no other organization in the city that covers so much ground. This past week alone included the following events: round-table discussions on The Inventions of Bob Dylan, Mathematics and Beauty, Poetry and Microgenesis, Naming God Naming Infinity-Religious Mysticism and Mathematical Creativity, a performance by the Wingdale Community Singers, a documentary on Alice Neel, and a discussion on The Future of Health Care on the same day Congress passed ground breaking legislation on that subject matter. The Philoctetes Center isn't a retrograde think tank, they are explorers, they are interested in a better New York City and world going forward.

But it's over. Unless it's not. December 31st will be the last day unless we create a new heap of money to propel it forward. It is as simple and confounding as that, a matter of money.

Bernie Madoff Auction: Mets Jacket, Jewelry Sold To Benefit Victims (PHOTOS)

2009-11-16T11:50:23Z

NEW YORK (Associated Press) -- It was about fascination with big money – and the life of a couple at the center of the biggest financial fraud case in U.S. history.

Bernard and Ruth Madoff's belongings fetched several times their estimated values at auction Saturday for a total of about $1 million, twice as much as the auctioneers had hoped for.

The fallen financier's blue satin New York Mets baseball jacket with his surname stitched on the back, valued at up to $720, sold for $14,500. The jacket carries its own special meaning: Team owners Fred Wilpon and Saul Katz were among the victims of Madoff's fraud.

Madoff's Hofstra College ring, estimated at $360, went for $6,000.

Excitement filled a Manhattan hotel ballroom as people participating in the auction, run by Pflugerville, Texas-based Gaston & Sheehan, bid for items they could afford without being as rich as Madoff was.

Charlie Blumenkehl raised his hand for a set of Madoff's golf irons, clinching them for $3,600, against a $350-to-$400 estimate.

"I just wanted Bernie's name on the clubs," the New Jersey fund manager said with a laugh, adding, "but I don't want his vibes to be transmitted – my fund is doing better than his."

Two pairs of Ruth Madoff's diamond dangle earrings sold for $70,000 each, against a pre-sale estimate of no more than $9,800 and $21,400. But the most highly prized item in the sale, one of Bernard Madoff's 17 Rolex watches, fetched only $65,000, paid by an unknown buyer. The watch was valued between $75,000 and $85,000.

The auction was organized by the U.S. Marshals Service, which seized the couple's properties – a penthouse on Manhattan's Upper East Side and houses in Montauk, N.Y., and Palm Beach, Fla.

Inside the homes were some of the items on the block Saturday, ordered forfeited as part of Madoff's sentencing after he pleaded guilty in a multibillion-dollar fraud that burned thousands of investors. Proceeds from the auction will be divided among his victims.

The lots ranged from dishes, pens and stationery to decoy ducks, furs and the Rolex, dubbed the Prisoner Watch.

The Swiss chronograph watch was modeled on those made for World War II Allied airmen imprisoned in Germany, who used them to time prison patrols and plan a possible escape. This one graced the wrist of Madoff, now a 71-year-old inmate in a North Carolina prison, serving a 150-year sentence for defrauding investors for decades.

The sale sums up the Madoffs in a nutshell, auction observer Lark Mason said.

"They wanted to show off their lifestyle with big houses, yachts, jewelry," he said. "They didn't buy things they were passionate about – they just wanted more and more."

The nearly 200 lots were an assembly line of conspicuous consumption, fueled by proceeds from the tens of billions of dollars that Madoff's Ponzi scheme cost investors. Some investors were wiped out financially while the Madoffs thrived, buying up watches and jewelry.

Ruth Madoff has not been charged with any crime. But she agreed to give up her possessions in return for a promise that federal prosecutors wouldn't pursue $2.5 million not tied to her husband's fraud. The scandal forced her to move out of the $7 million penthouse where she and her husband lived.

At the auction, a lineup of other Rolex and Cartier models filled a giant screen, selling for up to $30,000 each. But the couple's tastes could also be downright common; seven Swatch watches went for $850, against an estimate of $100 to $150.

There was little of great artistic value in the Madoff homes, Mason said.

"They weren't interested in great art," he said.

The auction house charged no premiums but was paid an undisclosed fee. Buyers, some of whom bid by phone from all over the world, were not identified.

Bernie Madoff's Yacht, Smaller Boats Up For Auction

2009-11-16T11:50:17Z

FORT LAUDERDALE, Fla. — A vintage 55-foot yacht named "Bull" and two smaller boats that once belonged to imprisoned financier Bernard Madoff are headed for the auction block, along with an even bigger yacht once owned by Madoff's right-hand man.

Madoff's 1969 Rybovich sportfisher, a wooden boat meticulously restored, is the prize offering at Tuesday's private auction. As of Monday, 29 people had put up a $100,000 deposit for the opportunity to bid and more were expected to register, according to the U.S. Marshals Service.

Zsa Zsa Gabor Has $118,321 Tax Bill, Blames Madoff

2009-11-14T08:49:39Z

LOS ANGELES — Zsa Zsa Gabor's lawyer blames convicted swindler Bernard Madoff for a hefty tax bill owed by his client.

According to documents obtained by The Associated Press on Friday, the Internal Revenue Service filed a lien of more than $118,000 for the years 2001 and 2002 against the 92-year-old actress on Oct. 5 in the Los Angeles County Recorder of Deeds.

Madoff's Items Auctioned: Jewelry, Clothes And Stationary Up For Grabs

2009-11-09T20:25:53Z

NEW YORK — Of all the items set to go on the auction block this week at a midtown Manhattan hotel, there's one that would take some mettle to wear in public: A satin New York Mets baseball jacket emblazoned with the name "Madoff."

The jacket – valued at between $500 and $700 – is among hundreds of pieces of jewelry, clothing and other personal effects once owned by disgraced financier and vanquished Mets fan Bernard Madoff and his wife, Ruth.

David A. Love: Absolute Corruption Is the Rule in America

2009-11-09T13:41:21Z

Often,
people will look at a high-profile example of corruption, and conclude that the
egregious act is an exception to the rule.
In reality, it might be the tip of the iceberg.

On
October 29, 2009, the Supreme Court of Pennsylvania did a wonderful thing when
it expunged the
records of as many as 6,500 juveniles in Luzerne County.
That’s not a misprint.

Two
judges in that county were sent up the federal river for locking up thousands
of innocent children over five years, in exchange for $2.6 million in kickbacks
from private juvenile detention centers.
Judges Mark A. Ciavarella Jr. and Michael T. Conahan helped the developers
secure the county contracts to build the prisons. Moreover, they filled the detention centers
with warm bodies— many of whom were first-time offenders with minor infractions—
and illegally denied the teens access to an attorney.

In the
case of Luzerne, the “cash for kids” scheme was a coldblooded expression of
greed, and we should not downplay the seriousness of the crimes committed. Yet, what happened in this rural county in northeastern
Pennsylvania is a reflection of what America’s criminal justice system has
become— a for-profit, money-making enterprise.

Often,
our poorer children, disproportionately of color, are funneled into a
cradle-to-prison pipeline through adulthood.
With a criminally negligent public school system, and job opportunities
outsourced abroad, many children at the bottom of the socioeconomic ladder are
ensured a future of little else than street corners or prison bars. In fact, many urban schools are nothing more
than prison prep, complete with police and metal detectors.

Interestingly,
the children of Luzerne, a county which is nearly 97% white, did not resemble
the “usual suspects” in the criminal justice system. But that really is not the point— when
prisons are a capitalistic endeavor, warm bodies are needed as the raw
materials, and so they must come from somewhere. And consequently, justice takes a backseat to
dollars. From the foodservice industry and
the phone companies, to the Wall Street bankers and the investors, many people
have a vested interest in filling up those empty prison beds and maximizing
their cut. American capitalism made the
U.S. prison population the world’s largest at 2.5 million, with mass
incarceration for nonviolent drug offenses and victimless crimes.

And
American-style capitalism is problematic for the culture of corruption it has
enabled, in the absence of an effective regulatory framework. Much attention has been paid to Bernie
Madoff, that poster child of the Ponzi schemes, who defrauded investors out of $65
billion. The damage he created is
impressive, from the family savings that were forever lost, to the charities
that went under. But like the judges in
Luzerne County, Madoff was merely a cog in a wheel of corruption that enabled
greed.

Madoff himself
said he was surprised his
scheme lasted so long, and that the Securities
and Exchange Commission (SEC) investigators were so clueless about
his fraudulent activities over 16 years.
The fact is, some members of the SEC staff were inexperienced or just
idiots. Further, Madoff
had too much credibility with the SEC and was not properly investigated,
with red flags uncovered yet ignored.

With the
deregulation of the financial sector and the evisceration of the Glass-Steagall
Act came the financial crisis of 2008.
The system had become the Ponzi scheme.
The economy was built on paper shuffling and no tangible products. Consumers were preyed upon with sketchy,
deceptive and destructive subprime mortgages.
Banks gambled people’s money in high-risk, high-stakes poker games. And with a revolving
door between Wall Street and the Treasury department, the same people with
the gambling problem are running the casino, and “monitoring” it as well.

The banks
that ruined the country swore by the free market when it suited them. But now, they gladly accept their corporate
welfare bailout checks, and scoff at the rest of us. Wall Street has rebounded, business as usual,
and Gordon Gekko is smiling. Meanwhile,
America’s former middle class is joining the ranks of the poor, and the
foreclosed are filling the nation’s homeless shelters. Short of bold government action of
Rooseveltian proportions, there will be no economic recovery for everyday
people. After all, the unemployed, the
homeless, and the soon-to-be unemployed and homeless generally are not big
spenders.

The moneyed
interests also have corrupted the political process, and a prime example is the
behavior of Senator Joe Lieberman (I-CT) and the “Blue Dog” Democrats in the
health care reform debate. Lieberman has
earned a special place in the hearts and minds of progressives of late for
vowing to stand with Republicans, and filibuster any health care bill that
contains a public option. He has even
said he would
rather have no bill at all than a bill with a public option.

In
American political folklore, the Senate is presented as an august deliberative
body where cooler heads prevail, where genteel statesmen and stateswomen put
the brakes on rash and potentially harmful legislation, for the betterment of
all. In reality, the Senate is a place
where bold legislation for the public good is killed, because industries put a
contract out on democratic ideas. And
they instruct their employees, the senators, to stop these ideas in their
tracks. This is a bipartisan endeavor. The Blue Dog Democrats, who are the
self-proclaimed fiscal conservatives of their party, distinguish themselves
from other Democrats by their greed and hypocrisy. They receive the most corporate money, and
have rejected less costly health reform bills that would hurt their benefactors. Ask Sen. Max Baucus of Montana, chair of the
Senate Finance committee, and a key player in this year’s health reform
debate. Baucus received $3.4 million
from health and insurance industry interests between 2003 and 2008, more than
any other member of Congress. Judging
from the sad excuse for a health reform bill that came out of his committee,
the industry got its money’s worth.

And Lieberman,
the dirty dog that Democrats love to hate, is a fully-owned subsidiary of the
insurance industry. Over the course of
his career, he has received $2.6 million from the insurance companies. In addition, his wife is a health care
industry lobbyist. Despite the
overwhelming popular support in Connecticut for a public option, Lieberman has
decided to follow the money. The
Democrats must take Lieberman to the woodshed for his
double-crossing ways, and relieve him of his coveted chair in the
Homeland Security and Government Affairs committee. Not to be outdone, Sen. Evan Bayh (D-IN),
whose wife has made at least $2
million sitting on the board of a major health insurance company, hinted
that he would filibuster the public option as well. Apparently, faced with the prospect of the Democratic
leadership opening a big can of whup ass on him, he backed off.

The
problem here is not just Senators Lieberman, Baucus, Bayh and a few other
unscrupulous politicians. The fact is
the entire political game, the link between money and politics, is rancid and
is killing democracy. In the case of
health care reform, the corrupting influence of money is literally sucking the
country’s life blood.

As in the
days of old before the 1929 stock market crash and the New Deal, corporations
have far more influence in this society than they are entitled. Citibank gleefully proclaimed in a series of
reports in 2005 and 2006 that the
U.S. is a plutonomy— a system of wealth inequality in which the richest 1% hold
a disproportionately large share of wealth.
The rich are likely to get even wealthier, at the expense of labor. This rising inequality, Citibank predicts,
will lead to a political backlash.

And some
backlash is needed now. It is certain
that the outrageous displays of greed and corruption deserve our attention and
our outrage. But to dismiss them as
exceptions to the rule, rather than products of a systemic, vulturous culture
that must be attacked, is to choose a perilous path.

David A. Love is an Editorial Board member of BlackCommentator.com, and a contributor to the Progressive Media Project and theGrio. He is a writer and human rights advocate based in Philadelphia, and a graduate of Harvard College and the University of Pennsylvania Law School. His blog is davidalove.com.

How Madoff Managed To Fake His Trades

2009-11-04T13:12:56Z

Over the past six weeks, Securities Industry News has dug into and beyond the court records to construct the most extensive report yet on how Madoff actually operated: The systems and technology he and underlings used to create-or fake-the most detailed set of customer accounts underlying a fraud in the history of the securities industry.

SEC's Madoff Report: Madoff Was Amazed Regulators Repeatedly Failed To Detect His Fraud

2009-10-30T17:08:19Z

WASHINGTON — Bernard Madoff was apparently convinced that it never even occurred to Securities and Exchange Commission staff he was running a Ponzi scheme, despite the agency's numerous probes of his business.

A document released Friday details a prison interview conducted on June 17 by the SEC inspector general in which Madoff says he had the impression that "it never entered the SEC's mind that it was a Ponzi scheme."

Dan Collins: The Smartest Guy in the Room

2009-10-27T12:02:10Z

If New York was mother to many of the evildoers in the financial disaster that sent the economy into a tailspin, it's also home to an avenging angel for the millions of ordinary Americans who lost billions of dollars in the meltdown.

The guy with the wings and the sword also wears robes: He's federal Judge Jed Rakoff. The shock waves from Rakoff's scathing denunciation last month of a proposed settlement between the Securities and Exchange Commission and the Bank of America are still rippling through Wall Street and Washington.

Bank of America CEO Ken Lewis is on his way out, and New York Attorney General Andrew Cuomo is pressing an investigation into the deal in which the bank purchased ailing Merrill Lynch last December without telling its shareholders that executives of the tottering brokerage were paid $3.6 billion in bonuses shortly before the takeover was announced. A congressional panel is also probing the deal.

The common-sense wisdom of Rakoff's ruling resonated with a public infuriated with billion-dollar bonuses and bailouts. The SEC signed off on an agreement in which the bank agreed to pay $33 million (in shareholder money) for concealing the bonus payments from the shareholders. In effect, the victims were being punished, a topsy-turvy outcome fairly typical of the SEC's handling of wrongdoing by large corporations in cases like these.

"Oscar Wilde once famously said that a cynic is someone 'who knows the price of everything and the value of nothing,'" Rakoff wrote.

The proposed consent judgment in this case suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the Bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.

Rakoff's ruling may well mark the dawn of a new era in corporate accountability, since the judge has pressed for the names of the bank executives responsible for hiding the bonus payments.

"I think Judge Rakoff resented the degree to which a government agency was seeking to pull the wool over his eyes, and just blandly stating it was his duty to rubber-stamp their settlement," said Columbia Law School professor John Coffee, who teaches a seminar on white-collar crime at Columbia with Rakoff.

The federal jurist who overturned the Wall Street applecart is a 66-year-old workaholic who neither smokes nor drinks, according to friends and colleagues. In keeping with that New York theme, Rakoff enjoys Broadway show tunes and once dreamed of becoming a lyricist. The judge and his wife of 35 years, Ann, have three daughters. The couple enjoys ballroom dancing.

He admires the writing of Kafka and Arthur Miller, and is himself admired for legal opinions filled with sharp writing and laced with wit. His legal hero is Benjamin Cardozo, the Supreme Court justice from New York whose lofty reputation rests partly on his writing skill.

Lawyers who know Rakoff mention three qualities that mark his style as a jurist: intelligence, independence and a thoroughness that can turn the resolution of an apparently routine legal question into a day-long hearing.

"He is one of the best federal judges that I have ever seen," said criminal defense lawyer Gerald Shargel, "because he's the smartest guy in the room, he's painstakingly fair, and he never kowtows to the government."

Last summer, Rakoff imposed a 20-year-sentence on Shargel's client, Marc Dreier. (Dreier, a prominent Manhattan lawyer, financed a Gilded Age lifestyle for himself by selling fake promissory notes to hedge funds and other investors. He stole about $400 million before he was caught impersonating a lawyer for a Canadian retirement fund he hoped to loot.) Given the temper of the times, and the irritability of the public, Shargel found himself treated like a winner by other lawyers after the sentence was announced.

Bernard Madoff had gotten 150 years for his $50 billion fraud and the government had urged Judge Rakoff to send Dreier to prison for 145 years, apparently calculating that the shady barrister was only slightly less evil that the Prince of Financial Darkness himself. But Rakoff refused, "Mr. Dreier's crimes, despicable though they may be, pale in comparison to Mr. Madoff's," he said.

"What I said to the lawyers who contacted me was that we've come to a very strange place if I'm getting congratulated for 'winning' a 20-year sentence for a 59-year-old white collar offender," Shargel recalled.

Since he was named to the federal bench by President Clinton in 1995, Rakoff has built a judicial resume that includes overturning the federal death penalty (reversed on appeal), thumbing his judicial nose at federal sentencing guidelines and forcing the Pentagon to reveal the names and nationalities of hundreds of detainees held at Guantánamo Bay.

Some of Rakoff's more interesting opinions have come in cases that are less than earth-shattering. In 2005, for example, New York City put the kibosh on a block party in Chelsea because the organizer planned to let artists spray graffiti on mock-ups of subway cars. Mayor Michael Bloomberg argued that such activity would encourage vandals to deface real subway cars with graffiti.

Judge Rakoff disagreed.

"By the same token, presumably, a street performance of 'Hamlet' would be tantamount to encouraging revenge murder," Rakoff wrote. "As for a street performance of 'Oedipus Rex,' don't even think about it."

"He has an extremely droll sense of humor. One might almost call it puckish," said Ron Kuby, the lawyer (and HuffPost blogger) who represented the party-thrower.

Rakoff's strong suit is securities law. He was born in Philadelphia and, after graduating from Swarthmore in 1964, attended Oxford and Harvard Law School. According to friends and colleagues, he arrived in New York City in 1970 with a dual dream: He would work as a lawyer by day and by night write the book for a musical that would take Broadway by storm.

Despite Rakoff's love of lyrics, the law won out. He soon joined the prestigious U.S. Attorney's office in Manhattan, where he worked as a prosecutor for seven years, including two as chief of the securities fraud unit. That paved the way for a career in private practice that made him one of the top securities lawyers in the U.S. (He has written a number of books and more than 100 articles).

"He was a great, great securities litigator. He's forgotten more about securities law than some of the top lawyers in the country have ever known," said Anthony Sabino, a professor of law and business at St. John's University. "His knowledge of securities law is such that if he asks you a question, you'd better have the answer. The SEC and the Bank of America didn't have the answers, and that's why they're in the pickle that they're in."

The bank and the government agency are scheduled to go to trial in Judge Rakoff's courtroom in March. Not surprisingly, given Rakoff's harsh criticism of the $33 million deal, both sides have opted for a jury trial.

Jeffry Picower Autopsy Results: Had Heart Attack, Drowned In Pool

2009-10-26T13:11:18Z

WEST PALM BEACH, Fla. — A man accused of making more than $7 billion off the investment schemes of jailed financial manager Bernard Madoff drowned after having a heart attack, authorities said Monday.

Jeffry Picower, 67, was found around noon Sunday by his wife, Barbara, at the bottom of a pool at their oceanside mansion.

Fred Wilpon, Mets Owner, Made Money Off Bernie Madoff

2009-10-21T08:52:55Z

Talk about getting caught in a jam.

After watching his team go down to defeat this season, Mets owner Fred Wilpon now faces potential "clawback" suits for raking in nearly $50 million in phony profits from Bernard Madoff's $65 billion Ponzi scheme.

Bernie Madoff Eats Pizza Cooked By Child Molester, Spends Time With Convicted Spy Jonathan Pollard: Lawsuit

2009-10-21T07:13:56Z

NEW YORK — Fallen financier Bernard Madoff has plunged from his Manhattan penthouse to the lower bunk of a cell he shares with a drug offender at a federal prison, where he eats pizza cooked by a child molester and hangs around with a mob boss and a convicted spy, according to legal papers filed Tuesday.

The snapshot of Madoff's prison life – and a contrasting picture of a former high-flying life laced with cocaine and salacious parties – are in a legal complaint filed by Burlingame, Calif.-based lawyer Joseph Cotchett, who represents about a dozen victims of Madoff's massive investment Ponzi scheme. Cotchett interviewed Madoff in July at the Butner Federal Correctional Complex near Raleigh, N.C.

Madoff's Long Island Home Sells For $9.41M

2009-10-16T21:55:38Z

NEW YORK — Federal marshals say Bernard Madoff's Long Island beach house has sold for $9.41 million.

The U.S. Marshals Service put the 3,000-square-foot house on the market Sept. 1 to help repay victims of Madoff's massive fraud. The four-bedroom house is set amid the dunes in Montauk, N.Y., a beach community east of the Hamptons.

Madoff In Prison Fight Over Stock Market: Report

2009-10-13T09:23:31Z

For all of his billions in faked profits, convicted Ponzi Schemer Bernie Madoff recently got into a very real fight with a fellow inmate over the stock market, according to The New York Post.

Madoff, of course, is serving a 150-year prison sentence for a massive $68 billion fraud. The altercation, according to The New York Post, was over the state of the market and involved another older inmate, who left the fight "red-faced." Madoff's toughness, apparently, impressed a fellow inmate at the Butner, North Carolina facility that was quoted by the Post.

It's not the first fight involving jailed financiers in recent weeks. Last month, Allen Stanford sustained injuries, including "two black eyes and a broken nose" while fighting with another inmate.

This summer, a noted prison consultant offered this advice to Bernie Madoff about how to deal with his prison term. Among other things, the consultant suggested that Madoff should look for a job serving cappuccino in the prison Commissary Trust Fund.

Check out the entire piece on Madoff's fight at The New York Post.

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Madoff Mask Set To Scare Children This Halloween

2009-10-12T08:31:46Z

NEW YORK — Don't be alarmed if Bernard Madoff comes knocking this Halloween.

The real Madoff pleaded guilty to a decades-long Ponzi scheme that cost investors millions of dollars. The New York financier is now serving a 150-year prison sentence.