Tuesday, June 30, 2009

Legacy of Shame

Judge Denny Chin imposed the maximum sentence of 150 years on Bernard L. Madoff, the mastermind of the greatest financial fraud in history, but it is not enough. There are more than 6,000 individuals and organizations that were victimized, in the judge’s words, by Madoff’s “extraordinary evil” that resulted in losses of more than $50 billion.

“I am responsible for a great deal of suffering and pain,” Madoff said in court, “I live in a tormented state now, knowing of all the pain and suffering I have created.” How can anyone believe these words? His business relationships were based on trust. Can a person who lived the world’s biggest lie be trusted when he says he now lives in a tormented state? More likely, what he is thinking and not saying is, “I had a great run while it lasted!” It is truly understandable that no friends or associates submitted letters of support to the court on Madoff’s behalf.

“How do you excuse lying to your brother and two sons,” he said at one point, “How do you excuse lying and deceiving a wife who stood by you for 50 years, and still stands by you?” Hold on Bernie, no one believes that your family wasn’t in on this scheme. Rather it is more believable that you talked about business while enjoying family time at that villa in the south of France, or while on a family cruise in the Mediterranean. It is more believable that your sons would ask for insight into your unprecedented success so they could carry on the business.

It turns out that your wife, Ruth Madoff, is feeling torment as well. She has been stripped of all assets and property except for $2.5 million. “The man who committed this horrible fraud is not the man I have known for all these years,” she said as she broke her silence with a post sentencing written statement. “Please know that not a day goes by when I don’t ache over the stories I have heard and read.” I am sure she is also aching over the fact that she has to do her own shopping and ride the subway.

Bernie Madoff concluded his courtroom statement with an apology, “I am sorry. I know that doesn’t help you.” He is right it doesn’t help that 91 year-old man who has had to go back to work in order to live. It doesn’t help Holocaust survivor and Nobel Laureate Elie Wiesel. It doesn’t Michael Schwartz’s disabled brother, whose savings are gone. “His jail cell will be his coffin,” Schwartz said after the sentencing. Another victim said, “Madoff discarded me like road kill.”

Most victims of Madoff’s Ponzi scheme were pleased with the sentence with many saying it would serve as a deterrent in the future. However, there were plenty of red flags raised with the Securities and Exchange Commission, and alarm bells were going off all over the place. Unless regulations are properly reformed, rigorously applied and staff are held accountable there will be no real deterrent. Madoff’s self-proclaimed “legacy of shame” extends to those who provided weak oversight and lax enforcement.

Meanwhile, the Madoff story is far from over. The FBI investigation is expanding and others are likely to be convicted. Madoff himself is waiting to hear in what prison he will serve his sentence. Yet, even if each day one of the thousands of victims was able to address Madoff face to face in prison for the rest of his life he still would not get what he deserves.

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