Saturday, March 14, 2009

Bernie Madoff Pleads Guilty

Madoff's guilty plea raises a number of questions.

1) Why did he plead to all charges? There is almost always a plea bargain behind a criminal plea, wherein the prosecution dismisses certain charges in exchange for a plea to the rest, and a favorable recommendation concerning sentencing. So why no plea bargain here? Part of a plea bargain would surely have been that Madoff would have had to agree to cooperate with the prosecution in naming other conspirators, and in finding out what happensed to the money. I.e., he is protecting his family. By not having a plea bargain, he does not have to assist the prosecution at all. He is throwing himself on the mercy of the Judge, who in all likelihood will do what he or she feels is fair and just anyhow, regardless of any prosecution recommendation. So, it makes sense when you think about it.

2) What happened to all the money? If news reports are to be believed, the loss to investors is $65 billion. However, I suspect this is what is supposed to be there, based on the statements Madoff has been sending out out, showing a high rate of return. I suspect the actual funds lost are much less, maybe in the neighborhood of $20-30 billion. Granted the Madoffs lived a fancy lifestyle, but all this money had to go somewhere. Madoff seems content to live the rest of his life in prison, but the bilked victims deserve to know more details about where the money went. In particular, Madoff's wife seems intent on disgracing herself personally by insisting that $69 million of her wealth is untainted. This is ludicrous on the face of it, and she will have a next-to-impossible time proving it.

3) Should Madoff's bail have been continued until sentencing? Normally a defendant stays out on bail until the time of sentencing, and only then is taken into custody. The idea of revoking Madoff's bail, when he was already under house arrest and unable to flee, seems to have been done to pacify the victims who filled the courtroom and continually erupted with raucous responses during the recent court hearing. I have no particular problem with revoking the bail bond, it just seems a bit odd.

4) Do we have two different kinds of justice, one for the rich and one for the poor? Perhaps, but not like is commonly believed. My impression is that when there is a rich, high-profile defendant, he/she is usually treated more harshly, because the prosecution wants to appear tough, wants to make an example of the defendant to deter others, and/or sees it as a chance to make a name for himself or herself.

If there is any defendant who was able to get the best lawyer money could buy, it was Patty Hearst after being charged with bank robbery. The Hearst family hired F. Lee Bailey, but even he could not get her off. Her brainwashing defense was surely sound, as she was no bank robber when forcibly abducted in the middle of the night from her California home. Yet, Bailey could not convince the jury and she was convicted and sent to prison. Surely this shows that money cannot buy justice.

5) Should property crimes be treated more leniently than violent crimes? The answer is surely yes, and they are. The guy who robs the local convenience store at gunpoint gets more time than a Madoff who steals billions of dollars, regardless of how little money the store robber actually gets from the robbery. This is because of the violent nature of the crime. The law recognizes that our personal health and safety is more important than our property. After all, didn't Jesus say we should store up treasures in heaven, not on earth? Didn't Jesus say that to enter the kingdom of heaven we had to give all that we have to the poor?

If any of Madoff's victims lost their entire life savings, then they were guilty of violating the first principle of investment, which is don't put all your eggs in one basket. The motivator for this is greed, pure and simple. Any con game depends on the "victim's" greed, and this crime simply can never rise to the level of a violent assault against another person.

6) Should Madoff have been caught earlier? Someone who looked into Madoff's company ten years ago wrote a very detailed, 29-point analysis to the SEC, detailing 29 suspicious aspects of Madoff's operation. What did the SEC do? Nothing. It is a huge failure of government regulation, no doubt made possible by the Reagan legacy which pronounced anything government did as bad and anything private enterprise did as good.

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