It is now agreed that there were no actual capital gains. It will trherefore be interesting to see whether the Government will attempt to hang on to all the capital gains tax it collected, rather than distribute it amongst the victims.
I'll be a hundred and sixty one when I get out, etc. I've never quite understood Yank sentencing even for serious crimes, nevermind those who harmlessly redistribute from the rich, vain and stupid to the rich and vain and slightly less stupid.
(actually, Madoff wasn't even that - he was purely 'rich, vain, stupid and unlucky' to rich, vain, stupid and lucky'. And yet he gets longer than a rapist would, even in a US court. Very strange.)
There were plenty of knock-on effects: charities that have to close because their endowments disappeared, notably. In addition, Madoff has pleaded guilty to 11 different crimes, and it is discretionary with the judge whether the sentences for those crimes are to be served consecutively or concurrently; evidently the judge has chosen the former.
It gives plenty of scope for cutting the sentence on appeal without anyone being too upset!
I believe it is traditional in the circumstances to point out that if he keeps his nose clean he could serve as little as 75 years.
@john b
"Harmlessly redistribute". Really.
He wasn't in the right job.
http://news.bbc.co.uk/1/hi/wales...est/
8124961.stm
"That's more like it!"
Tony
The SEC has referred to the remaining assets which suggests they have written off amounts paid to investors who did withdraw their "profits" before the collapse. If they keep them, why shouldn't the government tax them?
The government will take a hit later when the losers claim the losses. Not that the terminal losses will be quantified any time soon.
I find it amusing that John B appears to think that a $50 billion fraud is a harmless redistribution.
Brian E:
I consider it unlikely that his sentence will be reduced on appeal. My understanding is that the circumstances surrounding the crimes were so severe that the federal sentencing guidelines indicated that a life sentence should be imposed if one is available. Since none of the charges has a possible life sentence under the relevant statute, the guidelines indicate that the court in such an instance should impose instead the maximum term on each count and order that they be served consecutively.
The federal sentencing guidelines are consulted by federal judges, but they are now advisory following the Supreme Court ruling in United States v. Booker and United States v. Fanfan. Before these rulings, the guidelines were mandatory unless a judge could identify a compelling reason to make an upward or downward departure; appeals of sentences often dealt with whether or not such departures were reasonable.
Had the guidelines suggested a sentence lower than the statutory maximum possible, then an unusually grave case such as this would most likely have been considered by an appellate court to be appropriate for an upward departure. Such a hypothetical departure would have been upheld even before the guidelines were reduced to mere recommendations to the court. Since the judge had plenty of discretion and used it to follow the advice of the guidelines, I don't think that Madoff's appeal of the sentence has a prayer.
The theoretical maximum sentence that Rod Blagojevich may face (if convicted on every count, sentenced to the statutory maximum on each, and ordered to serve them consecutively) is 305 years, if I recall correctly. The circumstances surrounding his alleged offences aren't nearly as severe, however, and he is unlikely to be sentenced to more than twenty or thirty years if convicted on all 16 charges.
I see from the Wall Street Journal that Madoff's sentence is not the highest ever for fraud:
http://blogs.wsj.com/law/2009/06...ut-not-longest/
i'm more inclined to view madoff as a bit of a scapegoat - of course he's guilty as sin, but perhaps not as guilty as the politicians who didn't create a strong enough regulatory environment in the first place or indeed have a large enough group of regulators in place to enforce what regulations there were. lack of regulation is what got us into this hell-hole of a financial crisis.
everyone seems to think justice has been done because one rich fraudster gets to spend the rest of his life in the clink but the truth (and justice itself) is rather more complicated than that i'm afraid.
I'd like to see this sort of sentencing here in Blighty; once the deductions are made a sentence like this would see the perp off of the streets for at least a couple of years...
Slightly more seriously, whilst this figures do sound silly, I've never really understood the idea of concurrent sentencing; if you are sentenced to 10 years for one crime and 7 for another, then "serve" them concurrently, you are getting off scot-free for one crime. Two for the price of one!
Hopefully he'll do as much as he can.
I Don't quite see your glee.
He only conned stupid rich people, in fact, he made it almost impossible for you to give him your money unless you were rich and stupid.
Crimes like fraud never deserve a jail sentence.
Hopefully he has kept enough back to give himself a good life inside, and if not he can console himself that he lived it large for a much longer time than he will be inside for.
Mr King and John B should read the full transcript of the sentencing proceedings: http://www.usdoj.gov/usao/nys/
ma...9sentencing.pdf
After reading the full document, I am no longer amused by John B's ridiculous assertion that Madoff's actions were harmless.
Yes, many were rich. However, some were people of moderate means who entrusted Madoff with their entire retirement savings. Some could be regarded as rich and looked forward to an affluent lifestyle in their final years, but now face hardship.
I agree with Oliver that much blame lies with regulatory failings. However, incompetence of certain civil servants, lack of funding of the SEC, and holes in the patchwork of regulation do not in any way excuse Madoff's calculated decision. (I was angry to see Madoff refer to public criticism of regulatory agencies and express regret at the criticism now facing the regulators he "helped work with over the years". Does he not realise that he did not work with such regulators, but rather carefully exploited their inadequacy in order to advance his criminal scheme?)
I forgot to note that one of the charges against Madoff was theft from employee pension plans. His fraudulent scheme included money that pension funds had trusted with him to manage. Such funds undoubtedly had employees who weren't so rich and who are now a bit poorer because of Madoff's actions.
//I suspect that he may never do the full term// - Can even the Justice system of America ensure he will be kept alive until he is 222 years old?
I have now read the sentencing report, and I too urge skeptics to do so. The ex-prison guard's story is particularly moving.
What this does show is the gullibility of the super rich in believing they could get a high return in a short space of time. These people are so engrossed in thoughts focused on money they are not worldly wise and so easy to con.
The big question is: Where are the Madoff billions? Maybe he never actually invested a dime, but he took $60bn in deposits and personally had quite a modest lifestyle (relatively speaking.) That money must be somewhere. If he'd done some investing he might have lost it on the markets, but all the evidence suggests he never actually invested any at all.
I feel there's a lot we don't know about this story.
And on the sentencing front: he can appeal, pre-senile dementia seems to work, at least in the UK.
The Madoff billions never existed. A great deal of the money he collected was never invested (even though he claimed it was) and was instead paid out to other investors.
Could Bystander be thinking of a case a few years back when a rich prisoner was 'diagnosed' with a serious illness - let out of prison and then had an 'amazing' recovery?
[T'wasn't me. - ed]
Just wondering...
rogerh
Edited By Siteowner
JLJ:
Thank-you. However, there is certainly the precedent for the Trustee filing suit against those who did get out while the going was good.
'The ex-prison guard's story is particularly moving.'
I'm curious about how a prison guard could amass a fortune of 1.66 million dollars and retire before the age of 50.
Certainly wasn't with his brains as he invested the lot in a dodgy ponzi scheme.
Reminds me of the joke:
Q: Whats the similarity between a cop, a prison officer and a banana.
A: They are all bend and yellow.
Mr King:
If prison guards' retirement plans are set according to the same standards as most police officers, then they should normally retire and start collecting their pensions before most other people. Police officers (and I presume prison guards as well) do work that involves risk and and require high physical ability and often involve retirement in one's fifties. This particular prison guard has suffered 52 per cent hearing loss from his job, which may have contributed to his early retirement. His statement clearly indicates that much of his holdings with Madoff were proceeds from the sale of his house. He also indicates that he took a lump-sum pension distribution, which would explain his assets apart from the house. These facts can easily account for most of the $1.66 million figure that you cite. (Incidentally, I haven't found that figure in his statement. Where did you find it?)
You may also want to read the statement of Miriam Siegman, who appears to now live in poverty as a result of Madoff's actions. Her words: "I manage on food stamps. At the end of the month I sometimes scavage in dumpsters. I cannot afford new eyeglasses. I long to go to a concert, but I never do. Sometimes my heart beats erratically for lack of medication when I cannot pay for it."
I am sympathetic to most people who are guilty of crimes on the basis that they made a terrible mistake due to bad circumstances, momentary lapse of judgment, or are the product of much larger social problems. Bernard Madoff is the exception. He made a calculated choice over a period of many years to lie to people, knowing that the inevitable collapse would deliver great hardship upon them. He built up people's trust in him knowing that the sensible portfolios on their statements were all a lie. This was not a lapse in judgment, but the intended harm caused by a sociopath. I do not make these judgments to call for mob justice or an exception to the ordinary procedures of the criminal justice system. I merely make them to point out that this is one of the relatively few cases in which the touch sentences imposed in the federal courts seem fair. I fail to see how you can believe that a fraud such as this is not outrageous and does not deserve a custodial sentence.
Tony Frost:
I believe that claw-back suits against those who have received distributions from Madoff within the past six years are either pending or are expected to be filed. This does, of course, introduce major uncertainty for many investors. I am not sure about the tax treatment of people in such a situation. Of course, some happened to withdraw their money early enough to benefit from New York's six-year statute of limitations on such suits.
Prison is a complete waste of time.
The sentencing here may do the trick to prevent Uncle Bernie from opening up another scheme - but it won't do anything about the one that did all the damage. Who will it help?
And here in the UK, why would anyone fear prison, apart from the lawlessness within the institutions themselves?
A properly run prison affords food, education, recreation, rehabilitation (legally) and daily robbery, theft, violence and sexual assault (illegally).
Prison is appropriate in some cases perhaps, but should be seen as a punisment appropriate only to the very rich, such as Madoff, and not for the poor (other than for the violent or sexual offenders). It is an outmoded 18th century punishment for 'the poor'.
Their punishment should be. Well I know what it(& it doesn't involve anything physical or public).
Anyone else fill in the gaps?
Jules:
'You may also want to read the statement of Miriam Siegman, who appears to now live in poverty'
The key word there is appears
She invested with him since 1992 and must have lived very well on the proceeds over those years. With her 0.5 million dollar Securities Investor Protection Corporation I doubt she is going through dumpsters.
You consider this the work of a sociopath, I see it as someone who made a few mistakes with his investment firm and was just trying to pay back his investors, no doubt he fully believed that he would be able to make the money back and repay everyone.
The good news though is that prison officers seems to be very vulnerable to get rich ponzi schemes and he's in an ideal position to get right back in business.
I had a discussion with an American Police Officer re these long sentences. He informed me that they have reductions in sentence and parole rules etc, not to dissimilar to our own, but far less favourable to the prisoner. The very long sentences are to ensure that there is no possibility of the prisoner ever leaving prison. In some states they go so far as burying dead prisoners within the prison boundary and will not release the remains until time has been served. We then discussed sentencing and he informed me of a colleague of his who was attacked by two off duty Soldiers. The cop ended up with a broken nose and jaw. The offenders were given a minimum ten year sentence, before parole is considered. Then they will be handed over to the military authorities for trial. He informed me they were then looking at 5 years hard labour in a military prison, if found guilty, for bringing the Military into discredit. Conrast and compare with the below
http://www.telegraph.co.uk/news/...pes-
prison.html
An interesting difference!
"... Securities Investor Protection Corp (SIPC), which is denying government insurance to some investors because Madoff never actually invested their money in securities, even though he said he did." http://www.timesonline.co.uk/
tol...icle6605556.ece
This is in addition to delays in SIPC compensation that compare badly with the FDIC's normal procedure for dealing with insured deposits.
Mr King may believe Madoff when he says that he expected at first to bring his scheme to and end with no harm. If he is going to believe Madoff's self-serving claims, however, then he should also pay attention to Madoff's admission that he later realised that his scheme would eventually collapse as it did. As Madoff proceeded to attract new investors and assure them that he was investing their money sensibly, his creation of such trust for the sole purpose of betraying it cannot, in my opinion, be anything other than the work of a sociopath.
Mr King seems to want to suppose that Mr Ambrosino invested with Madoff because he had good reason to believe that he was invested in a get-rich-quick scheme rather than a proper investment portfolio. I suspect, however, that Mr King's characterisation is based upon Mr King's own prejudices rather than any good reason to impute Mr Ambrosino with irresponsibility or foolishness.
There were individuals who had good reason to suspect that Madoff was engaged in something other than the investment management that the world perceived. Some of them brought such concerns to the SEC, whose gross incompetence contributed greatly to the problem. However, most investors lacked the information that the SEC had as to why their investment account statements were an elaborate fiction.
In the USA one has much more control over your pension; assuming the prison guard entered the service immediately after high-school he would have 30 years contributions; you can save a maximum of ~$10K/year, compounding at a modest 6% return will easily yield over $1.6m. Note: he then has to live on this money for the next maybe 40 years, and health costs alone will be at least $25k/year (and rising at well more than 6% per year) until he reaches 65 and he can get Medicare.
Also, quite a few charitable trusts invested heavily in this scheme. They have had to curtail their works which has had an impact on the lowest rungs of society. Since there is little/no welfare operated by the state, charities are often the only source of help for many.
"In some states they go so far as burying dead prisoners within the prison boundary and will not release the remains until time has been served".
That will learn them!
I seem to recaall that we dug up Oliver Cromwell's corpse and submitted it to various indignities, presumably on the same principle.
Pour encourager les autres morts.
I believe its supposed to be a symbolic gesture to show that there is no escape from the punishment for the crime, even in death. Apparently its reserved for multiple murder or some other equally horrific crime. I suppose from a neutral view point, its a meaningless gesture, but if you have the rest of your life in solitary confinement, knowing that you will not physically leave the bounds of the prison, even when the grim reaper comes calling, it might take on some sort of significance.
And I belive the Royalists dug up Cromwell's body not so much for the desire to punish a "traitor", but as a warning to others who might try to usurp the power of the crown. A powerful gesture in a time when most Englishmen had a fanatical attachment to the church, akin to the modern day Taleban. Cromwell, now there is a chap who did not mess about!
And we spent centuries paying the price of his lack of 'messing about' in Ireland
Something of an interest of mine. And its a common mistake to blame the last 30 years of troubles on Cromwell and his military campaign in Ireland. I take it you refer to the siege and massacre at Drogheda. A common mistake in Republican propoganda to make it as simple as an English v Irish fight. Which of course it was not. Drogheda being at the time a Royalist town, in support of the crown. Cromwell is a useful rallying point, based on myth and propoganda, for Irish Republicans, which ignore the facts of the situation on both sides.
Her's one for you Bystander.
24 year old man enters my garden and steals a pallet truck which I got for £17.25 in non-working condition and fixed. He denies offence initially, gives police the run around, eventually confesses to theft. I replace pallet truck at cost of £160 and apply for that in compo.
Bailed to court after charged - fails to appear at court on day - warrant for arrest issued - rebailed and finally sentenced.
Previous includes a conviction for theft and handling. What did he get - you tell me your "sentence" and then I will reveal what he actually did get!!!!!
@David J. Button
Baseline: Burglary dwelling (PDF page 112), guideline = community
Mitigating: low value, guilty plea
Aggravating: Previous similar, little evidence of remorse.
I'll guess 80-100 hours community service.
Reminder: I am not Bystander.
In fact, this is my new monicker. "Special" people take note.
Read the PDF. Remain resolutely unmoved. Some people who were super-rich are now rich; some people who were rich are now on the same level as everyone else. And all of them were *utterly, unimaginably stupid* to entrust their money to someone like Madoff. Their whiny sense of entitlement doesn't exactly contribute to one's sympathy for them, either. "Oh noes, I'm no longer a gazillionaire, instead I just have to live on my pension like every other bloody pensioner..."
For those who're wondering 'what happened to the money', there never was any - he paid out the $60bn that he received as fake profits to his investors. In other words, he took $60bn from gullible shmucks, and paid it out mostly to the same gullible shmucks. That's why 'harmless redistribution' above - the scheme's only impact was to reward early investors at the expense of latecomers, like all Ponzi schemes.
...and if I were a US taxpayer, I'd be marching in the streets against the greedy morons getting a penny of my money in compo.
My thief got a £45 fine - £50 costs, £15.00 Victim Surcharge and has to pay me £17.25 the actual cost of the pallet truck as on the invoice.
Oh, this little lot is to be taken out of his benefits at £5 per week.
So actually the taxpayer is paying his fine for him!!!!!!!!
David J. Button :
seems reasonable, hardly crime of the century was it
So tell me where exactly is the punishment? He loses a fiver a week off benefits paid by the taxpayer - that won't hurt him since he is always doing work on the side. He has not even got to mail a payment off each week - that's done for him by direct deduction - so apart from the small inconvenience of having to attend court (no penalty for failing to attend the first time) and having another notch on his record - there is no punishment is there - really??????
DJB: What would you propose as an appropriate sentence?
Well I would have loked at it like this - a speeding fine is £60 minimum - theft is more serious than mere speeding in my view. I would have imposed a fine of at least £100 - I would also have regarded the offender's repeat offences (more than one of same type - small theft) and tagged him for 6 weeks. He failed to turn up to court - further £100 fine - costs I would have said £100 and I would have made enquiries into how a pallet truck only cost £17.25 and what was the replacement cost (£160 to get another one) and awarded the replacement cost. Thats a more realistic £460. Magistrates can only deduct £5 a week off benefits, so I would have ordered thief to pay at £10 a week with 28 days imprisonment in default. This way, justice will have been served, proper compensation paid and deterrant against future offences awarded.
"What would you propose as an appropriate sentence?.."
Justice Monkey
It would make a lot of sense if your thief was required to retrieve and return the stolen item. Doing that would tend to suppress the distribution of stolen goods process.
Obviously, if I were hauled up for re-arranging ownership in this way, I would ensure that the item had been sold to a bloke I met in a pub, who took it away on a truck which I didn't get the number of. One might address this issue by not actually chasing the item yourself. Simply apply quite a draconian punishment for 'disposing of stolen goods', which will be suspended if the goods in question are returned. It would be up to the thief how he managed to arrange this....
David,
All very interesting, but the clerk would have kittens, and if you went ahead the decision would be varied on appeal. You could then explain to the Bench Chairman why you ignored the clerk's advice that you were acting illegally. We can't make it up as we go along, you see, as we are bound by guidelines and case law.
Dodgy,
Sounds fun, but quite outside the court's powers.
So what exactly is within the court's powers Bystander?
What's your "sentence"??
BTW - the item was taken to a scrap metal recycler, impossible for it to be retrieved - by the time it came to court, it would have long ago been melted down.
There's a link to the Guidelines on the sidebar. It's all there.
So why are you avoiding giving your "sentence" bystander?
John B:
Money taken by fraud is on the same level as money taken by force. If you were robbed of £100 on the street, I certainly wouldn't call your natural desire to see the thief caught and punished a "whiny sense of entitlement".
It's also key to notice that Madoff's fraud didn't by any means sound "too good to be true". He was careful to keep the expected returns on his (fictional) investments small enough not to set off red flags, and warned that returns might fluctuate with the market, exactly as an ethical investment company would do.
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