Monday, October 10, 2011

Restitution in the Bernie Madoff Fraud Case: A Case of Too Little, Too Late!

As the Bernie Madoff fraud case demonstrates, restitution often comes too little and too late in white collar crime cases.  You will recall that Madoff, the "king of the ponzi scheme," was sentenced in 2009 to serve 150 years in prison for masterminding the largest investment fraud scheme in U.S. history. 

Tragically, Madoff's tough prison sentence did little to assuage the losses inflicted on hundreds of crime victims, many of whom were elderly people who saw their life savings taken away.  I will never forget the report of one elderly victim who was forced to return to work as a grocery store clerk after losing his retirement nest egg to Madoff's crime. 

Since Madoff's sentencing, a bankruptcy trustee, assisted by the U.S. Marshal's Service, has been selling off Madoff's property, including homes, jewelry, and even his clothes, to try to help make some restitution to Madoff's victims.  (I started to bid on something in the online auction, but the red tape was too complicated!)  Unfortunately, this restitution effort is not enough.  For instance, according to reports, last week, the trustee distributed $312 million to victims, but this constituted just pennies on the dollar compared to the total amount stolen.  

Also, according to reports, up to one-half of the $17.3 billion taken by Madoff may ultimately be recovered and distributed to victims, but only after time-consuming litigation.  However, many of the elderly victims simply don't have the time.  At least eight of Madoff's elderly victims have already died during the past couple of years.  As a result, sadly, many of Madoff's victims will never be made whole.

And sadly, this case shows that restitution often comes too little and too late in white collar crime cases.

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