Thursday, March 12, 2009

Why Have Madoff's Accomplices Not Been Arrested?

There are conflicting reports in the media about the all important Bernie Madoff Unanswered Question: Who else gets charged? Not "who else is involved," as clearly there were others involved, but who else is going to be nailed, and why the feds haven't nailed 'em yet.

The Daily Beast reported a couple of days ago that 20 people were targeted by prosecutors, including the Shtunk's wife, Ruth. But the criminal information did not include a conspiracy count, and Bloomberg reports today that a plea deal (ugh) fell through because Madoff wouldn't admit to a conspiracy.

Bloomberg says:

Madoff’s decision not to negotiate a deal means the government won’t have his help in determining whether his employees assisted in the fraud, the people said. Madoff, 70, will plead guilty today to all 11 counts he faces without any promise of leniency or anything else in return. He could receive 150 years in prison at sentencing on charges including fraud, perjury and money laundering.
Assuming this report is correct, I find it astonishing. Since when have prosecutors expeced the mastermind of a conspiracy to "rat down" on his underlings?

The usual procedure is for the feds to bear down on the underlings, to force them to rat out other members of the conspirascy.

Looking from the outside--and this is pure speculation on my part--it appears, at least superficially, that the feds have pussyfooted around the Madoff family, have not applied sufficient pressure on them, and instead have hoped that Madoff would turn them in himself and save them the trouble of doing their job.

That's a bit like arresting Vito Genovese and hoping he'll turn in the bookies who used to work for him.

I hope I'm wrong. But I'm puzzled why Bernard Madoff is the only person arrested so far in the biggest white collar fraud case since Cain embezzled from the Estate of Adam and Eve.

UPDATE: A CNBC commentator just summed up the conventional wisdom, which is that we won't know the full extent of the conspiracy if the shtunk doesn't talk about it.

If that were the case, then the government's prosecutions on organized crime--and Madoff's scheme is in that category, in my opinion--would go nowhere. Since the days of Capone, prosecutors have attacked organized crime by putting the heat on underlings. Grand jury probes have been one effective tactic, though that has perils because witnesses receive immunity for their testimony.

So, in other words, a "single bullethead" outcome for the Madoff case is simply not acceptable.

© 2009 Gary Weiss. All rights reserved.

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