Tuesday, February 09, 2016

The Pathetic Irwin Lipkin: a Bernard Madoff Reminiscence

Irwin Lipkin being wheeled out of court

The recent Madoff two-part series on ABC, starring a very convincing Richard Dreyfuss, brought back a flood of memories of my own very limited experience with this long-vanished but still fascinating story. Apart from this article in the old Condé Nast Portfolio I haven't written much, but I did have the interesting experience of attending one of the last acts of this drama. It was the last criminal proceeding in the case, the August 2015 sentencing of a Madoff factotum named Irwin Lipkin.

Lipkin, who was 77 years old, was Madoff's controller. He wasn't important enough to have been mentioned in the miniseries. His defining characteristic is that he was as pathetic as he was guilty. If you weren't acquainted with what he had done, you might feel sorry for him.

Yes, I realize, there is nothing more to be said about Madoff. He's been the subject of umpteen and half books, fifteen umpteen documentaries (one of which followed the ABC film), and an HBO movie in the works, based on the definitive Diana Henriques best-seller. But still, forgive me if I pile on.

It was a gorgeous day in Manhattan—temperature in the lower eighties, low humidity, nice cumulus clouds in the sky—and the view from Courtroom 12D of the federal courthouse on Pearl Street was a stunning vista of Midtown Manhattan to the north. Outside on Broadway there were TV satellite trucks, some parked on the sidewalk. They were there because of the sentencing of a New York City police officer who participated in a motorcycle gang attack on a motorist on the West Side Drive. That's news. Madoff wasn't news anymore, and certainly Lipkin was not.

Lipkin, in his wheelchair, was talking to his attorneys in a seat outside the courtroom as I arrived at about 1:30 p.m., and left soon after for the cafeteria. I heard Lipkin remark that they let his wheelchair right through the metal detector.

The courtroom was filled with about two dozen college students who have been attending court sessions as part of the Columbia University's American Language Program. They were foreign-born students, largely Asian, and were accompanied by two not very talkative faculty members. They took up most of the seats. There were about five reporters present, no federal officers as you sometimes see at these things, no victims, no phalanx of family members of the accused.

Lipkin was wheeled in, pushed by his son Marc, dressed in blue shirt and khaki pants. Irwin Lipkin was wearing a baseball cap that he didn’t remove until later, and a navy blue track suit with two white stripes running down the leg. He was wearing a dark grey warm-up jacket even though the air conditioning wasn’t that high and it was hot outside. He had another outer garment behind him, not worn.

Lipkin was very bald, his head possibly shaved. He had splotches on his face and was very pale. As he sat waiting for the judge he fingered his metal-rimmed reading glasses and a typed piece of paper he had unfolded, the statement he was going to read. He had a box of tissues in front of him that he didn’t need. Two prosecution lawyers and one federal agent occupied the front row of tables and Lipkin and his lawyer were in the row behind them.

U.S. District Judge Laura T. Swain came in at 2:07 p.m. and thanked everyone for attending, including the press. It was the first time I had ever heard the press thanked in such a situation. It made me feel all warm and fuzzy. Judge Swain proceeded to mechanically, for the record, review the various documents agreed to by both sides.

After a brief conference at the bench, Lipkin spoke for the first time in court. He acknowledged in ritualistic fashion, for the record, that he had read and approved some documents. He spoke in an old man’s voice, a bit horse as you’d get from not speaking in public much, but not frail at all, perfectly distinct. At one point his lawyer pointed out that Lipkin cannot stand up. I don’t happen to believe that, but that’s just my hunch. No problem. The judge understands. The prosecution, the judge, everybody is in agreement about what a death’s-door guy this is. The judge talked about his “mental health condition” and the possibility of home confinement.

'The Virtual King of Wall Street'
His defense lawyer, Hackensack attorney Richard Galler, said that he met Lipkin for the first time in 2008, that Lipkin knew Madoff as the “virtual king of Wall Street” and that Madoff had asked him to sign documents that were “not appropriate” and “not accurate.”

In an exchange with the judge, the lawyer said that Lipkin “didn’t understand the greater fraud” and should have “checked further as to the accuracy” of the documents he filed. In the years since Lipkin “voluntarily offered a plea” in 2012 (voluntarily?) his health has deteriorated, said Galler. He has lost 50 to 75 pounds.

“He’s a hunchback,” he added, “He’s a frail gentleman who had a pacemaker replaced as recently as Friday.” He requested a "downward departure" from the sentencing guidelines for bad health. “He couldn’t get around” in prison, said Galler.

Judge Swain responded that there are facilities for sick people. Galler replied that “they’re not as good as the ones outside the prison,” and said that he can now get an ambulance in five minutes, something he couldn’t get in prison. I remember thinking at the time that this attorney was named “Galler” because of his unmitigated gall. But that wasn't fair. Lawyers are paid to represent to give their clients the best possible representation, no matter who they are.

He went on to note that a Dr. Goldstein, a psychiatrist who teaches at Columbia, described Lipkin as a “sad-looking elderly male who looks older” than his age and seemed depressed. That seemed to be the extent of his “mental health condition”—that he’s depressed, evidently because of the crimes he committed. Depressed he got caught.

Galler poined out that all of Lipkin’s kids worked at the firm, and he was proud to bring them into the firm “not knowing the greater fraud.” He added that the government does not dispute his health condition and that the presentence report says there is no chance of recidivism. Lipkin was portrayed as being as meek and harmless as a mouse. He does not leave the house except to go to the doctor or go out on the driveway, and Galler said that he has had to go to Lipkin's house on legal business, and that Lipkin  hasn’t come to the office in a long time.

He went on and on. Mrs. Lipkin was not there “because of prior strokes.” Lipkin “requires mental health treatment. . . . Home confinement is reasonable under the circumstances.” In other words, since he is already confined to his home—no punishment.

I thought back to a mousy little accountant named John McAndris, the 57-year-old chief financial officer of the A.R. Baron penny stock scam firm, who was sentenced to five to fifteen years in state prison in 1998. Hard time, not home confinement. Punished because he didn't let the AR Baron scam continue for another few years until he was old and sick at the time of sentencing.

The prosecutor, Assistant U.S. Attorney David Abramowicz, offered a crisp rebuttal. He noted that fifteen people have pleaded guilty or been found guilty “and only one was named Bernard Madoff.” He was the most culpable and got a severe penalty. The lesson from the parade of guilty pleas is that “Bernard Madoff didn’t do it alone.” He probably wanted to do it alone but he couldn’t. He got help from people like Lipkin.

The prosecutor pointed out that when Lipkin pleaded guilty he admitted he was controller of Madoff Securities and falsified records. He knew it was illegal, so it was not just a case of his being obedient and following orders. Abramowicz noted that Lipkin “did very well for himself,” drawing a salary of $225,000 a year. He wasn’t following orders when he ordered sham trades on his account.

Abramowicz agreed that Lipkin was sick, and that his condition had deteriorated, but felt that reducing the penalty from 10 years (under the guidelines) to zero was “too drastic.” He said the defense hasn’t established that the Federal Bureau of Prisons is incapable of handling someone in his condition.

Yes he is at great risk of falling or suffering injury and that could happen anywhere. He noted that people who are convicted of serious crimes would love the “ability to choose their preferred medical provider.”

Lipkin was impassive as the prosecutor went point by point. Abramowicz said that Lipkin was older than many defendants because he was “so successful at his crime.” He agreed that there was little chance of recidivism but said there was a need for “general deterrence,” so that people committing crimes doesn’t feel that can “keep digging and digging till they get old.”

Lipkin was given his chance to talk. He bent over the desk to read the type on the paper. His old-man’s voice was distinct as he reads from the paper, with occasional out-of-sequence pauses as take place when you read something and aren’t trying to make it seem spontaneous.

He said he was the first person who went to work for Madoff. “Smarter people than myself were taken in by him. . . . If I had known what I know now, I would never have done these things to my family. . . . If I was so smart and knew anything, why would I have given my own money to this man?”

The answer to that last question, I guess, might have been that he knew what he was doing and that he expected to rob people to pay him. That's how Ponzi schemes work. Lipkin talked slowly, apologizing in rote fashion to the victims and his family, his wife and three sons “for what I had caused them during this period of time.”

He gestured now and then with his hands, and you could see his thin, bony fingers. “I don’t know how I can explain this to my wife,” he says. ("Explain what?" I wondered. It had already been seven years since the Madoff scandal broke.) He noted that his son Marc lives with him and his wife and takes care of them.

“This gentleman”—he gestures to the prosecutor—“spoke—I know how he feels—and there’s nothing I can do to change his mind. I only hope you can have sympathy for my wife and family and myself.”

The statement is over. The judge asked a question to Lipkin because she says she is “puzzled” by something he said,. He had admitted in the plea allocution that he had changed figures. If he was now denying what he had previously admitted in his plea allocution, that would upset the apple cart, and upend the lax sentence she was about to impose. So she asked: did he change figures on the books of Madoff Securities?

Lipkin responded that “I honestly and truly do not remember” what happened 18 and more years ago.

Uh oh. Not a good answer. The judge asked his lawyer to talk with him, which he does. Then his lawyer asks him in open court if he’s not denying what he had said concerning changing of numbers. “You may not remember specific ones” but he did commit that offense? “Correct,” says Lipkin. So hard to stop lying when you've lied for so many years.

Through this ritualistic questioning, the judge allowed Lipkin to put the toothpaste back in the tube via the ridiculously leading questioning from his lawyer. The judge then spent ten minutes sifting through papers on her desk and considering her sentence, which she delivered at 2:52.

First she thanked the spectators for their patience. Then she went through the rote remarks, found that Lipkin suffers from physical illnesses, adopted the presentence report, and said Lipkin is “frail and in exceedingly poor health.” He has cardiac and coronary artery problems, reaction to medication, balance and ambulation and falling risk issues. Also he has “mental health disorders” (another reference, apparently, to being depressed he got caught).

Thus there is medical evidence “outside the heartland” of the sentencing guidelines. She went over his offenses—one of the first employees of Madoff until his retirement in 1998. He knew financial information was false. He falsified books and records. Entered fake trades. Arranged for his wife to be on the company payroll and for himself to be on the payroll beyond the period to which he was entitled. He filed false documents with the U.S. Department of Labor concerning that. But she notes he was “not privy to the scope of client-related fraud.”

She points out that the letters sent to her show a “dedicated family man” and that he and his family have suffered financial loss. (How terrible!) She says he has expressed remorse “but he minimized his conduct and recollection of conduct”—apparently a reference to his comments in court today—which destroyed lives, etc etc.

“The court recognizes he has already faced significant repercussions” including a “substantial forfeiture obligation” as well as ostracism and guilt. A lengthy incarceration would be appropriate if not for the health issues. For that a “very substantial departure” is warranted. She then sentences him to six months in prison on each of the two counts, concurrently. Three years supervised release, with 18 months of home detention included in the latter.

The judge reeled off the mandatory conditions of the great, big, walloping slap on the wrist she was giving him for being a key participant  in the Madoff crimes. No weapons. Has to keep taking his meds. No supervised drug testing, that waived because of his medical condition. No caller ID on his phone, no call forwarding. Devils Island conditions, as you can see. No caller ID! Must wear an ankle bracelet.

Judge Swain then proceeded to say that she will recommend to the BOP that he get confined to a medical facility or home confinement, within their discretion, and notes that if there is home confinement it will be in addition to the 18 months he gets as part of his supervised release. Viewed from the rear, as I can't see his face, Lipkin seems impassive during all of this. Galler says Lipkin needs a “hospital setting” and Swain suggests that she get in touch with the “designation officer” of the BOP on that point.

At this point, in a moment of legally required levity, the judge advised Lipkin directly that he can appeal this wet kiss within 14 days, and that if he can’t afford it U.S. taxpayers can appoint a lawyer to rep him. She then directs him to report to the designated facility on Oct. 22, 2015. Finally, the judge said “Mr. Lipkin, the crimes in which you participated are serious and you are paying a heavy price.” In the disruption of his retirement “you have much in common with the thousands of victims of the Bernard Madoff fraud.”

That was so absurd. This man was a perpetrator, not a victim. That was like comparing old Nazi camp guards with survivors, as both are elderly. A shocking statement, or so it seemed to me at the time. The letters sent to her on his behalf, she said, show that he is “much loved and relied upon by the community.” But she didn’t mention that none of these people who love him so much showed up in court. She ended by wishing the family “continued strength and courage.” The proceedings were over at 3:17 p.m.

Postscript: the U.S. Bureau of Prisons was not as lax on Lipkin as Judge Swain was. He went to prison. As of today he was confined to FMC Devens, a federal medical facility in Massachusetts. He is scheduled to be released on April 20, 2016.

His victims, of course, are only part of the way through their life sentences.

© 2016 Gary Weiss. All rights reserved. No republication permitted, in whole or in part, without express written permission.

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