Madoff is in behind bars, but the Madoffs are still flush

Madoff is in behind bars, but the Madoffs are still flush

Bernard Madoff is done living a life of luxury. He’ll be sharing a small cell in a federal penitentiary for the rest of his life, wearing prison-issue khaki instead of silk suits, and his view of the outside world will be on a television shared by other inmates in his cell block.

But while Madoff’s days of high living are over, he seems to have done his best to insulate a sizable part of his fortune for the continued use of his family. And that’s just plain wrong.

In pleading guilty to 11 charges last Thursday, including fraud, perjury and money laundering, Madoff accepted all of the blame for the biggest swindle in history. There’s no indication that he’s inclined to make any deal that would implicate his wife, his sons or his brother. He also presented a timeline for his scheme that is suspect.

His wife, Ruth, withdrew $15.5 million from a Madoff-related brokerage firm in the weeks before Madoff’s Dec. 11 arrest, including a $10 million withdrawal Dec. 10. That tends to belie the family’s story that Bernard came clean to one of his sons, who immediately did the right thing and went to the feds.

Madoff told the court last week that, “as the years went by, I realized that my arrest and this day would inevitably come.” Obviously, he also had a lot of time to think about how he would insulate some of his riches for his family and protect them from liability when that day came.

Madoff’s wife, his 63-year-old brother, Peter, who was instrumental in building Madoff’s investment firm, and his sons, Andrew, 42, and Mark, 45, have now all lawyered up.

The family maintains that tens of millions of dollars in assets held by Ruth and hundreds of millions of dollars in assets of Madoff’s trading company, as opposed to his fraudulent investment advisory service, are untouchable.

In other words, while hundreds of the people who invested with Madoff are broke, the Madoff family remains fabulously wealthy.

No joke

Late night comedian Craig Ferguson mocked the contention that Ruth Madoff’s fortune of $65 million or so is untouchable. By that logic he said, a bank robber who managed to get his loot home and give it to his wife could say, no, it’s not the bank’s money, its hers.

No one would buy that argument, and no one should buy the claim that while Bernard Madoff was stealing billions of dollars from his clients, Madoff’s wife was making an honest living off the fruits of his thievery.

The wheels of a federal investigation can grind exceedingly slow. The speed with which Madoff has been brought to justice was possible only because, as he has said, he knew the day would come when his scheme would come crashing down, and when it did he acknowledged it.

U.S. District Judge Denny Chin sent Madoff directly from court to the penitentiary to await sentencing. Madoff had managed a few months of living in luxury that he didn’t deserve after the nature of his investment scheme became public, but he’s now where he belongs.

The Justice Department should move with uncharacteristic speed to break down the walls that Madoff has built to insulate his accomplices. The suggestion that he managed to run the biggest rip-off in history for almost 20 years with no help defies logic. Bernard Madoff not only stole from people, he damaged the credibility of the larger investment system and the checks and balances that are supposed to uncover crooks such as he. The quicker all of the facts behind his scheme are brought to light, the better.