Send Madoff to jail
Commentary: Just what does a guy have to do to get locked up these days?
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NEW YORK (Fortune) -- There was crime, now comes punishment. As Wall Street struggles to regain its footing this year, a yet-to-be resolved part of that rebalancing is investigating, charging, trying and, yes, punishing those who broke the law during the market's stunning rise and collapse.
Fortune's esteemed legal reporter, Roger Parloff, has written a must-read cover story on how this could play out for pooh-bahs at big financial firms. This process will of course take months and years. Eventually though, I would be surprised if some of these executives did not do time in jail.
There is one guy though, who I believe deserves to be locked up right now: Bernard Madoff.
In fact one of the most shocking pieces of the Madoff case, right up there with the outrageous betrayal, financial ruin, and even suicide, is the simple fact that Madoff is not in jail. That this destroyer of worlds is living, if not quite scot-free, then still in the lap of luxury is beyond unconscionable -- it is incomprehensible.
I would bet Bernie himself -- sociopath that he is -- is perplexed. As in: "What does a guy have to do to get thrown in jail in this country?!?!"
I understand that according to the letter of the law, it may make some sort of sense that Madoff is unincarcerated (give his lawyers points here), but it sure as hell violates the spirit of the law. This is a guy who has bankrupted charities, destroyed businesses (who knows how many jobs have been lost), impoverished widows, and undermined the confidence of our global markets.
And let's not forget he has already confessed! After all that, consider that he's now at home watching football and eating take-out from Le Cirque.
Meanwhile, I can assure that this very afternoon, some kid is being hauled into Rikers, busted for possession of a bag of pot. You tell me life is fair?
Remember, too, even Madoff's 'house arrest' (I thought that only happened in North Korea?) was incremental! At first he was pretty much free to do what he wanted, including wander around his tony Upper East Side neighborhood with that loathsome smirk plastered on his face. Now the authorities have restricted him somewhat. Way to go authorities!
I asked Roger Parloff, to explain why Madoff isn't behind bars. Roger noted that an arrested federal defendant is only supposed to stay in jail prior to trial if he poses a flight risk (that can't be controlled in other ways) or if he poses a threat to the community. The general principle is related to the fact that he hasn't been tried yet, so he might be innocent.
Roger also noted that the key thing is that Madoff more or less turned himself in, that he confessed to his sons, confessed to the FBI agent who came to arrest him, and appears to be cooperating. (This is as opposed to the accused lawyer-from-hell, Marc Dreier, who is in jail. According to the SEC, Dreier was trying to commit crimes over the phone even while locked up in Toronto, instructing subordinates and a banker to wire money out of client-escrow accounts into his personal accounts).
Madoff has a wife (unlike Dreier, who is divorced) who is also under scrutiny, so the feds might have some leverage over him if he flees (if she knew anything about the scheme, they could charge her), even beyond the $10 million bond (secured by at least two of his or her homes).
That may all be well and good. But I beg to differ with the prosecutors. Madoff should be in jail, period.
For one, he is still a flight risk. Yes, he and his wife have surrendered their passports, but believe me, a guy with this kind of money and guile could still flee. Stranger things have happened.
Madoff may also be a suicide risk. And he's a potential target. There are thousands of very angry, shall we say, ex-investors, out there. Yes, Madoff is under guard. (And don't get me started that his wife is paying for the guards. With whose money?) But he is still at risk.