Madoff sentenced to 150 years in prison
Disgraced investor gets maximum sentence for massive Ponzi scheme
msnbc.com news services
updated 4 minutes agoNEW YORK – Bernard Madoff was sentenced Monday to 150 years in prison after apologizing to victims for a multibillion-dollar fraud scheme that the judge called “extraordinarily evil.”
U.S. District Judge Denny Chin handed down the maximum allowable sentence in a New York courthouse packed with his victims and the press.
Defense attorneys had sought 12 years, while prosecutors wanted the maximum. The federal probation department had recommended 50 years.
Good thing this 71 year old man didn’t get off lightly with just a fifty year sentence. 
This Madoff was an unbelievable man, one who could set up this Ponzi scheme and fool so many people for so long, most of whom were prominent people and prestigious charities, foundations, and institutions.
He deserved his punishment, as he has punished so many with his crime.
However, there is another side. How would you respond to being offered a guaranteed 15% annual return on investment?
Folks should know well that this promise is highly suspect, being significantly higher than the stock market has ever returned over the long term.
Here is the warning of a skeptic in May 2001:
http://nakedshorts.typepad.com/files/madoff.pdf
Who cares when the money is pouring in? Is this the definition of greed?
If he was tried in Luzerne County he would have been sentenced to house arrest.
Those who put their money with him forgot the very, very basic rule of thumb: If it’s too good to be true, it is.
Let’s sympathize with the criminal and blame his victims.
If he was anything other than a white collar criminal, you’d be calling for the harshest punishment possible.
Tony, no one is sympathizing with Mr Madoff here.
Of course, there is something strange when a guy gets 150 years in prison for setting up a scheme directly modeled after the Social Security system . . . .
Dana, the Social Security was not set up as a Ponzi scheme.
The reason it will be in trouble is that Repub and Dem Congresses alike have allowed the FICA taxes to go into the General Fund.
However, even now, there are some very straight forward measures that can be taken to make SS solvent for a long, long time. Problem is, no one seems to care these days.
Many Ponzi schemes aren’t set up as such either. They are set up as investment futures. The idea being the previous investor is paid by the current and they in turn by the future. The money is actually invested in high yeild instruments which are risky but show big profits. Problem is when they hit a glitch (recession, bubble etc. or in the case of SS fewer workers and growing retirees) it unravels. From 1998 to 2006 I frequently yieled 30-46% on stock mutual fund returns. Had I solicited investors and guaranteed them a 15% return for every 100k I would have made a cool 15-31k on their money. Course when the bubble burst I’d and they’d have been screwed.
I would be interested in the measures you think could be taken to put solvency back into a system that for all we know is tens of trillions in the red. Especially with a near zero population growth and a tsunami of future retirees heading to retirement in the next 15 years.
I don’t believe the money collected was ever there (just a hunch, no proof before Pho starts with the “Cite” crap). But even if it were there without investing it in some instrument it wouldn’t even grow at the rate of inflation to be paid out in the future. The other problem I have with SS is that it was meant to augment retirement savings. But as time went on it was sold as the end all for retirement. The Gov. kept implying that savings was “extra” cause we had SS. Hence, people saved less and spent more figuring they were safe.
150 years?? Reminds of a line from an old Kingston Trio song from the early 60′s. “99 years? It could have been life.”
I would be interested in the measures you think could be taken to put solvency back into a system that for all we know is tens of trillions in the red. Especially with a near zero population growth and a tsunami of future retirees heading to retirement in the next 15 years.
See here:
So, if you got rid of Bush’s tax cuts and put the money towards ensuring old people could eat, the problem would go away.
Except, of course, that President Bush didn’t cut the Social Security tax; he got income taxes cut. Ther problem isn’t that we are taxed too lightly; the problem is that we spend too heavily.
I’d point out that President Obama ran on continuing the Bush tax cuts for everyone earning less than $250,000, so the majority of the Bush tax cuts would (if you believe him) stay in place. The American people have voted for tax cuts time after time after time; it’s time to listen to their wishes and cut spending to match the tax revenue the American people are willing to pay.
Perry wrote:
This is a common statement, but it’s one that ignores the law: Social Security funds must be invested with the government. From the Social Security Trust Fund Investment Policies and Practices, which you will note is a direct Social Security Administration site:
To break it down simply:
Excess Social Security funds could be invested only in the very instruments the government issues to finance the deficit! The Trust Fund Manager had no choice but to invest in the deficit!
Here I must (gasp!) agree with Perry. These folks who got taken in by Madoff weren’t exactly babes in the woods. They all thought they could make a fast buck investing with him, and some of them got screwed. Every prudent investment advisor tells you to diversify your investments, and the ones who put all their eggs in Madoff’s basket clearly ignored that rule.
Their problem isn’t that we are taxed too lightly; the problem is that we spend too heavily.
This is precisely why we in Cali are in the mess we’re in – the steadfast resistance and refusal of the controlling left to admit that it is because of their over spending (and spending what they don’t have) that has caused our descent into third world abyss. In their view, more revenue (commonly referred to by honest people as taxes) is the answer. The taxpaying public can always endure yet one more “revenue” shakedown.
This is precisely why we in Cali are in the mess we’re in – the steadfast resistance and refusal of the controlling left to admit that it is because of their over spending (and spending what they don’t have) that has caused our descent into third world abyss.
Uh-huh. You people really need to read Galbraith’s “Culture of Contentment”.
One question remains about Madoff. Where did the money go?
Ponzi schemers typically take a lot of money and run. Their games cannot go on for years, even decades. Some investors are going to show a huge profit to create the image of success and such faux profits should be recovered through a ‘clawback’ and used to reimburse those who lost money.
Billions of dollars cannot simply vanish. Madoff and family lived lavishly but did not spend billions on baubles.
Is the money hidden away?
Perhaps Madoff was really believed that he could make a lot of money for himself and his investors and lost a lot. Could he have believed that he would really get it right and make everyone more than whole.
Quite a few who embezzle money for gambling do so in the belief that winning the big one will allow them to return the money and retain profits. They convince themselves that they are not stealing but borrowing and have every intention of paying back what they took from the till.
Then again, the loot may be cleverly hidden. It may not be touched until Madoff dies but he does have a family.
These should be good times for skilled forensic accountants.
Perhaps some of his victims might want to see Madoff waterboarded to get the truth.
Eric, I’m just saying in a world where muni and state bonds were drawing 7-9% corp. bonds were doing 11-14% and high yield (junk) bonds were at 15-21%, a return of a steady 15% was not crazy. NOW in todays market no one in their right mind would even consider an investment like that. I’m saying taken in the context of the market at the time I don’t think 15% return was greedy, it may have been seen as a good return on a safe investment. People were lured into thinking: “Bonds, they’re safe” and at a good return. They did not invest in China Growth Funds or Latin American Funds as I did with growth of over 30% for 16 quarters. They were risky and you had to be ready to move as soon as the market “burped”. They wanted to “park” their money in a safe harbor and let an advisor handle it.
Is it possible that Madoff was motivated more by ego than greed? This is a bit of contrarian musing.
If a smart guy was to set up a Ponzi scheme, the plan would include a stopping point where the money would be taken and the run initiated.
There would some expenditure to create a facade of prosperity and some money would be paid out to investors to maintain the image of prosperity. Most of the money taken in would provide a lot of loot.
There might be some trading going on to create an image of action but not much money would need to change hands.
But most of the money handed over to Madoff seems to have vanished. Are there billions in loot hidden somewhere? Or did Madoff make a lot of bad decisions in the hope that all would be made right? His Ponzi scheme would be a way of buying time. This would mean that a lot of money was lost in bad trades rather than simply skimming off money. Such a game would been needed to maintain the image of Bernie the Money Mavin. This would bet the ego factor.
However, if there is a lot of lavish spending by Madoff family members after Bernie croaks, it would be a sign of a true rip-off.
JohnC: “… I don’t think 15% return is greedy ….”
John, 15% return year over year is unsustainable, as your own experience with foreign investments demonstrates, as you isolate 16 quarters of performance to cite your example. Besides, the context changes with each bubble and each downturn. What is the historic return on the D-J, something like 10-11%?
I cannot think of a time going back 50 years when I would have ever considered putting all my investments in a fund that guaranteed 15% annual return. That should bring up red flags to any prudent investor!