There was cheering from the crowd when Madoff was immediately taken to jail. Emotions are running high and will do so for years to come. But this is not a joyous day. Many victims lives have been radically transformed by the financial crime Madoff effected. Likewise, Madoff’s life as he knew it is over. Leaving the comfort of normal life to go to prison is a radically different experience as well.
I know – regretably I have been there for exactly the same crime Madoff plead guilty to today.
Every choice has a consequence. Many were victimized by Madoff et al and both the victims and Madoff, himself, are facing the consequences of choices made.
Madoff made the following comments in court today.
“I operated a Ponzi scheme. I thought it would end quickly, but it proved impossible. I am ashamed for these criminal acts. I always knew this day would come.”
I was asked today on CBS radio – KRLD – by Ernie and Jay about the mentality of how something like this could happen. Is it possible that Madoff just was out to steal from folks? The answer is simply – NO.
While I don’t personally know Bernie Madoff, I know the thought process that ends in federal prison. Madoff is a smart man. In fact, I would say that he was brilliant in his ability to effect such a scheme successfully for so long. That is rather amazing. But, for a time, I suspect when he first got started, Madoff was legitimate.
To effect a fraud like this, there must be three components: (1) need; (2) opportunity and (3) rationalization. My best guess is that Madoff had two needs that came together when he began this in the early 90′s – (a) emotional need – he would not admit that he was faliable; and (b) money – in that he likely lost money and was unwilling to admit that fact. Hence, he entered into the second part of creating such a fraud – he took advantage of his name and notariety to gain more money – more investors or more victims.
CNN reported: Madoff admitted that he never invested his clients’ money, and that he deposited the funds into a “Chase Manhattan” bank.
At that point, Madoff crossed the line of investing and became an outright fraud. Amazingly, instead of continuing to invest clients money hoping for the big win, Madoff just deposited the money in the bank. Of all revelations, that was the most amazing. Effectively he just gave up, committed the crime and waiting until the house of cards fell.
TONIGHT FOR MADOFF:
As I type this I can speak first hand from experience, Madoff just entered a phase of life that is totally foreign and for which he is unprepared. Likely, as he was removed from the court room, he went to processing where he removed his clothing and was issued prison issue clothing. It is doubtful that he was allowed to keep much other than one set of “street” clothes that might be used for limited visiting privileges or meetings with legal counsel, etc. He would have likely been handed his bed linens and escourted to his holding cell. Unless because of his age he was assigned a lower bunk, he would be given the upper bunk as those with more time in the facility get the privilege of lower. His meals would be a step above a Swanson’s TV dinner – maybe – and the routine is strict.
Counted multiple times per day, Madoff will soon find that he’s no more than anyone else incarcerated, an inmate. Inmates will likely acknowledge him, but not consider him any more than they. In fact, it is likely that many will avoid him fearing that what they might say to him will be used against them (they fear he’d become a snitch) in order to gain favor with the judge for a lighter sentence.
Tonight will be one of the longest nights of Madoff’s life. He will wonder to himself – time and time again – what he has done and why. Those thoughts will haunt him for the rest of his life, which from a free man’s perspective, has ended.
Now here’s where I should stop, but for whatever reason, I can’t. I understand the anger, and desire for revenge that many feel. It is natural as your trust has been violated. This is no different than feeling that one has when a marriage ends with the distrust created by adultery.
Many would say that I am the least to offer advice. Perhaps that is true, but I’m going to try. First, from a practical perspective seek the legal help you need to recover what you can. Know that there are possible sources for some recovery including the application of IRC Section 165(c)(2). I am not an expert in that area, but I have a guest blog from someone who is. Go there it might be helpful.
Beyond the legal recourse against Madoff and those involved – and I suspect that others will fall from this as well, may I say – with respect – put your loss into perspective. We come into this world with nothing and leave that way as well. Money – security – certainly are important, but it is afterall only material. The longer one harbors anger or hate, the worse life becomes. Finding the ability to recognize that Madoff will suffer and reap the consequences of his choices is significant.
Your life has changed – so has his. No one walks away from this feeling good or whole. The ultimate outcome, however, for you and your well being will, in large part, be a function of your ability to forgive.
IN THE LONG RUN:
Having been there, I know the pain of prison. Some learn from their experience and others never get it. In Madoff’s case we may never know what the true effect of his life changing experience will bring. In my case, prison was life changing. While I am thrilled with freedom, I understand that my time there changed my life and gave me an opportuity to do something positive today that, in fact, helps others.
Sometimes you can actually get lemonade from lemons!
As always – COMMENTS ARE WELCOME.
HERE is what Madoff read to the court.