New York, December 11: A Year after Bernard Madoff’s arrest in Wall Street’s biggest fraud, only three people have admitted guilt, few victims have been compensated and billions of dollars remain missing.
It was 12 months ago yesterday that Madoff – until then believed to be one of New York’s most successful money managers – was arrested for running a Ponzi scheme of epic proportions.
To the horror of thousands of investors, including major banks, Hollywood moguls and savvy financial players, Madoff admitted that for decades he had not been investing their money at all.
Instead, he had been shuffling the funds in an endless pyramid operation, using new victims’ contributions to pay phony interest to others and funding his own luxury lifestyle.
The crime rocked Wall Street, where Madoff was a former chairman of the Nasdaq stock market and pillar of the New York and Florida Jewish community.
Now one of the most hated men in the country, he was sentenced in June to 150 years in prison. Aged 71, he will in all likelihood die behind bars.
But since then only his right hand man, Frank DiPascali, and his accountant, David Friehling, have pleaded guilty in an investigation that has yet to fully unravel the crime or compensate the approximately 16,000 direct victims.
Even the basic mathematics of how much money was stolen remains illusive.
Originally Madoff claimed to have been managing $US65 billion ($A71.5 billion), but in October the court-appointed liquidator said the real – not fictional – bottom line was $US21.2 billion ($A23.32 billion).
Victims are frantically trying to recoup losses. Although some were wealthy investors, others had given their entire savings to a man reputed as the safest pair of hands on Wall Street.
USA Today reported that only 1,487 direct investors – less than 10 per cent of the total – have received reimbursement from the Securities Protection Investor Corp, a company set up by Congress to help such victims.
The trustee, Irving Picard, hopes to expand the compensation pool by scraping up money from people he says benefited unfairly from the scheme, including many who have not been charged with complicity.
At the top of the list are Madoff and his wife Ruth, who have seen their yachts, Manhattan penthouse, Long Island beach house and Florida pad stripped away for auction – not to mention Ruth’s vast collection of jewels and other fancy goods.
Mr Picard is also suing Madoff’s sons, brother and niece for $US199 million ($A218.9 million), accusing them of enabling the fraud while holding key positions at Bernard L. Madoff Investment Securities.
The family members say they knew nothing of Madoff’s activities, but they all earned millions of dollars and lived lavishly.
Mr Picard says: “they either failed to detect or failed to stop the fraud.”
The hard-nosed trustee says he is also delving into the dealings of some of the big investors who made dizzy profits with Madoff.
One of the biggest, Florida investor Jeffry Picower, 67, died of a heart attack in his swimming pool shortly after Mr Picard announced a lawsuit to seize some of the $US6.7 billion ($A7.37 billion) he’d withdrawn from Madoff’s scheme.
So far, Mr Picard has snared less than two million dollars.
The rate at which the authorities are punishing the culprits is equally slow.
DiPascali and Friehling are the only two other than the ringleader to have admitted guilt. They both face life in prison but have said they will cooperate with investigators, which could result in a lighter sentence.
In addition, the FBI has arrested two computer programs who allegedly cooked the books at the fake trading firm.
—Agencies