Boston Criminal Lawyer Blog
It’s been awhile since we checked in on the Bernie Madoff, the latest superstar of the Boston-created ponzi scheme. Once a larger-than-life society figure, he is now reduced to spending his time in his larger-than-life New York apartment, talking to his attorneys and hoping to avoid a smaller-than-life jail cell. As predicted by this daily blog many times, however, the finger of suspicion and blame in this case is too large for just one man.
For example, we have already explored in earlier postings (look under the blog’s White Collar Crimes section to review) the pressures brought upon out-of-state Madoff associates to come up to Boston to answer questions by regulators. We have also witnessed how the regulators themselves have been on and off the hot seat. Then, there have been questions about Madoff’s wife and her habits with the United States Postal service.
Now, as sensitivities to this kind of thing have grown, a Massachusetts man has been accused of stealing $57 million from the descendants of a 19th century industrialist and using the money on personal extravagances, including three private jets.
John D. , 60, of Topsfield (hereinafter, “New Defendant”) was charged in a federal indictment Wednesday of assessing millions in phony fees, transferring company funds to himself and hiding the theft with various schemes, including false financial statements. New Defendant faces up to 20 years in prison, if convicted for the Massachusetts white collar crimes.
The U.S. Attorney’s office said in the indictment that New Defendant had stolen “more than $20 million” from Tenens Corporation, which was created to manage trusts for more than 100 descendants of the late Frederick Ayer Jr., who owned textile mills in Lowell. In a May 2008 lawsuit by Tenens against its auditors, the company estimated the theft at $57 million. Tenens attorney said New Defendant “looted” the family and “joins the likes of disgraced money manager Madoff…The family is heartbroken by [New Defendant’s] personal betrayal, and stunned by the scope and audacity of his criminal acts”.
The trusts managed by Tenens are estimated at “hundreds of millions of dollars” by the company in its suit against its auditors. New Defendant worked at Tenens for more than three decades before he was fired in March 2006 after his alleged theft was uncovered. According to the indictment, now three years later, New Defendant was paid $240,000 at Tenens in his last position as Chief Operating Officer.
Meanwhile, closer to the Madoff nightmare, Massachusetts’ top securities regulator has raised the pressure on accused white collar crime king Madoff on Thursday by asking a judge to put Cohmad Securities out of business in the state.
Secretary of State William Galvin, who has called Cohmad Securities a feeder fund for Madoff’s alleged $50 billion Ponzi scheme, sought a default judgment against the New York-based firm on Thursday.
If approved, a judge would suspend Cohmad’s license to do business in Massachusetts, require the firm to hand over the names of all Massachusetts investors, and order the firm to pay a fine.
The move comes days after Galvin filed an administrative complaint that sought to revoke Cohmad’s license.
Cohmad filed a motion saying that it could not answer Galvin because the state’s accusations are “vague.”
Galvin became one of the first state regulators to probe the fraud when he ordered Madoff to turn over all records relating to money he managed for state residents. Cohmad was co-owned by Madoff and was set up primarily to attract clients for him.
And what, you may ask, is the status of the star of this despicable show?
Why, Bernie is sitting in his plush New York City apartment that his clients were so kind as to unwittingly buy him, and watching the calendar as March 13th approaches.
March 13th is his next court date and he is waiting to see if he will be indicted or if he can work out a plea bargain.
There is speculation that the 70-year-old villain might be closer to a plea deal in his suspected $50-billion Ponzi scheme since a recent special court hearing about a potential conflict of interest with his lawyer was quickly postponed, just hours after federal prosecutors in Manhattan had requested it.
A federal court official said that the issue was adjourned without a new date.
March 13th is the latest deadline for prosecutors to get an indictment or hold a preliminary hearing on the original federal complaint filed on Dec. 11.
Federal law requires prosecutors to get an indictment 30 days after a person is arrested on a complaint or hold a hearing – unless both sides agree to a 30-day postponement. Madoff and his attorney, Ira Sorkin, have already agreed to two postponements, and as many as five adjournments aren’t unusual.
Madoff’s counsel declined to comment yesterday about any plea deals but has said Madoff has cooperated in finding investor funds. When addressing various anti-Semitic hate emails, the attorney said that he has to zealously do his job for the much-maligned Madoff.
On a Madoff plea bargain, legal experts believe it is inevitable. But they said the issue of a possible conflict of interest has to be resolved first. The attorney’s parents had money with Madoff, but the lawyer said he never personally had any investment.
“It has to be dealt with, it is not something that can be swept under the rug,” said Manhattan defense attorney Charles Ross.
Failure to deal with the issue properly could later be used by Madoff to attack any conviction, said Ross.
If he wants to keep Sorkin as his lawyer, Madoff should hire an independent counsel to advise him on the conflict issue and then waive any objection, said Ross. While such a waiver could occur the day Madoff ever pleads guilty, Ross thought that scenario was unlikely.
The fact that no plea deal has been struck puzzled one noted defense attorney who asked not to be named. “It is taking longer than it should,” said the attorney, who speculated Madoff may be balking at saying anything that implicates his wife or sons
Attorney Sam’s Take:
There are many issues that are involved with regard to plea bargains. An examination of a few of them may shed light on why it is really not surprising that a deal may not have been struck yet.
I would imagine that Madoff is interested in protecting his wife and kids. He also, however, may not be terribly eager to spend the rest of his life behind bars. Many people try to avoid such living conditions, even if the time is served in various federal prisons which are sometimes criticized as “country clubs”. Madoff is 70 years old. Any appropriate sentence could well be a life sentence.
One of the things I believe the prosecutors are interested in is getting information from Madoff regarding who was involved, how he performed his feat and how to get some money back to his victims. Unless he has suddenly undergone a huge personality change, it is unlikely that he is going to trip over himself to give this information without a price. The price, of course, would be consideration in a plea bargain.
The prosecutors, and indeed the judge, is going to be in a bit of a bind. On the one hand, it would be dandy to get all this information, but what if the price is little to no jail time? Lives have been ruined by this grand theft. Is the public likely to simply shrug its collective shoulder if Madoff is given the deal of the century?
The judiciary is supposed to be an independent governmental body, but we have often spoken about the politicalization of the system and the results. In fact, a United States Supreme Court Judge has recently addressed it in a recent interview.
Finally, sentencing in federal court is governed in large part by certain sentencing guidelines. While judges have the discretion to step outside those guidelines, there have to be reasons given and doing so can be fodder for criticism.
So, as you can see, a plea bargain in this situation is a bit complicated. But, how do we know that it is being contemplated? Well, Bernie confessed, remember? We also know that other evidence of the scheme has been uncovered. So…why the delay in indictment? The probable cause for felony charges are clear. This matter could have been indicted long ago. If additional charges become appropriate in the future, the indictment could be superseded.
The reason is the hope to “work something out”. A plea bargain.
One more item to take out of today’s visit to the Madoff nightmare. As you can see, more attention is being given to potential white collar crimes. Law enforcement is afraid not to take these situations seriously now…even more than before.
Therefore, be smart.
If you have reason to believe you are being investigated for such potential crimes, do not simply sit back and await the Commonwealth Bracelets of Shame. Consult an experienced attorney to advise and protect you.
Do it before more damage is done because you figured you could handle it by yourself.
Have a great, safe and law-abiding weekend!
The full articles of this story can be found at http://www.reuters.com/article/domesticNews/idUSTRE5247U620090305 , http://www.forbes.com/feeds/ap/2009/03/05/ap6132048.html?partner=email and http://www.newsday.com/business/ny-bzmado056058124mar05,0,1671582.story
