Made Off With Plenty

by Donna Pendergast

Bernie Madoff was sentenced to 150 years in prison yesterday. The appropriately named Madoff pled guilty on March 12th to eleven felony counts including mail fraud, wire fraud, perjury, money laundering, securities fraud, theft from an employee benefit fund and false filings with the Securities Exchange Commission for running a Ponzi scheme valued at over fifty billion dollars.

U.S. District Judge Denny Chin referred to Madoff''s crimes as "extraordinary evil" at sentencing stating that "this type of manipulation is not just a bloodless crime that takes place on paper but one instead that takes a staggering toll."

Although many of the victims present in the courtroom were pleased with the sentence, they all understand that a a century and a half of largely symbolic punishment will do little to help the legions of persons that were financially wiped out by the fraud of staggering proportions perpetrated on victims who trusted Madoff with their money, their future and their retirement dreams

Now 71 years old, Madoff will spend the rest of his days on earth in a cell that is a far cry from the opulent residences that he shared with his wife and family. Maybe a few months of that kind of existence will convince Madoff that his heinous acts are more than "an error of judgement", a "problem" or a "tragic mistake" which were the terms that he used at sentencing to refer to his elaborate financial ruse

But then again probably not

The victims, who at sentencing referred to Madoff as a "monster" and a "psychopath" were right on base. Working as a prosecutor for over two decades I have come across my share of clinical psychopaths over the years. Although the psychopaths that I normally deal with commit crimes of a violent nature, they share plenty in common with Bernie Madoff. Lying, manipulation, coldness and lack of empathy are the hallmarks of a psychopath, a person who exploits relationships and persons with abandon and without remorse. Bernie Madoff certainly fits the bill on all points.

For those who wonder whether Madoff ever thinks of the persons that he has ruined, the answer is complex. He thinks about them he doesn't care in a way that a normal person can relate to. He cares that he got caught. He cares that his luxurious life has been taken away but he won't lay awake at night thinking about the daily struggles that his victims will have to endure.

His courtroom statements were very telling about what is important in the mind of Bernie Madoff. How can one stand in a courtroom looking in the eyes of persons who have been ruined by your actions, and refer to your misdeeds as an "error of judgement?" Those words alone pretty much say it all. The man understands but fails to care that he has condemned scores of persons to a life of poverty and struggle. His later feeble attempts at apology were overshadowed by the references to his "problem" and his "tragic mistake," the same tragic mistake that he kept making over and over while in the process imprisoning his victims in their own version of hell.

Judge Chin noted at sentencing that not a single letter had attested to Madoff''s good deeds or charitable activities further commenting that the silence was telling.

The silence is telling? The silence is deafening and yet says it all.


Statements made in this post are my own and are not intended to reflect the views, opinion or position of the Michigan Attorney General or the Michigan Department of Attorney General.

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They Are All Crooks So Why Not Bail Out Jeff Skilling?

Hunt for Justice by Cynthia Hunt

(Treasury Secretary Timothy Geithner, left, talks with Fed Chairman Ben Bernanke before the start of a House hearing on AIG.)

Is the United States Morally Bankrupt?

I’m not a negative person so it’s hard for me to think in that way, but facts are facts. I sit here day after day shaking my head about the financial crimes perpetrated by some of our nation’s finest minds and most educated individuals. It makes me worry about the moral health of our nation.

I’ve covered many violent crimes during my career as a journalist, and you can usually find the triggers. When you put a killer or rapist under a microscope, you almost always find a past that explains how the person transformed into a monster. Notice, I didn’t say it excuses them, but at least they are often explainable.

(Pic of Blogger Covering a Triple Murder in Houston)

Will White Collar Crooks Destroy Our Great Nation?

I find this new wave of white collar crimes grounded in greed and dishonesty more disturbing. I believe it reflects a moral decay in some of our nation’s most accomplished individuals. How could any AIG executive accept part of the $165 million in retention bonuses? Their company failed. They failed. A Big Fat F. We all know when you fail, you are not rewarded. We learned that in grade school Most of the executives receiving these ridiculous bonuses were from the same AIG unit that caused some of the insurance giant’s most severe problems. Accepting that bonus money is clearly stealing. Theft. A ripoff.

AIG is nothing compared to Merrill Lynch. Executives there rushed out $3.6 billion in bonuses. New York Attorney General Andrew Cuomo discovered Merrill paid four executives a combined $121 million and distributed bonuses of $1 million or more to 696 employees. The firm lost $15 billion in the fourth quarter. Again, I call accepting or giving bonuses at a company that is failing theft. What would you call it? Kudos to New York Supreme Court Justice Bernard Fried for ordering the list of Merrill bonus earners be disclosed to the taxpayers. After all, Bank of America bought Merrill Lynch. Bank of America has been allocated $45 billion in federal bailout funds and the Treasury has guaranteed to protect it from potentially billions of dollars in losses from investments Lynch made in real estate loans.

These bonuses are just the latest crimes. Yes, I said crimes. Shouldn’t we investigate the executives whose potentially fraudulent decisions caused the failures in the first place. Let me again quote a Wall Street Journal editorial from 2006:

A joke in Washington goes like this: "What's the difference between Enron and Fannie Mae? Answer: The guys at Enron have been convicted.”

Today Enron Would Get A Bail Out

I covered the Enron story from the beginning. We called the Enron guys' work voodoo accounting. They were put on trial, called liars and thieves, and sent to prison. Founder & CEO Ken Lay died before he went to the federal pen. Former CEO Jeff Skilling was sentenced to 24 years and recently lost his appeal. The damage Enron did is small compared to the Americans suffering now. This 2009 gang of white collar thieves is largely getting off except for the worst of the worst, Bernie Madoff.

(The FBI Arrests Former Enron CEO Jeff Skilling 2004)

Jeff Skilling was once one of America's brightest and brashest stars. I sat in his Houston mansion one night as he meticulously explained everything that went wrong at Enron and what he knew and when he knew it. I must tell you that he knew they pushed limits to create a new kind of industry. However, he never believed their company was in real financial trouble and would go down and destroy so many people financially. I am not defending just comparing. After he was convicted, he was ordered to pay $45 million in restitution to Enron investors.

I find Skilling more like a school girl when compared to this new gang of still unnamed executives--the people who ran their companies into the ground with complicated deals and shady investments and then stole taxpayer money. I am sure if federal prosecutors spend as much time investigating all of these huge companies as we did Enron, we could send a bunch of these modern suits to prison.

Let's not forget the politicians who gladly pocket donations from these sharp dressed crooks. I think they should go to jail first and stay the longest. Unfortunately, you know that will not happen when you follow the money trail.

A NEWSWEEK review of recent filings with the Federal Election Commission found that the political action committees of five big TARP recipients doled out $85,300 to members in the first two months of this year—with most of the cash going to those who serves on committees who oversee the TARP program. Among them: Bank of America (which got $15 billion in bailout money) sent out $24,500 in the first two months of 2009, including $1,500 to House Majority Leader Steny Hoyer and another $15,000 to members of the House and Senate banking panels.

We have elected crooks overseeing the hearings of the business crooks while the elected crooks pocket money from the business crooks they oversee. Instead of sending our 2009 crooks to prison, we, the hardworking taxpayers, are bailing them out. We strive for equitable treatment in our justice system. Should we bail out Jeff Skilling too? At least, he went before Congress and testified instead of cowardly taking the fifth or fighting in court to keep his name and his bonus amount secret. He didn't try to take taxpayer money as a bonus after Enron collapsed.

They say our economy will recover from this, but what about our national character? Politicians taking control of our banking sector is a dangerous development that keeps getting scarier. It's all so un-American. Many historians believe Rome fell because of internal decadence and excessive self-indulgence. Will we too?

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Group Think

by Lucy Puryear, M.D.

It is no longer 1984, but George Orwell was on to something when he penned his classic and prescient novel. Published in 1949, Orwell wrote of an eerie world where individualism was rejected and universal group adherence was mandated. Although the fear that 1984 would resemble "1984" the novel did not come true, many of his concepts are relevant to our culture today.

I would like to talk about group behavior and crime. In 1979, social psychologist Irving Janis coined the phrase "groupthink." He defined groupthink as "a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members' striving for unanimity override their motivation to realistically appraise alternative courses of action."

I am proposing that groupthink contributed to the financial crisis that we are facing today and allowed white collar criminals like Bernie Madoff and Sir Allen Stanford (pictured left) to swindle large numbers of intelligent investors. Those of us on the sidelines can't imagine how so many were taken in by unrealistic promises of over-the-top financial returns. But I'm certain if I saw the fortunes many of my friends were making I would want to join the party. When Madoff's funds consistently beat the market while others didn't, common sense would demand questions be asked. But no one wants to tell the Emperor he's naked, especially if they're serving caviar and champagne at the party.

It takes a charismatic, talented individual to conceive of and pull off a massive fraud on the scale of Stanford's and Madoff's. But without individuals following, the Ponzi scheme never would have worked. It was only when there were no more investors left with money that the plan fell apart. But we weren't immune to the bandwagon.

The stock market is a prime example of groupthink. We think the economy is doing well and we invest as we see stock prices rising. We think the economy is doing a nosedive and we panic, pulling our money out and stopping our spending. None of really knows what the economy will or won't do, but the group dynamic says we're in really bad shape here whether or not we personally are.

The dominant message from the politicians is restoring consumer confidence. Meaning, if we believe things will get better, we will reinvest and re-spend and the stock market will go up. The stock market often has less to do with real data and more about how people feel. And right now we're all feeling bad.

It is not just financial malfeasance that is made possible by groupthink. Large crimes against

humanity require people to function with a singular group mentality rather than with individual judgement. Why did so many Germans, otherwise good people, tolerate the Holocaust and the torture and slaughter of millions? How is it possible that Jim Jones in Ghana convinced hundreds to drink purple Kool-Aid? David Koresh? Marshall Applewhite (shown right)? All of these men became cult leaders, convincing numbers of usually bright, well-meaning people to follow them, even to their deaths.

Groupthink is frightening and we are all susceptible to it. It takes a unique individual to stand up to the mob and risk being ridiculed, excluded, or worse. Remember what it was like to be a teenage girl, listening to others make fun of your best friend, but deciding to go along so that you could be a part of the cool crowd and not be ostracized from the clique? As the examples above prove, people will choose death over losing their place in the group and being left behind. Most frightening of all, as we become more and more enveloped by groupthink, we begin to think of those thoughts and ideas as our own and lose our ability to think for ourselves.

People are not responsible for the choices criminals make, but in certain situations it takes our cooperation (unconscious though it may be) to become victims. Those charismatic, narcissistic, antisocial individuals know a lot about groupthink, and how to use it to their advantage.

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