I can think of at least three incidents in my own life where I
was a victim of white collar crime. One case was
after buying tickets to travel to New Zealand my husband and I learned that the
travel agency we used in Los Angeles had bilked not only us but at least a
hundred others of tickets they thought they had purchased.
The agency’s owners took the money, our money, and ran. We were furious.
Seeking to apply restorative justice to this crime after
much research I found that the state attorney general’s
office was in hot pursuit of the guilty parties.
The result was not what we hoped. We were told that we would be able to
collect approximately 80% of what we had paid out for the
tickets. What did we want? We wanted a full refund of what
we had paid for our airline tickets. But I also wanted an acknowledgement
by the culprit that he had remorse for what he had done. We were bilked and
we had our dream trip to New Zealand ruined. This is what I wanted as a
victim.
We all have stories where we have been victimized. What do we
want ? A pound of flesh? Maybe, or at least initially that could be our
response. But I think what we would all agree, especially in cases of white
collar/corporate crimes, is that we want to be restored. We want restitution and
hopefully even an apology. What about in the case of Madoff?
As we know now his sentence is 150 years, and he has
decided not to appeal. The man is 70 years
old. The judge stated that Madoff was “evil”, or he personified evil, and
his sentence therefore would reflect the seriousness of the crimes and the
decades of systemic fraud. In court, Madoff did show remorse
at least at time of sentencing. Would that be enough? I’d say no. Take a look at this
article, an Associated Press piece reprinted at Tampa Bay
Online. Many would perhaps think that most of the victims of Madoff’s fraud
schemes were upper end wealthy New York financiers or stock holders themselves
but that is not the case. Surely there were some who fit that bill. Yet as
we are learning now there are hundreds or thousands of regular, average folks
who invested in Madoff through what they call “feeder funds” or in essence
indirect investing. These individuals were investing their life saving, their
401 (K) accounts and their IRA through those they trusted as their “money
managers’. And they lost.
The article on Tampa Bay Online tells the story of
Jack Cutter, an 80 year old retiree in Longmont, Colorado. He was a
retired engineer who because of Madoff lost his retirement savings.
Cutter is now working in the meat department of a local supermarket
in Longmont and getting paid $8.64 an hour. He has no choice. When you read the
stories closely these are horrific accounts of average Americans losing
virtually everything they had because of Madoff’s ponzi scheme. Where does
the legal system leave them today? The story mentions that many
will get paid restitution but how many victims will be fully
compensated is at question.
Apparently, there ‘s a catch. If you were a victim of fraud,
through Bernard Madoff, but were victimized “indirectly” through your money
manager investing your monies via these feeder funds then you seem to
be ineligible for restitution. It’s been called a technical
loophole. The Securities Investor Protection Corporation, SIPC, is an
industry funded group which will make payments to the victims defrauded by
Madoff.
But legislation is needed to guarantee all victims
receive compensation even those, at the bottom rungs, who invested indirectly.
Without the change in legislation these individuals will not receive a
payment from the SIPC of $500,000. Complicated for sure. I am sure the
story will get even more complicated in the months ahead.
But if restorative justice were applied in this case we would
work to guarantee, as much as possible, that all those who were victimized
receive restitution. I would say they should receive full restitution. To
date the documented cash loss in the Madoff fraud scheme is $ 1 billion,
according to a bankruptcy trustee overseeing the claims process. Madoff’s
assets are listed currently at $171 billion, without adding in the assets of his
wife Ruth Madoff. All victims should receive their compensation. It might
take many years but that is justice. Given the enormity of this fraud
in the annals of U.S. corporate fraud where does the federal government
come into play? Shouldn’t the feds be involved to guarantee restitution is
paid and that all those who are responsible, including associates
of Bernard Madoff, also be held accountable? I think so.
If legislation has not been drafted to change the loophole in
the law mentioned above, as it relates to the SPIC, it should be. Apart
from an “industry funded group” like the SPIC, there should be some
kind of securities investor protection provided by the federal
government. At the very least Congress should investigate this
securities fraud case and take a fresh look at the rights of customers
who make investments. Should restorative justice be applied to
white collar crime/corporate crime? Absolutely. No white collar criminal
should ever walk away from his crimes with a slap on the wrist. But a long
prison sentence is not in and of itself a sentence that
provides justice to the victims.