In Madoff, a Court Trusts (Published 2009) (2024)

“Is Madoff here yet?”

“Where’s Bernie?”

“Do you think he’s going to jail today?”

A scrum of 20 photographers gathered in the January chill on Monday morning outside the courthouse on Pearl Street in downtown Manhattan, waiting to know if Bernard L. Madoff, accused in a Ponzi scheme extraordinaire, would have his bail revoked and be sent to jail.

They had come to catch a glimpse of the supervillain of the financial crisis, each hoping to get “the last shot of him before he gets hauled away,” as one photographer put it. Another team of photographers was camped outside of Mr. Madoff’s apartment building on East 64th to catch him as he left for the courthouse.

By now, you probably know what happened: Mr. Madoff never left home. And he did not go to jail, either. He is probably lounging around his living room watching repeats of “SportsCenter” on his flat-panel television.

Ronald L. Ellis, the federal magistrate judge, had promised to make his ruling by noon, and a few minutes after 12 o’clock, the news arrived that Mr. Madoff would not be remanded.

Despite Mr. Madoff’s sending 16 watches — including diamond-encrusted timepieces from Tiffany and Cartier — 4 diamond brooches and an emerald ring to family and friends, and having 100 signed checks worth $173 million in his desk ready to be sent, Judge Ellis decided that Mr. Madoff could remain under house arrest.

Mr. Madoff’s investors are fuming. The authorities say that he admitted to stealing as much as $50 billion, which, if true, would place him at the top of financial scoundreldom. Mr. Madoff also may have sought to obstruct justice by trying to get rid of whatever valuables remain — which ostensibly should go to the estate and its victims.

Someone without Mr. Madoff’s bank account surely would be locked up by now. Of course, this has always been the way of the white-collar world — though Martha Stewart never tried to smuggle jewelry through the mail. Kenneth L. Lay, L. Dennis Kozlowski and Bernard J. Ebbers all remained out on bail until and during their trials by posting millions of dollars in bail. Phillip R. Bennett, the former chief executive of Refco and a British national, was required to post a whopping $50 million to stay out of jail.

Welcome to the two-tiered system of justice: one for the super-rich, the other for the rest of us.

Judge Ellis’s explanation is not very satisfying. He says that to be remanded to jail, a defendant must pose a flight risk or be at risk of obstructing justice. Fair enough.

But he goes on to justify his decision by essentially saying that Mr. Madoff can afford to buy his way out of the pokey. Indeed, as part of Mr. Madoff’s house arrest, his wife has agreed to pay for personal security to “monitor” him by video 24 hours a day at a cost of tens of thousands of dollars. By doing so, the chances are low that Mr. Madoff will hop a flight to Namibia. (His passport has also been confiscated.)

And the judge added a new condition (with another expense) to keep him from trying to obstruct justice: Mr. Madoff will no longer be able to try to transfer assets because all of his valuables will be taken by a security firm and locked in a vault; the items that remain portable and in his apartment will be monitored by another security firm, which is supposed to take an inventory every two weeks.

All of those services will be paid for by Mrs. Madoff. (Oddly enough, Judge Ellis instructed Mr. Madoff to conduct the initial inventory of assets, which puts the entire idea of monitoring them into question.)

Judge Ellis clearly understands that people who lost money with Mr. Madoff are outraged. “The issue at this stage of the criminal proceedings is not whether Madoff has been charged in perhaps the largest Ponzi scheme ever, nor whether Madoff’s alleged actions should result in his widespread disapprobation by the public, nor even what is appropriate punishment after conviction,” he wrote in his opinion.

“The legal issue before the court,” he continued, “is whether the government has carried its burden of demonstrating that no condition or combination of conditions can be set that will reasonably assure Madoff’s appearance and protect the community from danger.”

At this point, it appears Mr. Madoff and his lawyer are playing for time. Ira Lee Sorkin, Mr. Madoff’s lawyer (and no relation to me), seems to know his client is going to jail; the real question is how long he can prevent it. So far, he’s done a good job a convincing the judge that Mr. Madoff can finance his own incarceration — in a penthouse apartment.

What is less clear is whether Mr. Madoff is cooperating with the authorities. Mr. Sorkin has waffled on this, at one moment saying that his client was cooperating and at another saying that he, Mr. Sorkin, was cooperating. Mr. Madoff hasn’t been indicted in the Ponzi scheme as the investigation continues, and he probably won’t for at least another month, if not longer.

Whatever the case, Mr. Madoff will probably find himself in his living room on the couch for as long as an entire year before he gets officially “hauled away.” And the photographers will still be waiting to get the shot.