Michael L. Martinez is a partner in the Washington office of Crowell & Moring LLP and is a former Assistant United States Attorney in Philadelphia and Washington.
The occasion of Bernie Madoff’s sentence to 150 years in prison and his somewhat surprising decision not to appeal is extraordinary for a white collar crime. Upon hearing of the sentence it triggered two questions in my mind: (1) was the length of the sentence appropriate; and (2) how did it compare with other sentences for similar crimes?
Whether the length of the sentence was appropriate is a legitimate question for at least two reasons. First, is that length a prison sentence warranted by Madoff’s crimes? Second, is assigning 150 years of prison time to someone pointless or “piling on” since obviously Madoff will not live that long?
It seems clear that the Madoff sentence was appropriate. Certainly the audience in the courtroom thought so, as cheers and applause broke out when the sentence was announced. But apart from that understandable emotional reaction on the part of some of the victims of Madoff’s ill deeds, U.S. District Judge Denny Chin set forth solid reasons justifying Madoff’s sentence.
For one thing, the raw numbers of Madoff’s Ponzi scheme are staggering. Estimates of the losses suffered by the collective victims of the fraud range from $13 billion to more than $50 billion. The number of investors who were direct victims of this fraud is in the thousands, and the number of indirect victims, including for example recipients of charitable funds no longer available to the charities that invested with Madoff, is most likely far greater. Those defrauded range from sophisticated investment banks and pension funds to average middle class Americans. Many of the victims are well-known. For example, Holocaust victim Elie Wiesel’s charitable foundation was wiped out. Similarly, according to the Wall Street Journal, 91 year old actress Zsa Zsa Gabor lost more than $10 million. It is impossible to assess fully the breadth of financial and emotional devastation Madoff’s conduct has brought to thousands of people.
In addition, as the prosecutors argued at the sentencing hearing, one must keep in mind that this was not a crime that arose out of a sudden financial distress or some other isolated event. Rather, Madoff’s fraud “was a calculated, well-orchestrated, long-term fraud.” Indeed, what struck me as astonishing is that Madoff created “hundreds of thousands of fake documents every year” in his efforts to perpetuate the fraud. Quite apart from the separate and obvious question of how someone could do this without the knowledge and assistance of others, the sheer number of false documents created annually at Madoff’s behest – all with the goal of misleading investors and the Government – serves to underscore Madoff’s bad intent and the lengths to which he went to perpetuate his fraud.
All of these factors led Judge Chin to conclude, and rightly so, that Madoff’s crimes were “extraordinarily evil” and not “a bloodless financial crime that occurred only on paper, but one that took a staggering human toll.” Accordingly, he felt compelled to sentence Madoff, who had pleaded guilty to securities fraud and ten other felonies, to incarceration for 150 years. Judge Chin clearly wanted to make Madoff an example, and under these circumstances, why not?