When the books of Madoff’s firm were opened, they showed total assets of about $1 billion.
Prosecutors are homing in on the $900 million held by Madoff and the $100 million held by his wife and sons in an effort to recoup some of his ill-gotten gains.
That makes about $2 billion total. Nice work if they can get it back.
What is wrong with this picture?
Since he began his Ponzi scheme in the early 1960s, Madoff took in about $66 billion dollars from hapless investors. Since then, the Dow has multiplied many times. Assets invested then should be worth many times as much now. The recent Wall Street crash shouldn’t have much impact in this optic.
However bad an investment manager he was, Madoff did not burn through $64 billion dollars and wind up with only $2 billion on the books.
Where are the missing $64 billion?
It’s likely some proportion of them was indeed lost through malinvestments by Madoff. Maybe a quarter, maybe a third. He may have burned through another several billion with his lavish lifestyle.
But the chances it is all gone are infinitesimal. Madoff would have had to be, not merely the most successful fraudster of all time, but the worst investment manager. He’s too clever for that.
Taking into account Madoff’s penchant for ill-regulated third-world financial markets, it’s a safe bet these missing billions are to be found in the tax havens – places like Bermuda, Liechtenstein, and the Cayman Islands. In these fiscal paradises his purloined billions would be safe from Federal investigators for generations to come.
Why did Madoff plead guilty, without a settlement based on turning state’s evidence? The apparent answer is that he didn’t want to trigger a long trial by pleading not guilty. Such a trial would necessarily have turned into a detailed investigation of where his assets came from and where they went.
At the end of the day he is laughing at the rest of us. That money will go somewhere. Where it won’t go is to the Federal government or back to his victims. One of them is Elie Wiesel, the Holocaust survivor whom he took for every penny.
The prosecutors are doing their job and I commend them for it. But the wrong question is being asked, and asking it really belongs to our legislators.
The $64 dollar question. Multiplied by a billion.