How to do a Financial Heist: Madoff Style
How to do a Financial Heist: Madoff Style
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1. Last More than Six Years. This is the key part. The look-back period for a fraudulent conveyance claim is six years. Once you, the fraudster, go past the six-year mark, any monies that you transferred to third parties before that time are likely safe. It appears that Mr. Madoff’s fraud has gone far past the six-year mark, giving him safe harbor for any transfers made prior to that time.
2. Transfer Your Money to Friends and Family. With the six-year fraudulent conveyance period in mind, it is important to transfer significant sums to your friends and relatives through outright transfers. In addition, employ them in your business and pay them inflated amounts, which can also be hard to challenge on legal grounds. Ensure that the transfers to your spouse are plentiful and that significant sums are kept in his or her own name only. To the extent that this is impossible, open up accounts abroad. We don’t know the full extent of Mr. Madoff’s transfers, but it appears that his children, niece and brother were paid millions by his firm and that his wife is paying for his court-ordered 24-hour security service. I don’t believe she had a job. Where do you think this money comes from?
3. Title Your Assets With Your Spouse. After transferring as much money as possible for as long as possible, make sure that your home, vacation home, boat, etc., are all titled in your spouse’s name. In particular, have him or her own a home in Florida. This way, they can eventually relocate there and be protected under Florida’s homestead laws. Again, Mr. Madoff followed this principle, and much of his real estate, including his homes in Palm Beach, Long Island and France, appear to be titled solely in his wife’s name. Where do you think she got the money for these?
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4. Confess When the Writing is on the Wall. Once it appears the scheme is over, confess quickly. This way you can control the process and limit the collateral damage. So, for example, did Mr. Madoff’s two sons, Andrew and Mark, who had worked for Bernie’s firm for years, 1) learn of the fraud from him and immediately inform on their father to the federal government, or 2) know about it all along, but their father, knowing that the end was coming, told them to report him so he could take the fall?
Which scenario seems more plausible: that Andrew and Mark were top executives for their father for years with no inkling, or were at best willfully blind? Under the former explanation, I think they are at best fools, and under the latter explanation, far worse. In any event, by managing his capture, Mr. Madoff has been able to create the appearance that he is the sole actor, something which seems incredible. In any event, I don’t see the Madoff family and the firm’s employees rushing to return the millions paid to them over the years.
5. Be Arrested by the Feds. The United States federal government has lenient bail requirements, which allow for bail so long as you are not a danger to society or a flight risk. Conversely, in the state of New York, you can go to Rikers. By being arrested by the Feds, Mr. Madoff was able to come under the federal bail procedures. That is why he is now sitting in his penthouse apartment. Had he been arrested by the state authorities, he might be in Rikers right now.
Here, I have a question: Where is New York County District Attorney Robert M. Morgenthau in all this? Mr. Madoff’s alleged crimes sustain a simple felony theft charge under New York State law. If I am correct, Mr. Morgenthau should do his job and charge Mr. Madoff with felony fraud and theft. Perhaps he can do a better job than the Feds, who don’t appear to have much traction on this case.
It all goes smoother with no spouse.
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Michael Porfirio Mason
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