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January 6, 2009

Madoff mess raises interesting white-collar bail issues

The money mess created by Bernard Madoff continues to raise interesting legal issues for white-collar crime fans.  Specifically, as detailed in this new New York Law Journal piece, the standards for pre-trial bail are now being tested through the Madoff case:

The decision by Bernard Madoff and his wife to ship jewelry and other valuables to family and friends may land him behind bars sooner rather than later.  Assistant U.S. Attorney Marc Litt told a magistrate judge yesterday that Mr. Madoff and his wife Ruth mailed in excess of $1 million in valuables late last month despite a court order in a related civil case requiring the accused mastermind of a multi-billion dollar Ponzi scheme not to dissipate assets....

Defense attorney Ira Sorkin of Dickstein Shapiro said the mailing of the valuables, which included watches, a pair of cuff links and even a $200 pair of mittens, had nothing to do with allowing Mr. Madoff to remain free on bail.

At issue was the Bail Reform Act, 18 U.S.C. ยงยง3141-3150.  Mr. Sorkin said the act contemplates only the risk of flight and potential danger to the community as factors in deciding whether a defendant should be allowed to stay at liberty pending trial.  The public, he said, is in no danger if his client stays out of jail until the case is resolved....

On Dec. 18. Mr. Madoff was ordered by Southern District Judge Louis Stanton not to dissipate assets in an action brought against him and his firm by the Securities and Exchange Commission.  Mr. Litt said the shipment amounts to obstruction of justice.

But Mr. Sorkin said Mr. Litt's position on the Bail Reform Act would gut the statute. "If you buy into his argument, then every defendant brought before this court should be incarcerated," he said, adding that the Bail Reform Act "does not cover dissipation" of assets.

Mr. Litt countered by citing legislative history - that the Senate Judiciary Committee intended to adopt a "broader definition" of community safety in shaping the reform act.... He also said Mr. Madoff remains a flight risk and that is it "simply impractical for the government to go around and collect anything of value." "The most significant thing is, in the face of a direct and clear order of which the defendant was aware, he violated that order," Mr. Litt said.

Some recent related Madoff posts:

January 6, 2009 at 09:37 AM | Permalink


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Rather than stretching the bail statute to read dissipation of assets as a danger to the community, couldn't the court use its contempt power to stick Bernie in jail (at least for a while)? This assuming, of course, that the court agrees with the government about how serious the flouting of its order was. (One million dollars is a nice, outrage-inducing number for the value of the items; is there anything backing that up, or is that just a number the government pulled out of the air? I don't doubt that Bernie had some nice watches, but those must be *really* nice watches!)

Posted by: observer | Jan 6, 2009 10:02:40 AM

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