Don’t Use the Last Line

You Had Me Until the Last Line

Reading an article on Ruth Madoff being sued, I saw this paragraph from the Compliant:

The United States government agreed not to contest Mrs. Madoff’s claim to $2.5 million and to make a payment to her in that amount following forfeiture of the Madoffs’ assets.  The forfeiture Stipulation and Order…expressly provides that the $2.5 million payment to Mrs. Madoff “does not in any way preclude…Irving H. Picard, Esq. as trustee for the liquidation of the business of defendant Bernard L. Madoff Investment Securities LLC…from seeking to recover the Funds from Ruth Madoff.”  While Madoff’s crimes have left many investors impoverished and some charities decimated, Mrs. Madoff remains a person of substantial means.  The inequity between Mrs. Madoff’s continuing financial advantages and the economic distress of Madoff’s customers compels the Trustee to bring this action.

See, I’m not sure exactly where I stand on Mrs. Madoff: I haven’t really given it all that much thought, as I don’t think it’s worth the mindshare.  But now that I have given it a little thought…

I’m unsure what the legal basis is for taking Ruth Madoff’s couple of million dollars when the US government has declined to bring criminal charges citing a lack of knowledge of the fraud on her part.  And for the DOJ to make that admission is pretty staggering.  Can you even imagine how much pressure there was to find something, anything, to hang a criminal charge on her.  That they failed really says something to me about her lack of knowledge. 

Now, the knowledge requirement for a civil case is lower than that of a criminal case.  Criminal authorities have to prove knowledge “beyond a reasonable doubt,” which is a pretty high standard.  Civil cases must be proven by a “preponderance of the evidence.”  This means 51%.  So I can understand a civil litigator, like the trustee of Madoff’s firm in receivership, saying, “well, I appreciate why the criminal authorities took a pass, but I think I can prove knowledge to a preponderance, so I’m going to bring a case.”

But that’s not what’s being said here.  It’s “she’s rich, her husband’s victims aren’t, so I’m going to redistribute that income to make things fairer.

I have a big problem with that. 

Being rich is not an immoral state of being.  When the Receiver says that she received funds she wasn’t entitled to, I say, “so what?”  Her husband cheated people and bought her things with the stolen money.  So, get the money from him, or his companies.  But the fact that the government agreed that this $2.5 million was hers, and now the Receiver is saying that she shouldn’t have it just because her husband’s victims are poor, that’s just wrong.  One has nothing to do with the other.  If they can prove that the funds are ill-gotten gains, take it.  If they can prove that she knew of her husband’s fraud, take it.  But in the absence of those two things, income redistribution does not support a seizure action.  That’s called socialism, and we’re not there.  At least not yet.

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