150 Years Doesn’t Put a Penny in Anyone’s Pocket

Bernard Madoff was sentenced today to 150 years in prison. In reality, the 71 year old Madoff will probably serve less than 15 years given the life expectancy in prison for persons his age. He has no hope of parole. Nor should he have. Many of his victims will serve much longer sentences of poverty, or just scraping by.

For the 14,000 investors who lost money, many of them their life savings and retirement nest eggs, it is a Pyrrhic victory. They will see very little if any recovery. One man in his 80’s has been forced to return to work as a meat cutter at a chain grocery. There are thousands of other horror stories. But one of the saddest outcomes of this man’s greed is the bitterness it has engendered.

His victims have every right to be bitter. But their bitterness doesn’t impact Madoff at all. Instead it makes their pain and suffering worse. Having lost a portion of my retirement savings to the fiscal meltdown (not Madoff), I know how agonizing and distressing monetary loss is when it affects your anticipated standard of living during retirement. But to wallow in bitterness is not going to improve anyone’s retirement years.

It is unknown if the trustee, Irving H. Picard, will be able to compensate victims for anything close to their losses. And the very process of receiving, reviewing, researching and paying out even a partial settlement is incredibly difficult and slow. And the perception that all of Madoff’s victims were wealthy and can weather their losses is not true. His victims include public school teachers, farmers, mechanics and other middle class folk. Many had been enjoying a comfortable retirement but now with their nest eggs gone, they are struggling to pay the bills, to stave off foreclosure, to put food on the table.

The victims hurting most are not those who invested directly with Madoff. It is likely the direct investors will receive some of their investments back. But people whose 401k or their IRA’s where invested by fund managers will probably never see a penny of the investment returned. This inequity is due to a legal technicality.

Not only has Madoff destroyed the today and the future of thousands of innocent people, he has also severely damaged their emotional well being. That is really the greater crime.