BREAKING NEWS: BERNIE MADOFF ARRESTED

Stupid Crimes of the Week, Continued

by Megan Barnett Dec 11 2008

Wall Street trader Bernard Madoff is charged with operating a Ponzi scheme. Has the recession made the world go mad?

This week, we've seen three examples well-known, successful professionals being charged with committing absolutely mind-bogglingly stupid crimes.

Rich white men throwing it all away for nothing. It's officially a trend.

First, we witnessed the New York lawyer Marc Dreier being arrested after impersonating another lawyer in what has to be one of the most bizarre and fascinating fraud cases in recent history. Charged with swindling hedge funds out of hundreds of millions of dollars, Dreier was denied bail on Thursday after prosecutors called him "an enormous risk of flight."

Then we had Chicago. Oh, Chicago, your corrupt politicians never cease to captivate the country! Governor Rod Blagojevich was charged with brazenly soliciting bribes in his quest to fill the Senate seat vacated by President-elect Barack Obama.

And now, we have Bernie Madoff. The president of Bernard L. Madoff Investment Securities, the 70-year old Wall Street trader was arrested by the FBI and charged with securities fraud late Thursday. The fraud allegedly totaled over $20 billion.

The details are still emerging, but the Wall Street Journal's description fits the week's crazy criminal trend perfectly.

The criminal complaint filed against Mr. Madoff alleges that he told senior employees Wednesday that his business was "a giant Ponzi scheme," according to a person familiar with the matter. The alleged scheme involved tens of billions of dollars, but the extent of investor losses wasn't immediately clear.

The disclosure came after Mr. Madoff tried to distribute early bonuses to employees of his firm, prompting questions by senior employees, a person familiar with the situation said.

Mr. Madoff, 70 years old, allegedly told employees he had a couple of hundred million dollars left and wanted to distribute it before turning himself in to authorities, this person said.

You read that right. When the boss comes in and says "Take your bonus now before the Feds get it instead," you know something is amiss.

Madoff's name is best known in trading circles on Wall Street, as his firm is one of the biggest market-makers in town. But the Journal reports that Madoff operated the so-called Ponzi scheme in his firm's asset management business, which managed money for institutions and high net worth clients.

“Bernard Madoff is a longstanding leader in the financial services industry,” Madoff's defense lawyer Dan Horwitz told Bloomberg. “We will fight to get through this unfortunate set of events.”

Unfortunate, indeed. While the lawyers at Dreier LP are deciding whether or not to bother coming into work anymore, and the employees in the Illinois capitol hang their heads in shame, the traders at Madoff are now facing an especially ugly holiday season.