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Letter To Judge Chin Regarding Madoff's Guilty Plea, And A Response To A Madoff Victim Regarding The Clear, Simple, Cura

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Message Lawrence Velvel

April 2, 2009

 Re:  Letter To Judge Chin Regarding Madoff’s Guilty Plea, And A Response To A Madoff Victim Regarding The Clear, Simple, Curative Bond Proposal.   

            Appended below are two documents that were not initially posted on my site ( or on OpEd News.  One is a letter to Judge Chin urging him not to accept Madoff’s guilty plea, and giving the reasons for non acceptance.  Judge Chin did accept the plea, however, which I believe was a mistake for reasons given in the letter.  The letter has now been released by the court to various national news organizations, and so I am now posting it for ready availability to persons interested in the propriety of acceptance of the guilty plea.


            The other document is a response to a Madoff victim who (mistakenly) claimed the simple, clean, curative bond proposal contained in a posting of March 30th would have a present value of $88 billion, and that -- whether he was sarcastic or serious, I do not know -- the proposal would require the government to write a check for the $88 billion.  The response to that erroneous claim was not posted previously because I did not think it of sufficient general interest.  However, it appears that the bond proposal has been noted by a leading intellectual, so I have decided that the response to the mistaken claim should also be posted now.*


March 10, 2009


The Honorable Denny Chin

United States District Judge

Daniel Patrick Moynihan

United States Courthouse

500 Pearl Street

New York, NY 10007-1312


Dear Judge Chin:


            I am a member of and am writing you on behalf of the Steering Committee of MadoffSurvivors.  MadoffSurvivors is a Google group with approximately 300 members. They were investors with Bernard Madoff, and their accounts were wiped out by the revelation on December 11, 2008 that Madoff was running a Ponzi scheme.  Our estimate, and it is only an estimate, is that the amount of money lost by MadoffSurvivors collectively is probably in the neighborhood of 500 to 700 million dollars. 


            The members of MadoffSurvivors are not the billionaires, “centamillionaires,” hedge funds, and banks that the celebrity-driven mass media focus on, thereby causing the public to believe that the victims of Bernard Madoff are all wealthy plutocrats.  MadoffSurvivors are, instead, “little” people.  They are people who usually started with little or nothing, as members of the working class or lower middle class, as immigrants, as children of holocaust survivors. They are people who worked like dogs all their lives, finally saved up enough money to make an investment in Madoff, and now find themselves wiped out.  Many -- perhaps even most -- are elderly, in their late 60s, 70s, or 80s.  Many had no other savings or income except what they had in or received from Madoff.  Many are completely devastated, financially and psychologically.  They are selling their homes in order to obtain money to live.  They are attempting to reenter the work force, sometimes in menial jobs, in their 60s, 70s and 80s, in order to obtain money for food and shelter.  (There is, as you may know, one man in his 90s who is reported to have taken a job in a supermarket passing out fliers, we believe, in order to sustain himself.) They are the victims of both a terrible crime and a terrible tragedy.


            The crime and tragedy of which they are victims were not caused by Bernard Madoff alone.  They also were caused by a widely circulated public statement by the SEC in December 1992 that there was no fraud involved, and by the subsequent conduct of the SEC from 2000 onward in failing to properly investigate Madoff when given a plethora of tips by Harry Markopolos and, it now appears, by some others as well.  The SEC’s failure to pursue the (accurate) charges of a Ponzi scheme made by Markopolos is well known.  The SEC’s public statement of December 1992 that no fraud existed, a public statement that was never retracted despite all the tips the SEC later received, is rarely if ever mentioned by the media, but was the cause of huge numbers of people keeping already-invested money in Madoff, putting initial monies in Madoff, and/or putting more money in Madoff.  It is an unhappy fact, but a fact nonetheless, that the government itself, by publicly placing the imprimatur of honesty on Madoff in December 1992, and never retracting it thereafter, caused untold numbers of people to invest in and lose billions of dollars in Madoff, and enabled Madoff’s fraud to grow from less than half a billion dollars in 1992 to what Madoff claimed to be 50 billion dollars in 2008.  The SEC contributed to disaster by incompetently failing to protect citizens who depended on it for protection -- for the very protection that was a fundamental reason for passage of the federal securities laws in the 1930s.


            To the members of MadoffSurvivors, as to other “small people” victimized by Madoff, it is critical that the government uncover, and recover, every possible dollar of Bernie Madoff’s stash, and the stashes of his family members and guilty non family employees, so that as much as possible can be returned to the devastated victims of his fraud and of the government’s negligence or even, possibly, complicity. Very few people believe that all the many billions Madoff took in has been spent by him or his family, or redeemed by prior investors.  Rather, it is widely believed, perhaps even universally believed, that there are billions of dollars, perhaps tens of billions of dollars or more, stashed away in banks in countries which in the past have served as secret repositories of ill gotten wealth (Lichtenstein, the Cayman Islands, etc.), in banks in Israel, in illiquid real estate in a number of foreign countries, and in other investments. There is also a deeply unhappy suspicion that branches of various mafias or cartels could have been involved and could have been siphoning off billions of dollars.


            For these reasons, the Steering Committee of MadoffSurvivors urges that no sentence be pronounced upon Madoff until, and if legally possible there should even be a suspension of a plea until, the government -- including the Department of Justice, its component the FBI, the SEC, and any other relevant federal bodies -- is willing to formally attest that Madoff, his family members, and his culpable employees have fully told it where every dollar stolen from investors by Madoff has gone, insofar as it is possible to know this, from 1960 or 1962 -- whichever the year Madoff began taking in money from investors -- until the present time; to formally attest to the identity of the persons, institutions, banks, partnerships, trusts, real estate or other property which have  or do possess the stolen money or in which it is invested, and will formally attest to and identify every step it used to recover the money; and will formally attest to and identify all evidence of guilt in its possession, as well as remaining locations of the money or the property in which it is invested, in order to aid the efforts of desperately injured investors to obtain more complete restitution through private actions. 

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Lawrence R. Velvel is a cofounder and the Dean of the Massachusetts School of Law, and is the founder of the American College of History and Legal Studies.
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