Bernard Madoff Victims Coalition
Victims Helping Victims
Government Accountability Needed For All
by Richard B. Shapiro
April 18, 2009
DURING the uproar over the bonuses given to AIG executives, every politician expressed outrage that more than $200 million of taxpayer money was dispersed to leaders of the failed company.
No one missed the opportunity to face a camera and express his or her outrage. They all called for accountability. No one in the land, except perhaps the recipients of those bonus payments, disagreed.
I am one of thousands of victims of the Ponzi fraud scheme perpetrated by Bernard Madoff, and I am urging those same politicians to actually hold the responsible entities accountable.
As despicable and deplorable Madoff and his cohorts are, there was an accomplice in this fraud: the Securities and Exchange Commission.
The SEC by its failure to properly regulate -- as well as outright ignoring numerous clear warnings that Madoff's operations was a total fraud -- aided and abetted Madoff in pulling off this greatest of crimes. Nobody disputes this, in fact, SEC officials admit they failed. But admission is not accountability.
Thousands of hard working people lost their life savings. Not just the wealthy were defrauded; so were charities and nonprofit organizations. IRA and pension accounts were completely cleaned out, gone forever.
Many middle-class citizens pooled their money to get the right to invest with Madoff, believing the former chairman of the NASDAQ was honest and the SEC was protecting investors who invested in our securities markets. He was slick, and the SEC certainly gave him the credibility he needed. Our congressional leaders, who are so justifiably outraged at AIG, should be equally outraged at the SEC for allowing tens of thousands of citizens to be fleeced by Madoff.
In 2006, the SEC gave Madoff's firm a clean bill of health, yet Madoff recently admitted he didn't trade a share for the last 13 years! Accountability should entail restitution for failure to do one's job - and that applies to our own government.
The legal principle of sovereign immunity prevents any victim from suing the SEC outright. But that doesn't mean our elected can't demand that the SEC be held accountable. Oops and sorry don't help people keep a roof over their head and put food on the table.
The IRS has provided guidance that allows victims to go back five years to recoup taxes paid on phantom income, but what about those who paid taxes for many years beyond five? Should the government be entitled to retain the windfall they got from taxpayers paying taxes on phony income prior to five years ago? Why are they limited at all?
Then there is the Securities Investor Protection Corp.(SIPC), which has said victims could qualify for up to $500,000 toward their losses. However that limit was set in 1978, more than 30 years ago.
Wall Street firms, the brethren of Madoff, fund SIPC and for many years SIPC not only didn't collect the assessments from its members, but they never increased the amount of insurance simply to match the increased value of today's dollars.
The fact is that $500,000 in 1978 would be equal to $1.6 million today. Who is going to tell SIPC that they must be accountable to pay to victims of fraud what was intended when it was formed in 1970, and the amount was set in 1978?
Congress was willing to pass legislation taxing AIG bonuses at 90 percent. Where is the corrective legislation that instructs SIPC the maximum compensation to victims should be $1.6 million not $500,000? If our elected officials really want to send a message to Wall Street and help Main Street, this seems like a slam-dunk.
SIPC should be held accountable to at least provide to stock fraud victims what was intended in 1978. Where is the outrage and call for accountability by our elected officials? Tell Wall Street that they owe Main Street - and tell them now.
It seems that accountability has different meanings for different situations. I hope our elected officials will feel it should have the same meaning for all.