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Madoff Prosecutors Labor Under ?Amorphous Blob? of Evidence

By Mary B. Jacoby

The absurdity of the Madoff case continues.

Seventeen months after Bernie Madoff pleaded guilty to one of the biggest swindles in Wall Street history, which he pulled off right under the nose of the SEC, not a single other big fish in the case has gone to jail. The court appointed bankruptcy trustee Irving Picard is doing the heavy lifting, going after the financial wizards who ran the so-called feeder funds that allegedly facilitated the fraud by funneling billions of their investors’ money to Madoff. But Picard, as ballsy as he’s been, isn’t a prosecutor.

Who are the Southern District of New York prosecutors targeting? Madoff’s former back-office operations chief, Daniel Bonventre, and a couple of Madoff’s computer programmers. Seems like the vaunted SDNY could shoot a lot higher. So what’s going on?

According to this Associated Press story, the SDNY’s case against the former Madoff employees is ”bogged down by a mountain of potential evidence.” A defense attorney called the evidence a ”massive, amorphous blob that’s almost impossible to get a handle on.”

According to the AP:

The documents are so voluminous that prosecutors have sought to organize them by creating a computer database showing where and when they were seized, Assistant U.S. Attorney Lisa Baroni said Monday. She said the government had offered to give the defense team “a tutorial on how to search the database.”

This comports with what I’ve heard as well: The SDNY doesn’t have the resources to reel the big Madoff fish in.  They’re swamped, overwhelmed, out gunned.

Then there’s the further absurdity of the SDNY attempting to negotiate with the father of the SDNY’s own criminal chief over a civil forfeiture from the estate of alleged Madoff conspirator Jeffry Picower, a Palm Beach billionaire who died of a heart attack last year. The SDNY negotiations have been a roadblock to the bankruptcy trustee’s attempts to ink a $2 billion settlement with the Picower estate –  money that would be used to repay victims.

Picard has alleged that entities controlled by Picower took out some $7 billion from the Madoff Ponzi scheme, and that Picower “knew or should have known” about the fraud. Picower’s personal lawyer is William Zabel, father of the SDNY criminal chief Richard Zabel. Richard Zabel recused himself from the Madoff case last year because of his father’s close ties to the case.

Full post as published by Main Justice on August 16, 2010 (boomark / email).