Ruth Madoff’s Ill-Gotten Gains

Megan McArdle is angry to the point of thinking profane thoughts over the idea that Bernie Madoff transferred some $69 million in assets to his wife’s name to shelter them from the Feds.  She, quite reasonably, feels that “those investors certainly deserve it better than Ruth Madoff, who has been living high off of ill-gotten gains for years.”

As it turns out, Federal law sees it that way, too.  Indeed, Peter Henning has a longish piece at NYT today entitled “Can Ruth Madoff Keep the Penthouse?”   The explanation, as with all things legal is long (why else would you need 7 years in law school to learn it all?).  The short answer, though, is Probably not.

[S]imply putting assets into another person’s name, or giving them as a gift, does not necessarily shield them when they are the proceeds of criminal activity.

The government has not yet filed a complete set of criminal charges against Mr. Madoff, and the current deadline for seeking an indictment is March 11. Federal prosecutors can pursue criminal asset forfeiture under a range of statutes that could authorize the seizure of the assets claimed by Ms. Madoff if they are considered to be the product of his crimes.

[…]

To argue that the assets in Ms. Madoff’s name are in fact separate, it will be necessary for her to show they were acquired by untainted money. That may be difficult to prove because the records from Mr. Madoff’s investment advisory business do not appear to be very clear. If the government is able to show the brokerage operation was supported by the Ponzi scheme, then money taken from that business may not be immune to forfeiture.

The fact that Ms. Madoff did not know the money she received from him was the proceeds of unlawful activity — a point the government may well contest — would not insulate the property and accounts in her name. Under the asset forfeiture laws, ignorance of the source of the tainted money is not a defense. Instead, the only basis to resist a criminal asset forfeiture claim to property traceable to the crime is if the purported owner acquired the interest before any criminal activity generated the proceeds, or if the person is a bona fide purchaser for value of the property.

One presumes there’s some sort of lien on those assets right now.  Otherwise, Ruth Madoff should spend it while she still can.

FILED UNDER: Economics and Business, Law and the Courts, , , , , ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Bithead says:

    I wonder if there’s any place in the world either one of them could get a fair trial? Mind, I’m not defending them, but it appears to me that this thing has gotten whipped up to a fever pitch because of , among other things, Obama and his “evil rich” meme.

    I can’t help but think that this thing would not be receiving nearly the publicity that it has, absent the financial crisis that we find ourselves in.

  2. sam says:

    this thing has gotten whipped up to a fever pitch because of , among other things, Obama and his “evil rich” meme.

    Beooootiful–the quintessential Bithead.

  3. tom p says:

    well, criminal gains are, well, criminal.

    I wonder if there’s any place in the world either one of them could get a fair trial?

    Well, Bit, figure you to bring that conundrum up in conjunction with,

    it appears to me that this thing has gotten whipped up to a fever pitch because of , among other things, Obama and his “evil rich” meme.

    As far as I have noticed (maybe it is just me?) Obama has not called any one who happens to be “rich”, evil (got a cite?)…. he just said that those who raped the system need to take responsibility…

    Which surely fits Bernie and Ruth.

  4. Bithead says:

    Obama has not called any one who happens to be “rich”, evil (got a cite?)….

    Actions, I’m told, speak louder.

  5. Drew says:

    Bit –

    I understand the “actions” reference. But I’d be careful of holding a brief for Madoff, or sloughing this off on Obama’s admittedly and obviously stupid “blame the rich” BS.

    Because of my business, I know people in the Madoff sphere. This is a bad guy. A really bad guy. Period. Full stop.

    There are no excuses. There is no rationale. Give him a fair trial and then hang him.

    All right, all right…..a little hyperbole. But not much.

  6. sam says:

    You know, I’ve come up with a new game: The Bithead Game. It’s like the Six Degrees of Kevin Bacon game. Here’s how it works: Take a headline that facially has absolutely nothing to do with Barack Obama and see how many steps (in the game, they’re called “Bits”) it takes to connect the story in a negative way with the president. So, your score could be something like one Bit, two Bits, three Bits, and so on. Here’s one from the New York Post to get the ball rolling:

    LOSS OF A-ROD DEVASTATES DOMINICANS

    Have at it and post your results.

  7. tom p says:

    Actions, I’m told, speak louder.

    So bit… I repeat… got a cite? Put up or shut up. What actions?

    You know, I’ve come up with a new game: The Bithead Game. It’s like the Six Degrees of Kevin Bacon game.

    Sam… I like your game, but you do know bit will win it every time (not thru logic, but because it is all Obama’s fault)?
    Drew:

    There are no excuses. There is no rationale. Give him a fair trial and then hang him.

    and

    All right, all right…..a little hyperbole. But not much.

    I suspect we are on the same page here. Can Bernie Madoff get a fair trial in this country? I doubt it. Does he desrve one?? Ahh, now there is the crux of the question. For years now we have watched hedge fund managers walk a way with millions of dollars, paying “half” what we (people who actually work for a living) do in taxes…(question: how many people here actually
    get that tax break?)
    To paraphrase Warren Buffet… It is class warfare, and we are losing.

  8. J.W. Hamner says:

    Otherwise, Ruth Madoff should spend it while she still can.

    Ooooooh… like Brewster’s Millions! She has now until the jury’s verdict to spend $69 million dollars and can’t end up with a penny in assets… it could be a reality TV show!

  9. PD Shaw says:

    One presumes there’s some sort of lien on those assets right now. Otherwise, Ruth Madoff should spend it while she still can.

    I think the issue is tracing. If she takes the money and buys a house, then the feds will trace it to the house and demand it be turned over. She needs to buy consumables. Every time she goes through the McDonalds drive-through she should order 2 Big Macs, not just one.

  10. James Joyner says:

    She needs to buy consumables. Every time she goes through the McDonalds drive-through she should order 2 Big Macs, not just one.

    Exactly! There was a Richard Pryor movie about this years ago (The Toy). She should buy a copy or two for pointers.

  11. anjin-san says:

    but it appears to me that this thing has gotten whipped up to a fever pitch because of , among other things, Obama and his “evil rich” meme.

    Or perhaps, simply because this guy ripped of a lot of folks for a great deal of money. But guys like bit only seem to get upset about crimes committed by poor folks.

  12. Bithead says:

    But I’d be careful of holding a brief for Madoff, or sloughing this off on Obama’s admittedly and obviously stupid “blame the rich” BS.

    Which is exactly why I said:

    I’m not defending them,

    Funny how everyone apparently missed that one.

  13. Bithead says:

    What actions?

    Ya know you'[re really gotta come out from under that rock once in a great while.

    Here. Read. You might learn something.

  14. Bithead says:

    I suspect we are on the same page here. Can Bernie Madoff get a fair trial in this country? I doubt it. Does he desrve one?? Ahh, now there is the crux of the question.

    (Nod) Perhaps so. But that wasn’t the point was making. And you know, it’s funny; were you to ask such a question about someone who didn’t have a whole bunch of money folks like Anjin would get all upset and start calling you names out of the Democrat standard book of insults. He only seems to get upset about crimes committed by folks making dime one more than he.

  15. anjin-san says:

    He only seems to get upset about crimes committed by folks making dime one more than he.

    Well, at least we know you would be safe from my scorn 🙂

    Is lame “success envy” bs really all you have? I guess so…

    Its kinda funny, because here on planet earth I have a number of friends who are quite wealthy. I have always enjoyed hanging around with people who are more successful than I because I can learn from them and draw inspiration from their accomplishments.

  16. Bithead says:

    Well, at least we know you would be safe from my scorn 🙂

    And how, pray, would you know that? You’ve no idea what I make, or how. Which puts an interesting angle on this obsession you have, doesn’t it?

    Is lame “success envy” bs really all you have? I guess so…

    It does seem the center of your comments around here. Of course anyone who dares disagree with your politics gets the ‘you don’t care about the poor’ which is akin to ‘it’s for the children’.

    Bah.

  17. anjin-san says:

    It does seem the center of your comments around here

    Perhaps a person who is not very bright would see it thus…

    And how, pray, would you know that? You’ve no idea what I make, or how.

    You spend enough time droning on about “soup to nuts” IT work.

    this obsession you have

    Projection is an interesting psychological phenomena, no? You can’t get off your “Obama hates the rich” thing, so everyone else is obsessed. 🙂

  18. Bithead says:

    You spend enough time droning on about “soup to nuts” IT work.

    Heh. Yeah, well, because that’s all you can see, that’s what you judge me on. Hint: It’s hardly my only source of income.

    You can’t get off your “Obama hates the rich” thing, so everyone else is obsessed. 🙂

    And what else can one draw from his actions? What else can one draw considering the teachings of his mentors? Here again, we only ahve what we can see to go on. You apparently draw information in to fill in the blank spaces, in both cases from preconcieved notions.

    Not too much a shock, I must say.

  19. anjin-san says:

    And what else can one draw from his actions?

    Well, a thoughtful person might draw many things. That would tend to exempt you…

    It’s hardly my only source of income.

    Well, I am aware that you sell ads on your blog that tell folks how they can get “free money they never have to pay back” from the stimulus plan. As you yourself tell everyone so often, you are really a highly principled guy bitsy. Anything for a buck, eh?

  20. anji-san says:

    you don’t care about the poor

    Please show where I have said that even once, ever…

  21. tom p says:

    Bit, sorry, I was knocked off-line all day. (living in the country and all that) BUT… You had to go to CANADA to come up with this crap???

    it’s exactly as promised in the U. S. presidential campaign. Rich Americans are about to have their incomes pillaged through taxation, and even poor and middle class Americans will pay more, once U.S. President Barack Obama’s $3.55 trillion spending plan passes. (Which, given Democratic control of Congress, it will, notwithstanding the $1.1 trillion deficit it contains.)
    Next, the class warfare.

    Class warfare??? you want to talk about class warfare???

    See, I can play that game too.

    As to the larger point… awwww geeeezzzzz, some guy who makes more than 250K per year is going to have to pay an extra $4.90 cents per $100 he makes over $250K…

    My heart bleeds for him.

  22. Bithead says:

    Well, I am aware that you sell ads on your blog that tell folks how they can get “free money they never have to pay back” from the stimulus plan.

    I’ve already told you; Google runs those. I don’t control what gets out up. Did you really think I’m there changing the ads 24 hours a day?

    You had to go to CANADA to come up with this crap???

    You seem to forget, I’m around 40 miles from the border. MY own back yard, if you will.

    See, I can play that game too.

    I note you pick up on a government paid source to do so. Cute.

    The people your heart should be bleeding for is the people who he’s paying. Unless you have some way we don’t know about to secure a job from a poor person.

  23. Bithead says:

    Please show where I have said that even once, ever..

    But guys like bit only seem to get upset about crimes committed by poor folks.

    Comon, Anjin, the implications are fairly clear.
    Quit dancing, and take the hit.

  24. anjin-san says:

    Comon, Anjin, the implications are fairly clear.

    Only in your rather cloudy mind. What I said has nothing to do with anyone “caring about the poor”. I don’t think anyone has even the tiniest obligation to care about the poor. You do, or you don’t, not my business.

    Equal protection under the law, however, it something I care about.