Madoff Agenda: What the Interview Means

Chidem Kurdas

Funny thing about the NYT interview with Bernard Madoff. He sounds as if he’s following a script meant to support the charges made by Irving Picard, the Madoff estate bankruptcy trustee, against JP Morgan Chase and other defendants.

Mr. Madoff is quoted as saying that unnamed banks and hedge funds that did business with him were willfully blind to his fraud: “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ” This is in effect what Mr. Picard alleges in the various lawsuits he’s brought.

Madoff suggests he provided useful information to the trustee that he alone possessed.  Presumably this information bolsters the case that the banks knew or should have known that he was running a scheme. The suggestion that Madoff has such information may push the defendants to settle and give Picard leverage to negotiate settlements.

Why would Madoff want to ingratiate himself with the trustee? Well, Picard is suing members of his family and I’d guess could go a little easier on them in exchange for helpful evidence.  Or there could be some other consideration.

But if the defendants refuse to settle, the long-time fraudster is not going to be credible on the witness stand. We don’t know that he really has evidence that the banks knew of his scam. He could be bluffing—-even so, his bluff strengthens Picard’s hand.

Incidentally, that Picard did not meet Madoff face-to-face is beside the point.   He does not need to personally visit the prisoner any more than he personally files documents with the courtroom clerk; he will have sent his associates to deal with Madoff.

On another point, too, Madoff backs Picard. He argues that the trustee need return only the $20 billion capital that his clients gave him, not the false gains he reported, which bring the total up nearly $65 billion. This is a point Picard made all along and the bankruptcy judge accepted.

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