His name is mud

Bernie Madoff didn’t use a gun or a knife, but he victimized thousands and stole billions, much of it from fellow New Yorkers. White-collar or not, he was a terrible criminal, and his death in federal prison, two weeks before his 83rd birthday, was a fitting end for a man who far outdid Charles Ponzi’s original 1920 confidence scheme.

Madoff’s weapon was paper, creating always positive and always false monthly statements for his investors, duping them into believing that their money was growing and growing, when it was really just being used to pay out other clients. It was too good to be true, and his scheme was too awful to be imagined.

Ponzi’s thievery from Bostonians a century ago came to about a quarter billion inflation-adjusted dollars, making him a piker compared to Madoff’s looted billions. Discounting the paper losses of $65 billion, which were real enough to people who thought that they had college funds or retirement accounts, Madoff actually took in about $18 billion from his investors.

Through a complicated series of clawbacks and offsets, the court trustee Irving Picard has returned more than 75% of those funds to the victims, an extraordinarily high rate for this kind of scam. Picard is still at it. Other fallout is a supposedly revamped U.S. Securities and Exchange Commission that wouldn’t be so blind to future Ponzi scams. And it was good that the IRS changed from three years to five years for Ponzi victims to file amended tax returns. It is really awful if you reported and paid taxes on Madoff-created wealth that wasn’t real and you would never see.

As for Madoff himself, when federal prisoner 61727-054 expired yesterday, he still had 116 years to go on his sentence before his Jan. 31, 2137 release date. That’s 22 years less than the righteous 150 years handed him by Manhattan Federal Judge Denny Chin in 2009, with the reduction due to good behavior.

Ironically, Madoff had asked Chin for 12 years. It’s pretty sad that Madoff got exactly that in the end.