No one in the world believes that Bernie Madoff could have carried off his massive fraud alone. In his WSJ column today, Holman Jenkins calls for investigators to start digging into the question of who knew what and when.
“Mr. Madoff may have gone on for 40 years, and one suspects a certain folk knowledge existed among many participants that something was not quite right (which is not the same as deciding not to participate).
Indeed, a continuum of complicity will likely be found, extending from the truly duped to the not-so-duped. A place to start applying the screws would be Frank Avellino and Michael Bienes, the two accountants hauled before the SEC in 1992 for illegally raising $440 million for Mr. Madoff. In the most eye-popping of its missed opportunities, the agency never ventured to look directly at Mr. Madoff’s books after he somehow coughed up cash to pay back Messrs. Avellino and Bienes’s clients.”
We agree that Avellino and Bienes are a great place to start. They were placing money with Madoff for years, promising investors a certain return and keeping all the excess. They started investing with Madoff as early as 1962, at the very beginning. They made so much money–by taking money from investors, giving it to Madoff and skimming returns that exceeded what the investors had been promised—that they quit being accountants in favour of running their illegal investment vehicle.
We want to know, in the first place, why these two decided to start investing with Madoff way back in 1962 and whether or not they continued to raise money for Madoff after the SEC busted them in the 1990s. How did they even meet Madoff, who had just started his firm in two years earlier. Both men are now very wealthy, often sighted at fancy parties and known for donating money to charities and museums. Neither will return our calls.