Even though a Madoff plea deal could be announced this week, we’re still curious about Ira Sorkin’s relationship with his high-profile defendent. The big reason is that Sorkin was the attorney for Madoff feeders Avellino & Bienes back in 1992, and it was Sorkin who kicked sand into the SEC’s eyes, so that they wouldn’t take the investigation to its logical extreme.
But it turns out that Sorkin has a history of protecting Ponzi schemes that goes beyond Madoff, Avellino and Bienes. Counterpunch relates a story we hadn’t heard before, about his defence of Ponzi scheme Towers Financial back in the early 90s.
See, Ponzi mastermind Steven Hoffenberg was arrested in 1994, but apparently the SEC had started sniffing years earlier:
But in 1988, six years before Hoffenberg was finally arrested and hundreds of millions of dollars more would be stolen, the SEC appears to have been close to uncovering the Ponzi scheme. But into the fray stepped Ira Sorkin and his law firm, Squadron Ellenoff, to work out a deal with the SEC.
The Administrative Trustee for Towers Financial would later file a malpractice lawsuit against Squadron Ellenoff, charging in court papers that Squadron Ellenoff, through the course of their legal representation of Towers Financial, received access to a confidential memorandum that revealed the fraudulent accounting practices but, nonetheless, the law firm falsely responded to SEC inquiries and subpoenas. The trustee alleged that “Squadron Ellenoff’s ability to delay the inevitable discovery of the Ponzi scheme, while simultaneously neglecting to advise Towers of the manifestations thereof, served to increase the number of defrauded investors and Towers’ ultimate liability.” Read the whole thing >
Bottom line: It’s one thing to defend the accused. It’s another thing to step in and help them perpetuate ongoing crimes.