Madoff And The Mob

Was Bernie Madoff running mob money? That question has been at the centre of a lot of rumour and speculation on Wall Street, in law enforcement and in, well, certain communities in Brooklyn and Queens. 

Recently, Charlie Gasparino discussed the rumour that Madoff may have been connected, in some way or another, with the Russian mob. He admits that right now it’s pretty much guess work but seems very open to the possibility. Larry Kudlow said he’d heard speculation about mob connections from his Wall Street connections. A guest on Kudlow’s show, Patrick Brosnan, who seems to be some kind of private detective, said that the underworld agrees: Madoff was probably running money for organised crime.

We’d be surprised if Madoff didn’t have organised crime money in his scheme. He was, afterall, running a nearly perfect money laundering operation. One of the problems with funds garnered through criminal activities is that they are notoriously hard to invest or even save. Banking regulations make depositing huge sums from criminal sources a risky venture. But Madoff took huge sums easily, without disclosing anything to authorities. If you had a few hundred million you needed to stash, Madoff would have seemed a very attractive investment.

There are rumours that Madoff may have been handling money from organised crime going all the way back to the 1960s. This could even explain the mystery of where he got his start-up money from. And, although this is pure speculation, it could also explain why he never wanted to show a loss. Can you imagine having to explain to a professional killer from, say, the Lucchese crime family, that unprecedented market disruptions meant that his deposits with you had lost half their value?

Gary Weiss thinks there may be entirely different mob connection–perhaps Madoff himself was a victim. He could have been shaken down by mobsters, Weiss guesses:

There’s talk about the mob “investing” with Madoff. The mob doesn’t “invest” with anybody if they can help it. They take. There’s a lot of talk about money laundering and such, but my hunch is that if the mob is involved (and there’s not a shred of evidence on that so far), it would be old-fashioned extortion. The Russian mob “stars” in a lot of the half-baked conspiracy theories you see floating around the Internet, but in this case it is entirely credible.

We contacted the FBI’s organised crime unit to ask about the connections but they have remained mysteriously quiet about this possibility.


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