We all know that Bernie Madoff was ordered to hand a list of his assets over to the court last week. But why would anyone believe that a man who ran a decades long fraud would suddenly disclose everything? His attempt to hide millions of family jewels should put the last nail in the coffin of the rumour that he had suddenly become an honest man.
In reality, Madoff will likely conceal lots of assets and much of his ill-gotten gains will end up in the hands of friends of family. With decades to prepare for the day his Ponzi scheme would collapse, Madoff had plenty of time to hide his assets. It’s not just secret bank accounts. There are probably bearer bonds and diamonds in safety deposit boxes around the world. All untraceable and unlikely to be discovered by investigators.
Robert Chew, a Madoff investor-victim, writes an article in Time Magazine that explains the problem nicely:
Sure, experts say, he’ll cough up the obvious brokerage accounts, client names, and offshore and numbered accounts that dealt directly with his investment company, Bernard L. Madoff Investment Securities LLC. And he’ll begrudgingly concede the $7 million Park Avenue pad, the Palm Beach digs, the yachts, the French villa and the Montauk getaway. But no one believes he’ll tell authorities where all the booty is stashed — not a chance, unless it saves him from walking the plank. It’s the equivalent of the British government asking the infamous pirate Captain Kidd if he wouldn’t mind handing over some of his treasure maps, pretty please.
“Do you think a man who deceived so many friends, associates, charities, and lied to them openly for so long, has a problem being a little bit deceitful in surrendering his books and records?” asks a former Los Angeles–based Treasury Department special agent who for decades specialised in white-collar fraud. “Of course he’s hidden money; we’re talking $50 or $100 million. It’s a pittance to a guy like Madoff. Hiding money is a game for criminal minds, and there is no way Madoff’s ever going to provide 100% of the information unless it exonerates him.”
The modern way of burying a treasure chest of cash, banking experts say, is to have your own bank that is funded by nameless wire transfers to Switzerland, the Caymans, Liechtenstein. It’s still unclear as to whether Madoff had his own bank, but there is always the ever popular method of hidden safes and multiple, anonymously managed safety-deposit boxes loaded with cash, or even better, “bearer bonds,” an old-fashioned but effective tool that is as good as cash and can be presented to banks by anyone bearing them — no questions asked. Today they are used frequently in Central America. Typically, bearer bonds pop up years later in the hands of family members, after the institutional memory of the crime has faded. The beauty of bearer bonds is that they can be made out for any amount and there’s no record of purchase.
Over the course of 20 years, a person like Madoff could have stashed away a lot of bearer bonds, for a lot of money, in a lot of places. But what about the money trail? Couldn’t transaction records lead investigators to these caches? “You’ll likely see an amazing loss of memory and material in the months ahead,” says the Treasury Department expert. “Computers will be lost, fires will be started, records and books destroyed. It always happens.”