We never believed that Bernie Madoff operated his giant Ponzi scheme alone. Yesterday we moved closer to the truth when Madoff’s CFO confessed to participating in the scam for decades.
But thanks to the decision by Judge Richard Sullivan to jail Frank DiPascali this may be as close to the truth as we get.
Prosecutors had asked the judge to release DiPascali, arguing that he should be released because he was cooperating with the authorities. But Sullivan jailed him anyway.
Now it’s perfectly legal for a judge to overrule a deal cut with prosecutors. But it’s rare and it’s very risky. It exposes something prosecutors don’t want targets of investigations to think about—that whatever a prosecutor tells them about cutting a deal, a judge can overrule it. This makes targets of investigation far less likely to cooperate.
This is more than an abstract concern. It seems very likely that DiPascali may stop cooperating. And others who worked at Madoff’s firm will also now be hesitant to cooperate with authorities, worried that the public outrage attached to the case will result in jail time regardless of the level of cooperation.
In addition to the effect on the Madoff case, his refusing to release DiPascali is a real step backward for law enforcement. Prosecutions of all forms of crime, but particularly organised crime and white collar cases, depend upon insiders ratting out their collaborators.
Sullivan seems to be saying that in a well publicized case, a deal with prosecutors won’t be worth a damn.
Future cooperators in the Madoff case, and I’m sure the feds have others, have good reason to wonder if they’ll wind up in the can even if the prosecutors promise they won’t. This means that prosecutors may have a hell of a time making cases against others who made the Madoff scam possible.
If that happens, Sullivan won’t be blamed. After all, he just kept the guy in jail and who can blame him for that?
It’s a low-risk move–for the judge. Cynical, self-centered and very dangerous.
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