Why Are Bernie Madoff's Wife And Sons Still Walking Free, Ask Fraud Victims
Victims want to know if Ruth, Peter, Andrew, Mark and Shana will be arrested.
Nov. 19, 2010 — -- Victims of Bernie Madoff applauded the news Thursday that two close associates of the convicted Ponzi scammer had been arrested, but asked why a group of people even closer to Madoff – his wife, sons and brother -- remained free almost two years after Madoff's multi-billion-dollar investment fraud was exposed.
"It's about time!" said Madoff victim Adele Fox, reacting to the arrest of Annette Bongiorno and Joann Crupi, who worked for Madoff's investment firm for decades. Both women have been charged with fraud, conspiracy and tax evasion. "But what about Peter Madoff?" asked Fox, 87, who says she lost a large sum to Madoff's pyramid scheme. "What about Ruth and the sons? Do you mean to say they didn't know?"
Bernie's brother Peter worked as the chief compliance officer at Bernard L. Madoff Investment Securities, while Bernie's sons Mark and Andrew were codirectors of trading at the firm. According to a lawsuit filed by Irving Picard, court-appointed trustee for the Madoff victims, Peter's daughter Shana "held herself out" as the company's compliance counsel. Ruth Madoff, Bernie's wife, once worked as his bookkeeper and maintained her own office at the Madoff firm. None of them, however, have been criminally charged in connection with the investment fraud.
Victim Michael DeVita, 60, said he was "literally jumping out of my chair" when he learned Thursday that Bongiorno and Crupi had been charged. "They finally at least got someone who was connected," said DeVita. Prosecutors say that Bongiorno personally handled the accounts of top Madoff clients and helped run the secretive "17th floor" where employees created phony documents.
But DeVita, who invested "high six digits" and "lost everything," said he hoped the arrest of Bongiorno and Crupi was "the tip of iceberg" and that more criminal prosecutions were coming.
"I hope their targets are more people with the name Madoff," said DeVita, "It troubles me that you have Ruth walking around with $2 million. . . . And you've got the sons walking around with who knows how much money, and living a relatively normal life."
Federal authorities are investigating Mark, Andrew and Peter Madoff for possible tax fraud, but no charges have yet been filed. A spokesperson for Shana Madoff Swanson said he did not know whether she had been questioned as part of the investigation. "We do not comment on ongoing investigations," said a spokesperson for the U.S. Attorney for the Southern District of New York.
The family members have been sued, however, by Irving Picard, whose job as trustee is to recover assets for Madoff victims. Picard told ABC News he had no comment on the U.S. Attorney's criminal investigation.
Earlier this year, Picard sued three businesses controlled by Madoff family members where he claims more than $30 million may be stashed. In papers filed in federal bankruptcy court, Picard said that Madoff family members had used almost $200 million in investor cash to fund "lavish lifestyles."
"Foremost among the recipients of Madoff's gifts of customer funds," said Picard in the filings, "were his closest family members, including his wife Ruth Madoff, his brother Peter, his two sons Andrew and Mark and his niece Shana."
The lawsuits were filed against an oil and gas company, a family fund and a trading company, alleging that they received funds from Bernie Madoff's investment firm. The suit against the family fund claims that Peter, Andrew, Mark and Shana acted "in complete dereliction of their management duties."
In a lawsuit filed against the Madoff family in 2000, Picard said the Ponzi scheme was "a family piggy bank" that funneled at least $198,743,299 of stolen customers' money to Peter, Andrew, Mark and Shana.The 2009 suit included an allegation that money was funneled to family members through fabricated purchases of stock, which they supposedly then sold for the cash proceeds.
Martin Flumenbaum, a lawyer for Mark and Andrew Madoff, told ABC News in July, "With respect to Mark and Andrew, the lawsuits are without merit both factually and legally."
Flumenbaum did not respond to a request for comment Thursday. Lawyers for Peter, Andrew, Mark and Ruth Madoff also did not immediately respond to requests for comment.
Through her lawyers, Ruth Madoff has denied any knowledge of her husband's fraud scheme. In a written statement on the day of her husband's sentencing, she said, "to say that I feel devastated for the many whom my husband has destroyed is truly inadequate."
This summer, when she was spotted on a Manhattan street by an ABC News producer, she didn't respond when asked if she had anything to say to her husband's victims.
"She was her husband's bookkeeper for all those years, and we wonder why she has not been prosecuted for all this," said Ronnie Sue Ambrosino, a Madoff victim who works as an advocate for other victims.Ambrosino said she hoped the arrests of Bongiorno and Crupi Thursday were "the beginning of justice being performed, albeit late, but better late than never."
Ambrosino said she felt it was a "travesty" that Madoff family members were not arrested as well.CLICK HERE to follow the ABC News Investigative Team's coverage on Twitter.
But victim DeWitt Baker, who said it was "outrageous" that no Madoff family members had yet been criminally charged, was philosophical about waiting. "They're certainly guilty. Everybody knows it. But you can't charge unless you have the kind of evidence that will stand up in court."
Said Irving Picard, "This is not an easy case to unravel."
