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2009-03-09 — counterpunch.org
Growing questions are being asked by legal scholars and Wall Street veterans over the background role that Bernard Madoff’s attorney, Ira Lee Sorkin, played in 1992 that may have resulted in Madoff looting investors for an additional 16 years. That question now takes on heightened urgency as Sorkin negotiates a plea deal for Madoff that would avoid the antiseptic sunshine of an open courtroom trial.
...
... 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.
It is clear to us that this Sorkin fellow has a specialty: keeping semi-official-looting Ponzi schemes from ever being truly "busted" open by regulators.
And now he's about to do it (again) for Madoff.
You really gotta give them some credit for the sheer gall:
In 1992, the SEC filed a suit against Avellino & Bienes charging them with selling $440 million of unregistered securities to 3200 investors. Although the SEC knew the money had gone to Madoff, their complaint referred only to an unnamed broker. The SEC said at the time they felt they were looking at a Ponzi scheme.
Then in steps Ira Sorkin, still at Squadron Ellenoff, and in the precise move made in the Towers Financial matter, offers to return all the money. Except the money wasn’t all returned. Behind the scenes, clients were simply allowed to sign agreements directly with Madoff and continue receiving those steady, stellar returns of 13 to 20 per cent according to lawyers representing defrauded clients. The SEC was somehow persuaded to drop the case in exchange for an agreement that Avellino & Bienes would shut down their firm and pay a fine.
That's right -- when the SEC figured it was a Ponzi scheme (to the benefit of Madoff), they allowed a settlement to be implemented that resulted in Madoff keeping the capital... and paying returns out from the Ponzi scheme.
In other words, the SEC (at Sorkin's direction) abetted the continuance of the Ponzi scheme, by buying off the clients with *guaranteed* returns from the same Ponzi scheme.
That's "regulation" for ya, made in America!
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