By DAVID WEIDNER / MARKETWATCHmadoff after court 248.88 ap(photo credit: AP)
On a sunny June morning in downtown Manhattan, the kids at the Columbus Park playground had to share their swings, slides and benches with photographers, reporters, cameramen and the people they had come to see: Bernie Madoff victims.
There is not enough room on the sidewalk in front of the Daniel Patrick Moynihan United States Courthouse on Pearl Street to contain the Cirque de Madoff. When Bernie the Smirk is making his way inside - as he was Monday to receive his 150-year jail sentence - the crowd is so large it must expand across the street to the playground and down Mulberry Street, which runs perpendicular.
Not that everyone minds.
"Criminals are good for business," said Sam Ng, owner of Sam's Traditional Deli at 30 Mulberry as he rushed to fill orders coming from the horde for hot and iced coffee. "I think they should put him in jail for a long time."
Presumably, Ng hopes Madoff didn't act alone, if only to help his sales.
Ng and the kids in the park know that the Bernie Madoff spectacle, once compelling for illustrating the grandeur and scope of his fraud, is in danger of losing its relevance. It's been six months since Madoff's scam was uncovered, and for six months we've been hearing the horror stories.
By now, you know them by heart: the lost retirement, college funds, endowments, nest eggs and jobs. Madoff created 10,000 financial nightmares. There's not enough money to cover the losses. We get the idea.
Sounding like whiners
This criticism isn't meant to minimize the suffering, which is immense. But some Madoff victims are starting to sound like a bunch of whiners.
Take, for instance, Richa rd Friedman. He was a fixture in front of federal court on Madoff hearing days. On Monday, he held forth to a gaggle of cameras, microphones and reporters who are running out of questions. Friedman, from Jericho, New York, lost his life savings. He wants the Securities Insurance Protection Corp. to cover all of his losses.
"It's not right," Friedman said. "If the FDIC [Federal Deposit Insurance Corp.] came into a bank, everyone would get their money back, and they would get the money that's on their statement. With SIPC they don't want to pay you the value of the money on your statement because they don't have the money."
"They are making up the laws to suit themselves," he added.
Friedman wants SIPC to reimburse Madoff investors above and beyond the maximum $500,000 it insures on brokerage accounts. Even though the FDIC, until recently, had set limits on deposit losses, Friedman thinks SIPC should throw its rules out the window just for him.
That's right. He wants extra compensation that wasn't promised to him. Talk about making up the law to suit yourself.
He's not alone. There are a lot Madoff investors upset with SIPC and the Securities and Exchange Commission. They don't feel the insurance fund and regulator are taking enough responsibility.
Shell game victims?
But Friedman and his ilk are shrill and play into an unfortunate stereotype that's developed in the general public: that Madoff investors were greedy billionaires enticed by the fraud's air of exclusivity and outsized returns. Now, like the tourist in Times Square who lost money in a shell game, they are crying foul to the police for not shutting the game down, and they are demanding the cops give them their money back.
Why should the investors and brokers paying into SIPC pay for a fraud they had nothing to do with? And why would anyone support a taxpayer bailout just because the SEC missed the scam, as some Madoff investors have suggested?
The answer, of course, is that they shouldn't. Madoff investors are getting back what they are entitled under the law. Through the work of the court-appointed trustee, Irving Picard, they're reportedly due $1.2 billion from the $13.2b. in estimated net losses Madoff incurred since 1995. That's in addition to insurance payments.
And the search goes on. Family members, feeder funds and accomplices may soon have to forfeit assets to help those who lost fortunes. Whatever the search brings, it will never be fair, but it will be lawful.
To suggest that as bystanders we owe Madoff investors something more is comic. At this stage the Madoff spectacle already has two: Randy Credico, an "activist and comedian" who was arguing clemency for Madoff - "an old man who made a mistake"; and Andy Borowitz, the comedian who was promoting his book Who Moved My Soap? - a humorous look at Madoff adjusting to life behind bars.
Friedman and his followers should take a cue from the comics and lighten up. They should also confer with Bonnie Webster who lost close to her "life savings" investing with Madoff. Stationed a block away from the courthouse on sentencing day, Webster told me she isn't happy with SIPC or the SEC, but she isn't beating the drum of entitlement that's the instrument of choice for a noisy minority of Madoff victims.
"We want to be positive and talk about the future," she said. "We feel what happened to us could happen to any American. Does anyone really know if their broker is trustworthy?"
Now, that's a real issue that deserves the media spotlight. The idea that we're somehow responsible for a madman and his followers is better left on the playground where it belongs.
