Madoff's fraud cost him his son and reputation

The scandal surrounding Bernard Madoff and his $60 billion (Dh220 billion) Ponzi scheme is back in the news with the tragic death last week of Mark Madoff, the eldest son of the fraudster. He committed suicide by hanging himself in his New York apartment after sending several tortured e-mails complaining that no one believed him.

Madoff senior is in Butner Prison serving a 150-year life sentence, and according to New York Magazine earlier this year, is treated like a celebrity, "even if his admirers were now murderers and sex offenders." Apparently his ego remains pretty much intact and now free from hiding his crimes, admits to defrauding billions.

In the past fortnight, the court-appointed Madoff trustee, Irving Picard, was unusually busy, filing last-minute lawsuits against a raft of big banks, advisors and family members.

Picard's claim is that HSBC ignored the obvious (statements with wrong details, wrong names for funds, transactions settled on non-working days) red flags that should have told them something was wrong.

Feeder funds

The fees they received from Madoff and the feeder funds were "kickbacks ensuring they looked the other way." HSBC says it will defend the lawsuit vigorously.

Some banks have already decided to settle. Union Bancaire Privee, the private Swiss bank was sued for $1 billion and last week settled for $500 million. The Madoff sons have also been targeted by the authorities but they have always maintained that they knew nothing about the fraud taking place on the rogue investment services side. The critics say it stretches common sense beyond breaking point to believe they couldn't have smelled a rat.

Truth

After two years of investigation, 46-year-old Mark Madoff, who was also named in the lawsuits himself, hanged himself. One of the tortured e-mails was allegedly sent to his attorney, saying "no one wants to know the truth."

I have followed the Madoff case with interest since his arrest just before Christmas two years ago. The case had it all — dishonesty by a major, respected, Wall Street player on a level never seen before; thousands of investors who lost everything; the greed of bankers and advisors who seemingly ignored the obvious; staggering incompetence from the regulators and supervisors at the SEC amongst others.

Bernard Madoff always claimed that his massive fraud started when he did a few false trades to tide him over a bad time. He could not have known that decades later he would be facing the rest of his life in prison, his name would become a synonym for criminality on a grand scale, his wife would be a broken pariah and his son would be dead. A high price indeed paid by everyone.