Financial penalties

Sentencing of Bernard Madoff was handed down today by U.S. District Judge Denny Chin: 150 years in federal prison. This is the maximum sentencing usually reserved for terrorists, traitors and the most violent criminals.  Clearly, Madoff isn't any one of these things, but Chin wanted to send a message that what Madoff did was extraordinarily evil. 

This decision follows last week's forfeiture order issued to Madoff to turn over $171 billion, stripping him of all assets, personal property, real estate, and investments. Goodbye to...

$7 million Manhattan apartment

$11 million estate in Palm Beach

$4 million home in Montauk

$2.2 million boat

Now I think this is all well and good that he needs to liquidate his assets. That's a good start. But I don't know what economic value the system will derive by putting him behind bars. At a minimum, he will continue to be a financial drain on the overall system. Cost of housing, food, utilities, etc. of this convict will still come in to play for the next 150 years. 

Now I don't know about you, but that doesn't sit well with me. 

I think Madoff should be put to work immediately in some sort of work-out program. If he's smart enough to fleece thousands out of $171 billion worth of money into his investment fund, he's gotta come up with at least $171 billion to pay back all of the victims of this fraud. I think that's fair, don't you? At a minimum, we gotta have him doing menial tasks that contribute value back into the system to the tune of $5.00 per hour. At that rate, it'll take him over 16.4 million years to pay back the $171 billion.  That's not even including the cost of the time value of money.

I am not a patient person, so that will simply not do.

How about if we find him a consulting job, in which he can charge $548,076.69 per hour. This will return $171 billion in 150 years. That seems doable, but of course he won't really survive 150 years. 

I'd say if we really want to get full value out of this guy, he'll need to deliver at least $4.1 million per hour for the next 20 years (give or take) plus interest. That seems fair to me. I think the sentencing by Justice Chin doesn't really reflect the full potential of what we ought to expect from Mr. Madoff, wouldn't you agree?

On a related side note. While the massive Ponzi scheme perpetrated by Madoff fleeced thousands in the largest and most brazen investment fraud, it isn't the first and it certainly isn't the last. Where did this concept come from? While the term is coined after Charles Ponzi, the first description of such a scheme can be found in literature. Charles Dickens' 1857 novel Little Dorrit described such a scheme decades before Ponzi was born. 

I suppose there's a lesson to be found in here. Be careful what you write. 

Post script: On a related note, Andy Borowitz has an amusing book available, Who Moved My Soap? The CEO's Guide to Surviving in Prison: The Bernie Madoff Edition. 

Punchlines

The fifty-four principles of screenwriting are:

1. Ignore the last 44 principles of screenwriting.

2. Ignore anyone who offers you unsolicited advice.

3. Ignore George Sand especially.