Howls of protest could be heard ringing from the tree-lined streets of the Upper East Side of Manhattan today, as U.S. District Court Judge Ronald Ellis denied the prosecution's motion to revoke the bond of alleged Ponzi scheme mastermind Bernard Madoff, following allegations that Madoff and his wife transferred over $1 million in valuables to friends and relatives in late December.
The public outcry is understandable. After all, petty shoplifters, often unable to make even the most paltry of bail, often spend weeks or months languishing in county jail before trial. Meanwhile Madoff, accused of running the biggest Ponzi scheme in history and defrauding investors out of billions, is languishing in his $7 million penthouse under 24-hour house arrest. A cage, I'm certain Madoff would be the first to tell us, but a gilded one nonetheless. But while the decision to allow Madoff to remain free on bond isn't going to win Judge Ellis any popularity contests in the financial community, it should win him points for making the right decision.
Unlike state law, where judges often refuse to set bond in cases that carry large potential prison sentences, judges in federal cases are far more likely to set bond in every case, with the exception of cases involving large quantities of drug trafficking or murder. Moreover, under federal law, judges cannot consider the desire of the public or the severity of the accused's crime. Rather, a federal judge MUST set bond in a criminal case unless he finds that no condition or combination of conditions will reasonably assure the appearance of the person in court and the safety of another person or the community. In other words, unless Judge Ellis found the Bernie Madoff was a flight risk or a danger to the community, Madoff was entitled to remain free on bail.
The prosecution argued that jailing Madoff was the only way to prevent him from further harming his victims by continuing to dissipate his assets, thus reducing substantially the assets available to pay restitution. However, the judge was also bound to consider whether putting Madoff behind bars was most restrictive manner in which the transfer of assets could be prevented. He rightly found that it was not.
In addition to being charged with one criminal count of securities fraud, Madoff is also the subject of a civil suit filed by the Securities and Exchange Commission. As part of that suit, Madoff agreed in mid-December via consent decree to have his financial accounts frozen and not to transfer or dispose of his assets. Judge Ellis today ordered that the terms of the consent decree should become conditions of Madoff's bond, and orderd Madoff to provide prosecutors with a list of all valuables in his residence, which will be checked by a private security firm on a weekly basis to assure no property transfers have been made. Considering that Madoff is already under 24-guard, with two security guards stationed outside his building, there wasn't much else the prosecution could say.
Though there are probably millions of people who would relish seeing Bernard Madoff get what they perceive is coming to him, today was not to be the day of reckoning, and rightly so. A bail hearing is not the place for a judge to make his feelings regarding the defendant's alleged crimes known, no matter how outrageous those crimes may be. While the presumption of innocence applies to the very poorest of criminal defendants, so does it apply to the very richest.