Madoff Is Right

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Clients who did no due diligence and demanded high returns in slow markets enabled his scheme, Madoff says in a new from-prison interview

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Disgraced financier Bernard Madoff may be a lying, conniving scoundrel, with gusts up to psychopath, but that doesn't mean he's wrong.

Some of his clients were greedy. Among the smartest and most sophisticated investors in the country, they should have known that their Madoff-infused investment returns, year after year, profit after profit, were simply too good to be true. But these clients, these best and brightest, consistently cast aside reasonable skepticism (and due diligence) so long as the golden returns kept coming in. In Bernie We Trust, they said, as they looked away from the improbability of it all and toward the balances on their account statements.

From Steve Fishman's fantastic New York magazine interview with Madoff (who among us would not have accepted that collect call from prison?) we are reminded that these folks were earning 15 percent back on their money even in a "slow" market. This stubborn fact, now the subject of litigation, has been obscured over the past two years as compelling, media-savvy victim after compelling, media-savvy victim has stepped forward to heap scorn upon Madoff, the confessed swindler now serving a 150-year sentence.

But culpability for this disaster shouldn't be a zero-sum proposition. And there is plenty of blame to go around. Fishman writes: "But Madoff distributes the guilt. 'Look.' he said, 'these banks and these funds had to know there were problems.' Madoff told them absolutely nothing about how he made those returns. 'I wouldn't give them any facts, like how much volume I was doing. I was not willing to have them come up and do the due diligence that they wanted. I absolutely refused to do it. I said, "You don't like it, take your money out," which of course they never did.'"

This was not a bank robbery. There are different classes of victims here. Some, at the top of the pyramid, made money off Madoff for years before it all crashed down. Some, at the bottom of the scheme, did not. Some were little old ladies who lost it all. Some were high-powered brokers who were playing an edge and who now, Claude-Rains-like, claim to be shocked -- shocked! -- that Madoff's results were illegitimate. This doesn't diminish the enormity of Madoff's crimes. But it does provide them with important context. Having already lost it all, Madoff has nothing to lose by saying so and for that, at least, he deserves some credit.

Image credit: AFP/Getty Images/Don Emmert

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Andrew Cohen is a contributing editor at The Atlantic, 60 Minutes' first-ever legal analyst, and a fellow at the Brennan Center for Justice. He is also chief analyst for CBS Radio News and has won a Murrow Award as one of the nation's leading legal journalists. More

Cohen is the winner of the American Bar Association’s 2012 Silver Gavel Award for his Atlantic commentary about the death penalty in America and the winner of the Humane Society’s 2012 Genesis Award for his coverage of the plight of America’s wild horses. A racehorse owner and breeder, Cohen also is a two-time winner of both the John Hervey and O’Brien Awards for distinguished commentary about horse racing.

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