WHAT IS FORFEITURE?

I hope you’re having a wonderful May. This month’s E-Newsletter focuses on an issue that been all over the news recently. Many want to know whether Bernie Madoff’s family will continue to live the good life now that he has pled guilty. Hopefully this article assists.

Also, check out my new demo reel featuring some of my latest television appearances. See:
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By now everyone from Wall Street to Main Street knows the story of Bernie Madoff and his $50 billion Ponzi scheme. The list of victims is thought to comprise of thousands around the globe, from retirees and celebrities to some of the richest people in the world in what has been called the biggest fraud in history. Since his guilty plea to 11 counts of fraud, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison. Although the estimated total funds recovered so far from Madoff’s businesses are somewhere between $950 million and $1 billion, much has yet to be found. It is now believed that hundreds of millions of his investor’s losses are tied into his personal and family assets. With so much remaining unpaid and with so many people still out their life savings, the question becomes how much can the government seize and what if anything are Bernie’s wife and family entitled to keep?

Forfeiture is the government seizure of property connected to illegal activity. Criminal forfeiture, unlike civil, operates as punishment for a crime requiring a conviction, following which the state takes the assets in question from the criminal. Once a crime is identified, the government may seize any property flowing from the activity. In some cases, the government may seize property in lieu of provable criminal proceeds. The property must be identified in the indictment in order to serve notice to the defendant, and opportunity must be given to contest the forfeiture. Although the conviction requires the government to prove guilt “beyond a reasonable doubt,” the forfeiture is subject to a lower burden–preponderance of the evidence. Furthermore, the burden shifts to the defendant once the government shows that the defendant acquired the property around the time of the crime, and no other likely source existed.

Although, criminal forfeiture only severs the defendant’s interest, and not the property rights of third parties, such as Bernie’s wife, she must shoulder the burden of proving the property did not have the necessary relationship to the crime in order to avoid the penalty. This means that anything that she has joint ownership in, that the government tries to seize, and that the she wants to keep will be subject to a hearing where she must prove that the funding for such items did not come from Bernie’s fraudulent “Ponzi Scheme.” Some of the possible assets Mrs. Madoff will have to defend will be her $7 million Upper East Side apartment, as well as the couples’ homes in Palm Beach, the Hamptons, and France, her reported $62 million bank account, their 70 foot yacht, “Bull”, four cars including a BMW and two Mercedes, Ruth’s Steinway piano (valued at $39,000), and a silverware set (valued at $65,000). Although possible defenses do exist, once an accused has been found guilty, the only chance the family has in keeping such expensive assets is proving the items were purchased by a legal source of income. This likely means that the Madoff family’s luxurious lifestyle at the expense of so many peoples’ misfortunes, might soon be coming to an abrupt halt.