The December 11, 2008 arrest of Bernard Madoff officially brought to an end the $50 billion Ponzi scheme that had operated for an indeterminate amount of time through the investment advisory arm of Bernard L. Madoff Investment Securities LLC, founded in 1960. The arrest sent shockwaves throughout the global financial structure, and further threatened the liquidity of some of the world’s largest banks, which invested heavily with Madoff. The collapse of the Ponzi scheme also had devastating consequences for the nonprofit community, and is estimated to have cost Jewish foundations and charities, alone, over $1 billion. (1) The personal consequences continue to make headlines with a growing number of individual investors who have committed suicide after losing their life savings.
Bernard Madoff has become an icon for corruption on Wall Street, and a focal point for the anger and frustration triggered by the collapsing economy. Ira Sorkin, the legendary Securities and Exchange (SEC) attorney responsible for launching the investigation that brought down Michael Milken, and Ivan Boesky, was hired to serve as Madoff’s legal counsel. Ira Sorkin began his career as a trial attorney with the SEC. From 1971-6 he worked as an assistant attorney in the criminal division of the U.S. Attorney’s office in New York. In 1984, he returned to the SEC, and served as the NY regional director until 1986. (2)
In his two years as a regional director for the SEC, Sorkin earned a reputation for being an aggressive investigator of securities violations. He is credited with busting the insider trading scam known as the “Yuppie 5” that grew out of Marcus Schloss & Co., which triggered the investigation that resulted in the conviction of Michael Milken, the king of the junk bond market, which was one of the most sensational financial scandals of the S&L debacle in the late 1980s. In an interview with the Forward, Ira Sorkin defended his decision to represent Bernard Madoff, despite being connected to the Jewish philanthropic community devastated by his fraud. “We represent the despised, the downtrodden, the weak,” Sorkin stated. “I believe in the system, that’s the most important thing.” (3)
Since leaving the SEC, Ira Sorkin’s private practice career has been devoted to defending the white-collar criminals he once investigated. Sorkin defended Robert Frust, a managing director of Merrill Lynch, for his role in the Enron scandal. Sorkin is now the co-leader of Dickstein Shapiro LLC’s Securities, Litigation, Regulatory, and Compliance and White Collar Criminal Defense & Investigations Practices division, and charges an estimated $1,000 an hour. Bloomberg News reported that Ira Sorkin might have a potential conflict of interest in defending Madoff, due to a retirement account Sorkin’s parents had with Madoff’s firm until 2007. (4)
(1) “Madoff Scandal: Charities Lose $1 billion” by Danielle Peled and Anshel Pfeffer. 12/18/08. The Jewish Chronicle.
(2) Ira Sorkin’s biography on Dickstein Shapiro LLC
(3) “Madoff’s Lawyer Plays Both Sides of the Court” by Andrew Weiss. The Forward. 1/28/09
(4) “Madoff Lawyer May Have Conflict Over IRA Investment” by Erik Larson. Bloomberg News. 2/13/09
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