Hedge Fund Husbands Or Married To The Mob?

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mobster
Sometimes life is just as hard being a Madoff as being a Soprano.

There has been some serious financial meshugas as of late, has there not? In short order, the bond rating agencies, banks, treasury, hedge funds, Federal Reserve and aggressively optimistic (and greedy) homeowners conspired to play Jenga with the house of cards that the American (world) economy was (is) perched upon. But it was really (says this guy) only a few Gordon Geckos that got us to this point. But what about their families?

When it comes time to pay the piper, Bernie Madoff's family may not get off any easier than the Gottis got (though they may not land a spiky-haired reality TV gig). I read a good book once that said the sins of the father were visited on the son but made no mention of what the wife catches. Presumably, by hook or by crook, she visits whichever hell, heaven or purgatory that the husband earns.

And there is precedent for that in our justice system. It turns out that lots of guys (fraudsters, book-cookers and racketeers, inclusive) confide in their wives. Maybe misery loves company and maybe some shameful burdens are too much to shoulder alone. Whatever the case, Andy Fastow (CFO of Enron) shared enough criminal information with his wife Lea that it cost her a year of her liberty. Technically, she was jailed for failing to report kickbacks on their joint tax returns but it was largely a message move by government.

So, when does spousal immunity kick in? A court case in the 80's solidified that the right NOT TO testify against a spouse was intrinsic to the 5th Amendment (i.e. you can choose not to testify against yourself or your husband). The right to remain silent, however, doesn't preclude someone for getting slammed as an accessory (after the fact).

And what about, say, Ponzi-meister Bernie Madoff's wife Ruth Madoff? There are a few laws enacted to punish people on the receiving end of ill-gotten gains. Whether these gains are fur coats purchased from a Lufthansa Heist or houses in Boca built from pyramid scheme cash, it can all go away quicklike. Some of the time, these laws apply to the unwitting beneficiaries in a Ponzi Scheme or any other rip-off money-maker (see fraudulent conveyance and RICO statutes).

According to the International Herald Tribune a few people are skeptical that she couldn't have known what was going down. The Madoffs were thick as thieves and these few people don't think that Mr. Madoff, necessarily, kept his own counsel exclusively. She's probably on the up and up.

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