Feds file civil forfeiture actions against Madoff employees

Forbes reports:

The feds have launched civil forfeiture actions seeking $5 million allegedly held by two former back-office workers at Bernard L. Madoff Investment Securities LLC. U.S. prosecutors in Manhattan say Annette Bongiorno and Joann “Jodi” Crupi both spent more than 25 years working for Bernard Madoff’s now tarnished investment firm.

Bongiorno handled BLMIS clients’ questions about their investments, and allegedly oversaw fabrication of documents like account statements and trade confirmations. The government wants her to fork over $1.1 million in accounts at mainstream banks like HSBC; the nearly $300,000 she spent on a 2005 Bentley and a 2007 Mercedes Benz; and $1.3 million that went to a swanky condo. According to court papers filed by prosecutors, Bongiorno began spending much of her time in Florida and working a heavily reduced schedule starting as early as 1995, but was still making six-figure annual salaries over the course of the firm’s last decade of existence.

Crupi was responsible for client redemptions and allegedly was involved in funneling investors’ money through a chain of bank accounts controlled by BLMIS as part of its elaborate Ponzi scheme. The feds say she’s on the hook for the $2.25 million in cash she used to purchase a home in Mantoloking, N.J., and $26,500 in rental income she’s earned after buying that property.

Here’s the problem. It clearly appears that these employees are guilty of real crimes; if Forbes is right that Bongiorno for instance oversaw the fabrication of documents, then there should be plenty of ground for criminal charges. Civil forfeiture actions are inappropriate; any restitution for the crimes should come through fines tied to a criminal sentencing for Bongiorno and Crupi.  Keep in mind that we get the same result (forfeiture of property tied to illicit income) either way.

Civil forfeiture actions are inappropriate because they presume guilt, and because they’re an easy way for prosecutors to avoid the work of actually obtaining convictions in a court of law. Civil forfeiture does not require a trial, just a civil hearing, at which the defendants have to prove the innocence of their property instead of the government proving the guilt of the defendants beyond a reasonable doubt.

Civil forfeitures sound innocuous (after all, why not just take the property implicated in illicit transactions?) but in practice is a mechanism that allows the government, on both the federal and the state levels, to just take property from people without the due process protections that a criminal trial entails. As you might guess, civil forfeiture ends up being used even when there is no actual crime alleged against a citizen and this happens a lot more than one might guess (millions of dollars of forfeitures are vested against people who are never convicted of a crime every year).

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