Today Bernie Madoff was sentenced to 150 years in prison for perpetrating one of the most spectacular frauds ever on Wall Street. At age 71, unless his sentence is reduced or commuted, Madoff will likely die in prison.
Even his wife Ruth says that she feels "betrayed and confused." But not so confused that she failed to claim some of the $80 million in personal accounts and various homes as her own property separate from her husband. Nonetheless, the court ordered her to forfeit all but $2.5 million, and we imagine much of that will go to attorney fees before this is all over.
The exact amount of the Madoff fraud depends on your point of view, with estimates ranging from $171 billion representing all the money that may have passed through Madoff's hands during the long period of his fraud to $65 billion in fraudulently inflated balances shown on the last account statements to $13 billion in net losses. Any way you count it, that's a lot of money, and many who invested with Madoff have seen their life savings wiped out. Only $1.2 billion has been recovered so far.
But Bernie did not make off with all our money. As earth shaking as these amounts are, the Madoff fraud hardly even registers on the global Richter scale. The U.S. stock market fell more than 50% from its high in October 2007 to its low in March 2009, a loss of around $10 trillion. On top of that, another $23 trillion was lost in other stock markets around the world. In other words, less than a penny on every dollar lost can be attributed to Madoff.
Since March, stock markets in the U.S. and around the world have made some of those losses back. That helps to heal the collective psyche, which was suffering not just the pain of what had already been lost, but the acute anxiety of losing the other half too. For the Madoff victims, that's their reality.
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