Imagine touring the Butner Federal Corrections Complex in North Carolina.
Bernie Madoff, the world’s greatest Ponzi schemer, points to a cell across the block and grins like Hannibal Lecter. “See that guy?” he whispers. “He used to work at the Securities and Exchange Commission.”
Last week, the SEC’s Office of Inspector General turned over its investigation of a top former SEC official to the Justice Department for possibly violating criminal conflict-of-interest laws.
David Becker may never be criminally charged, but even the possibility of charges is an outrage unto itself. Becker began mounting his defense in a Congressional hearing on Thursday. He said he discussed his personal financial ties to Madoff with the SEC’s ethic’s office and SEC chief Mary Schapiro. And they gave him the OK to proceed on Madoff matters before the SEC.
“I did precisely what I was supposed to do,” Becker testified. But did Schapiro and the rest of the SEC?
Becker, who was the SEC’s top lawyer, inherited a $2 million Madoff account when his mom died in 2004. His His brother liquidated the account to pay estate taxes, years before the Madoff fraud came to light. But things got sticky for Becker when a trustee sued him for fictitious profits in his mom’s account.
Despite this situation, Becker went right on dealing with Madoff matters before the SEC, influencing such questions as how much investors should receive in compensation from the Securities Investors Protection Corp., and whether Congress should limit clawback lawsuits.
We’ll have to leave it to the Justice Department to decide just how heinous a conflict-of-interest this was. Meantime, Madoff can relish the irony.
Reminds me of a a line from Lecter in the 1991 film, “Silence of the Lambs”: “I have followed with enthusiasm the course of your disgrace and public shaming.”
Click here to read my column in The Sunday Wall Street Journal.