My column this week in the FT is on the New York fraudster:

There was a moment during Bernard Madoff’s sentencing hearing in Manhattan on Monday when it became obvious that the 71-year-old fraudster was going down for a very, very long time indeed.

It was when Judge Denny Chin cited the case of a woman who went to see Mr Madoff after her husband’s death to be reassured that his legacy was safe. The avuncular titan put his arm around her shoulder and assured her that all would be well; she could trust him.

Fraud is often a difficult crime to prosecute, and for which to obtain punitive sentences. It is complex and hard for juries to understand and the harm it causes – the losses to investors in the companies involved – are intangible compared with violent and physical crimes.

If someone is mugged and robbed in the street, both the damage and the way in which it was caused are obvious for all to see. In cases where a chief executive fiddles the accounts to cover losses, how it was done and the way that it hurts mutual fund investors are harder to grasp.

So Bernard Madoff was a prosecutor’s dream – the Hollywood incarnation of a white-collar criminal. He dealt face-to-face with many of his victims and looked them straight in the eye; he did not merely taint the value of the investments but squandered the cash they entrusted to him.

I sat through the hearing surrounded by victims of Mr Madoff (I left behind my media credentials and was dispatched by the security guards to sit with the other folk). It amplified the emotional impact of the heart-rending – and they were heart-rending – stories of people losing all they had.

Ira Sorkin, Mr Madoff’s lawyer, is unhappy about the 150-year sentence and thinks the judge went off-piste in applying the federal sentencing guidelines. He thinks it is “absurd” to send an elderly man to jail for many times his life expectancy to satisfy demands for “vengeance”.

For what it is worth, I thought Mr Sorkin mumbled his way through a poor attempt to defend Mr Madoff in his closing argument. It was neither here nor there, however: Mr Madoff’s conduct was ultimately indefensible and he deserved what he got.

The question is whether Mr Madoff’s spectacular sentence should become the benchmark for future cases of corporate fraud, as Douglas Berman, an Ohio State law professor and blogger on sentencing policy has suggested that it will.

I think not. The Madoff case was exceptional and should remain an outlier. Neither deterrence of future crimes nor retribution demand that every white collar fraudster with a yacht and a share in a private jet gets a spectacular punishment – a harsh one is sufficient.

You can read the rest of the column here and comment below.

July 1, 2009 9:40pm in Finance | Comment