Madoff's Attorney a Year Later: I Would 'Absolutely' Do It Again
On Dec. 11, 2008, Ira Lee Sorkin planned on a truly enjoyable day.
The high point would be visiting his two-year-old granddaughter's pre-school in the suburbs of Washington, DC. His law office in New York was far from his mind, as was the appointment on his calendar for Dec. 15 with Bernie Madoff.
The appointment with Madoff, whom Sorkin had known for years, pretty much came out of the blue, Sorkin said. Madoff had called on December first asking "to come up and talk to me," Sorkin recalled.
He said he had no idea what Madoff wanted to talk about. They had agreed to meet on Dec. 12, but Madoff had called on the 10th to reschedule. The change allowed Sorkin to stay in Washington a little longer and visit the pre-school.
"And I'm sitting in class and these children, two-and-a-half-year-olds, are standing around, pretending that they're on a farm," Sorkin said. "And the teacher is asking, 'what sounds do you hear on a farm?' Like a cow, moo-moo, and a duck, quack-quack.
"And I'm hearing all these animal sounds, and all the kids laughing and applauding, and my cell phone rings. And it's Bernie Madoff. And he tells me that he's been arrested by the FBI. He's handcuffed to a chair. He needs my help. And in the background, I'm hearing, 'moo-moo, quack-quack, oink-oink,' and I ran out of the class."
From that moment, Sorkin's life would become a whirlwind.
Sorkin, 66, is the co-leader of the securities and white collar defense practice at the New York law firm Dickstein & Shapiro. He spoke to CNBC exclusively on the one-year anniversary of Bernie Madoff's confession and arrest in an epic $65 billion Ponzi scheme.
By the time Madoff called Sorkin on Dec. 11, the financier had already confessed to the FBI, leaving Sorkin with little to do but massive damage control.
"I told him, 'say no more,' but by then it was too late," Sorkin said.
At the time, Sorkin had no idea how big the scam was in dollar terms, but he had a good idea of what he was getting into.
"I knew of his reputation on Wall Street, and I knew how he was perceived on Wall Street, and by the regulators," Sorkin said. "So I knew on something like this, it would have an impact."
The Madoff scandal would hit some 16,000 investors, and many more indirectly through feeder funds, as well as charities that invested with Madoff. It would also badly shake investor confidence, already in tatters following the financial crisis.
As Sorkin worked to preserve Madoff's rights and contain the collateral damage from the scandal, he found himself on the receiving end of the public's rage, including, he says, death threats and "vicious" anti-Semitism.
Today, Sorkin keeps a loose-leaf notebook on his desk, filled with some of the angry e-mails he received.
"Most of the e-mail, putting aside the cursing and the death threats and the anti-Semitism, dealt with, 'How can you possibly represent someone who's a criminal?' 'How can you represent someone who did this terrible thing?'"
Sorkin says those are the e-mails he found most disturbing.
"We (defense attorneys) play a role of standing between the power of government and those accused of a crime," Sorkin said, "And unfortunately, too many people don't understand that."
Sorkin says the case reminded him of why he chose to become an attorney.
"If nothing else, I'm often asked, would I do this again? And the answer is, absolutely yes," Sorkin said.
In addition to sparking public outrage, the Madoff case exposed massive flaws in the regulatory system. Sorkin has a unique perspective on that, having worked as an assistant U.S. Attorney in New York in the 1970s as well as two stints with the Securities and Exchange Commission, first as a staff attorney and later as a Regional Administrator.
Madoff himself told investigators he was amazed he did not get caught sooner, and Sorkin agrees.
"I think a real problem, which I understand is being remedied, is no one understood risk, and no one paid attention to the risk," Sorkin said. "Problem number two is, I think the examination process failed. I think if the SEC had asked perhaps four questions, this could have ended much earlier."
Those questions, Sorkin said, included asking about the counter-parties in Madoff's supposed trades, as well as demanding trading and execution records, and vetting Madoff's auditor—David Friehling—who has since pleaded guilty to fraud charges.
Sorkin attributes the lapses to inexperience, as well as a misallocation of resources at the SEC.
"I would cut the staff in Washington at the SEC by two-thirds," he said. "I wouldn't fire them, I'd send them out to where the frauds are occurring," stationing more examiners at SEC regional offices around the country.
Sorkin said that while the federal investigation of the Madoff fraud is continuing, he believes members of Madoff's family who worked in the business are unlikely to be charged. They include Madoff's wife Ruth, their sons Andrew and Mark who worked in Madoff's proprietary trading business, and his brother Peter, who worked as Madoff's Chief Compliance Officer.
The family members each have their own attorneys, and all face massive civil lawsuits, but none has been charged criminally.
"If (federal prosecutors) had sufficient evidence to bring charges," Sorkin said, "I have no doubt they would have brought charges."
Sorkin said he remains in contact with Madoff, who is serving a 150-year sentence at a federal prison in Butner, N.C. Sorkin would not say when he last spoke to his client, but said, "He's OK. Under the circumstances, recognizing the fact that—he's not gonna leave prison—ever—alive—he deeply regrets what happened. He feels a great deal of—pain and—and—anguish over the pain that he caused."