New York Federal Criminal Practice Blog
March 25, 2009

Second Circuit Affirms Denial of Bail to Bernie Madoff

Robert Culp, Esq. writes:

Like Ivan Boesky, Mike Milken and others before him, Bernie Madoff has become a white collar pariah who needs no introduction.  Such criminal defendants have the ability to define their times, and the public’s thirst for justice is understandable.  But, as is often the case, notoriety and the rule of law sometimes find themselves in tension.  This can be seen in the Second Circuit’s affirmance of SDNY Judge Chin’s denial of Madoff’s application for bail, United States v. Madoff, 2009 WL 728379 (2d Cir. March 20, 2009). 
The denial of bail to Madoff after his plea when he had been granted bail before the plea (see here), with the Second Circuit’s approval, is not unusual.  While white collar criminal defense lawyers are certainly accustomed to having their clients surrender after sentencing, the stipulation to guilt in the plea combined with the certainty of a lengthy sentence clearly changes the legal and equitable calculus.  What is noteworthy, however, about the Second Circuit’s brief unpublished affirmance is the Court’s seemingly unnecessary flirtation with debatable legal principles concerning bail. 
Incentive to Flee
First, the district had denied bail in part on the basis of Madoff’s “incentive to flee,” a consideration Madoff argued was improper.  Finding this consideration “permissible under the [bail] statute and reasonable under the circumstances,” the Second Circuit explained that “such an incentive naturally bears upon and increases the risk of flight.”  While it is difficult to quarrel with this conclusion on a practical level, the opinion could invite bail denials on the more amorphous and ever-present “incentive” basis, rather than the more defendant-specific “risk of flight” consideration.  After all, what defendant facing time doesn’t have an “incentive” to flee?  The issue is and should remain whether this particular defendant is likely (and has the capability) to flee.  The Second Circuit’s decision in Madoff affirms this principle, but the prominence given to the concept of “incentive” in its discussion may lead to a subtle loosening of the applicable standard.
“Economic Danger” to the Community
Second, and more significantly, the Court noted Madoff’s failure to prove that he did not pose a “pecuniary” or “economic” danger to the community.  The Court cited a 1992 decision of the Ninth Circuit and interjected the word “pecuniary” into the Bail Reform Act to make it read: “pose a danger to the [pecuniary] safety of any other person or the community if released....”  28 U.S.C. § 3143(a)(1).  Magistrate Judge Ellis had rejected this economic harm argument in his pre-plea decision granting Madoff bail, noting that while the statute’s legislative history did allow for a concept of non-corporeal “danger,” there must still be a showing of additional likely criminal wrongdoing, and the government had failed to establish how some possible, future dissemination of Madoff’s assets could rise to the level of harm under the statute.  In its brief order, however, the Second Circuit raised the notion of economic harm without exploring these distinctions, finally acknowledging that it did not need to rely on this ground, given the risk of flight determinations. 
While the bail order here is not slated for formal publication, anything involving Bernie Madoff will be watched very closely.  Ordinarily, a court would have disincentives to make prominent mention of a new and largely undefined concept of “economic harm” in the bail setting.  These include the general injunction to avoid unnecessary dictum and the obligation to construe criminal statutes strictly.  The concept of “pecuniary danger” is perhaps all too real in a practical sense, and to that extent a valid issue in these times.  Introduced as a legal concept in this high profile case, however, it arguably comes off as open-ended and vague, almost a trial balloon that could float in different directions.  Certainly, this was not the Court's intention, but it cannot be predicted whether prosecutors will seek to exploit the reference and ratchet bail standards towards detention, perhaps beyond the purposes of the Bail Reform Act.  Conversely, will defense attorneys counter with arguments against detaining breadwinners in economic times?   Regardless, it can certainly be argued, given that bail was denied for other reasons, that no reference at all to “economic danger” in bail decision making would have been preferable to casual introduction.   
Lawyers: Ira Sorkin, Dickstein Shapiro LLP (Defendant); AUSAs Marc Litt, Lisa Baroni

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