Next target of Madoff case: his wife?

Once Bernard Madoff gets sentenced on June 29th for his $64 billion Ponzi scheme, will the government turn its fury on his wife?

Some lawyers representing Ruth Madoff victims think that's the plan.

“The FBI is investigating,” says Jerry Reisman, a Long Island attorney who represents 16 victims, some of whom have been questioned by investigators.

“They are calling the victims and a number of other people,” says Mr. Reisman who thinks the only reason nothing has happened so far is that the government “wants to complete the investigation and make sure there are not any mistakes or errors to cause a reversal.”

Mrs. Madoff has not been charged with any crime at this point. Waiting outside the jail where Madoff is incarcerated, an ABC News crew tried to get a comment from Mrs. Madoff. She declined.

Why the delay?

One of the questions surrounding the case is why investigators are taking so long in charging her – or clearing her. A story on Monday in the Financial Chronicle said Ruth has not been questioned by federal prosecutors.

The US attorney’s office has probably asked to talk to her, Mr. Reisman says. But he believes her lawyers have rejected the idea, unless it is part of a cooperation agreement. Reisman believes the reason there has been no civil lawsuit against Ruth is to prevent a possible conflict in case of a criminal case. “Whatever comes out of the civil suit could possibly hurt the prosecution if they conclude she committed a crime,” he says.

If prosecutors are looking at Ruth, they are not waiting for her husband’s sentencing, says Robert Mintz, a former assistant district attorney in New Jersey.

“The sentencing will proceed on one track and the investigation on another,” says Mr. Mintz, whose specialty is white-collar crime at the law firm McCarter & English. “The US attorney’s office does not typically go to great lengths to time out announcements for any kind of public relations reasons.”

Mintz says he thinks the reason the US attorney has not done anything about Mrs. Madoff yet is that it’s potentially a difficult case.

“There was a unique nature in that it unfolded unlike in the way most cases of this type play out,” he says. “Generally, prosecutors work from the bottom to top ultimately resulting in the indictment of the CEO. But in this case, they started with the conviction of the ultimate organizer, Madoff, who says he was the only player, and are working backwards to figure out how he got to where he was then they first confronted him.”

Madoff victims angry

Reisman says his clients have a lot of interest in seeing Madoff’s wife charged.

“There is a possibility she hasn’t committed a crime, but the public wants her blood and won’t settle for an innocence,” he says. “No one believes she is innocent.”

If the Feds do decide to go after Ruth, Mintz says the potential charges could range from conspiracy to aiding and abetting.

“This is all very hypothetical,” he says. “But given the enormous amounts of money at stake here, anyone caught up in it faces the possibility of spending a good amount of time in jail.

That would probably please many of the victims. Recently, US District Court Judge Denny Chin, the judge in the Madoff trial, released copies of letters from 113 victims. Some of those letters, with the names of the authors blacked out, asked for justice from the entire Madoff family.

“Madoff’s wife did not work or contribute funds for her wonderful life style, where did she think the money was coming from?” wrote one victim. “No one outside the Madoff families' lives will ever be the same, why should theirs?”

– Guest blogger Ron Scherer is a Monitor staff writer.