Who Is the Worst Scoundrel, If All the Allegations Are True - Blagojevich, Madoff or Dreier?

By EDWARD LAZARUS


Thursday, Dec. 18, 2008

Here is a game that I've been trying out on my colleagues, and that everyone can play at home: Who is the most morally culpable: Governor Rod Blagojevich, stock swindler Bernie Madoff, or lawyer-gone-bad Marc Dreier?

Of course, the game comes with a caveat: None of these individuals has yet been convicted of any of the crimes charged. But let's indulge ourselves with the not-implausible assumption that most or all of what we've read in the news is true. Which is the worst of the three?

The Case for Blagojevich: Allegations of Grossly Abusing the Public Trust

In my office, the results have been split, for the reasons described below. Whatever the bottom-line vote, however, all the conversations I've had on the topic come around to the same incredibly depressing conclusion – we may be living through the most corrupt period in American history, a time when society's elite threw off the harness of law and decency in headlong pursuit of riches and self-aggrandizement.
Although he is not my choice for the most morally culpable of the three, a lot of my friends put Blagojevich in the very worst circle of the Inferno. The most notorious charge against the Illinois governor is that he viewed the chance to appoint Barack Obama's successor as a vehicle for enhancing his personal fortune. Caught on a wiretap, Blago is heard to gloat: "I've got this thing [the power of appointment] and it's (expletive) golden. And I'm just not giving it up for (expletive) nothing. I'm not gonna do it."

Then there is an allegation that is perhaps less well-known but no less appalling: Blago is also accused of threatening to withhold millions in assistance to a children's hospital unless sufficient contributions were made to him. Similarly, he allegedly expected contributions in exchange for toll road contracts. And he is claimed to have threatened not to help the Chicago Cubs' stadium unless the Chicago Tribune fired editorial board employees who'd been critical of him.

Maybe it's the fact that I know a lot of former government lawyers, including a lot of former prosecutors, but the fact that Blago was abusing the public trust for private gain registered extra high on the immorality scale with many whose opinions I sampled. And who can truly argue with their view? When our high public officials behave disgracefully, it reinforces a destructive cynicism about our whole political system. And it's really no rejoinder to say, as some have, that, hey, we're talking about Illinois here – so what did we expect?

Are the Allegations Against Madoff and Dreier Arguably Worse Because They Describe More Concrete Harms?

Still, as awful as Blago's conduct is, I find the talk about abusing the public trust to be a little bloodless and abstract in comparison to the harms allegedly visited upon victims by the other two members of my little Rogues Gallery.

Take Bernie Madoff. According to the Securities and Exchange Commission, which unfortunately missed the real problem despite having Madoff on its radar for years, this highly-regarded Wall Street figure had long been running an enormous Ponzi scheme. Attracting huge amounts of money from individuals, charities, and investment advisors, Madoff had been paying unsustainably high returns to some investors using the principal invested by others. Apparently, Madoff's operation had long been insolvent – kept going only by steady infusions of new money. But with the financial crisis and the redemption demands that followed, the whole pyramid came crashing down, with losses estimated at $50 billion.

There's nothing abstract about the havoc Madoff has caused. A host of wonderful charitable organizations have lost most or all of their endowments. Lots of individuals have lost big chunks of their life savings. Madoff had won their trust completely – and now a sudden and devastating financial disaster has engulfed them.

The breadth and depth of the losses, all the good work that Madoff has imperiled, and the extensive and devious premeditation that Madoff's scheme required, over a long interval of time, all add substantially to his moral culpability in my book. And, thus, while most of the time a breach of the public trust will trump a breach of private trust in its moral turpitude, I view Madoff as an exception to the usual rule by dint of how many innocent people and good institutions he has ruined, or nearly so.

Dreier Versus Madoff: Who Is the More Culpable, Based on the Allegations We've Heard So Far?

Measured by size, Marc Dreier's misdeeds pale in comparison to Madoff's. So far it looks like Dreier, an incredibly successful Harvard-trained lawyer with his own nice-sized law firm, stole only about $380 million. But on the moral culpability scale, he ranks awfully high.

According to press reports, Dreier is guilty of at least two types of theft. First, while impersonating other people, Dreier sold hundreds of millions in phony discount notes purportedly issued by a prominent New York real estate developer. Second, he apparently took $38 million from one of his firm's client trust funds.

Like Madoff's -- indeed, even more so than Madoff'a -- Dreier's scheme required an extraordinary amount of planning and premeditation, in part because he created and sold bogus financial instruments. And Dreier appears to have been even more purely venal than Madoff. To be sure, Madoff made plenty of money off his Ponzi scheme. But it's not at all clear that personal profit was his principal objective. A lot of the money going through Madoff's operation went into the hands of his investors.

Dreier, by contrast, seems to have been motivated purely by an astonishing greed. Clever and brazen, he was simply taking other people's money and buying an unbelievably lavish lifestyle. Pure selfishness surely counts for something – something bad.

And while Dreier has not left as large a wake of misery as Madoff has, he's left plenty of victims behind. There are the lawyers and staff, numbering in the hundreds, who have been left without jobs or health insurance. There are the victims whose lawsuits against the firm are surely flowing in. With respect to those suits, too, Dreier's colleagues, perhaps right down to the first- years, none of whom were complicit in Dreier's thievery, have been left holding the bag.

All told, my own ranking is Madoff, followed by Dreier, followed by Blago. But I won't argue with any permutation of the three. In high times, we re-prove the wisdom of the ages about the corrupting influence of money and power. The low times that inevitably follow expose the rot and inspire the hard work of rebuilding the communal ties and legal timber on which society's prosperity is built. As we take stock of the last cast of villains, that is our task now.


Edward Lazarus, a FindLaw columnist, writes about, practices, and teaches law in Los Angeles. A former federal prosecutor, he is the author of two books -- most recently, Closed Chambers: The Rise, Fall, and Future of the Modern Supreme Court.

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