Lawyer Jonathan Bristol Allegedly Aided Ponzi Scheme

Anyone who has watched a lot of mafia movies -- or a lot of local news in the New York metro area -- is familiar with the figure of the "mob counsel" -- the lawyer so close to his clients that he, in effect, is part of their criminal enteprise.

Well, it turns out that mafia dons are not alone in having lawyers who actively abet their crimes. Plenty of white collar criminals do as well. In fact, much of the time you find a complex fraud or sophisticated scheme to cheat in business or finance, you'll also find a lawyer who helped facilitate things.

The latest example may be Jonathan Bristol, formerly of Winston & Strawn LLP, who has been charged with helping Ponzi Schemer Kenneth Starr hide millions of dollars in ill-gotten gains. "Bristol crossed the line from lawyer to conspirator when he failed to safeguard funds entrusted to him, helped Starr steal client money, and lied to the victims to perpetuate the scheme," said George S. Canellos, director of the SEC's New York Regional Office. The SEC complaint against Bristol alleges:

To avoid detection of the misappropriation scheme, Bristol repeatedly
allowed Starr, beginning in or around November 2008 until Starr's arrest in May 2010, to
use Bristol's attorney trust accounts (collectively, the "Attorney Trust Account") as
conduit accounts when Starr stole assets from Starrco's and SIA's clients (the "Starr
clients"). Bristol, who was the sole owner ofthe Attorney Trust Account and had sole
authority to authorize outgoing transfers, would then send these monies to the Starr
Parties among others, even though Bristol knew that the money belonged to the Starr
clients. Bristol did not disclose the existence of the Attorney Trust Account to any of his
colleagues at his law firm.

If the SEC charges are true, and that remains to be seen, Jonathan Bristol would seem to be a classic example of a respectable professional who lost his way morally somewhere along the line -- as so easily happens in a society where wealth is an all-important arbiter of personal worth and status and where corruption seems to be everywhere.

Bristol attended Amherst College (class of '78), graduated from the University of Virginia Law School in 1981, and worked at a prominent firm. (See more about him here, including a photo.) As a younger, presumably more idealistic man, Jonathan Bristol served as a member of the New Jersey Supreme Court's Office of Attorney Ethics.

Bristol tried to maintain the profile of respectability even after Starr was busted, and that's the real kicker of the SEC's complaint:

Notwithstanding Bristol's personal role in the misappropriation scheme, Bristol represented the Starr Parties throughout the Commission's investigation ofthis matter and in connection with a cause examination of SIA by the Commission's examination staff. Bristol also attempted to represent at least one victim of the fraud after the victim was contacted by the Commission. In addition to the fact that such representations violated the ethical obligations of lawyers, Bristol's clear intent was to obstruct and undermine the Commission's investigation and cause exam in order to conceal the Starr Parties' - as well as his own - wrongdoing.

Talk about chutzpah! You can get all the details of Jonathan Bristol's work on behalf of Kenneth Starr in the complaint below.

Complaint Against Jonathan Bristol, Lawyer to Kenneth Starr

Madoff Aides Busted: Helped with Scheme

Everyone knows that Bernard Madoff could not have pulled off a $65 billion Ponzi scheme by himself over a period of many years. What we don't know, though, is exactly how many people knowingly abetted this monstrous financial crime. But as time passes, more answers are emerging. The latest piece of the puzzle to fall into place came yesterday when authorities arrested two more people in connection with the scheme, bringing the total number of Madoff employees arrested to five. As reported in the New York Times, 

Two former employees of Bernard L. Madoff, including his onetime personal secretary, were indicted Thursday on fraud and conspiracy charges related to his multibillion-dollar Ponzi scheme.

The arrests of the two, Annette Bongiorno and JoAnn Crupi, bring to eight the number of people charged in the case.

Federal prosecutors charged both women with knowingly participating in the Ponzi scheme by, among other things, executing fictitious trades in clients’ accounts to achieve predetermined investment returns set by Mr. Madoff.

According to authorities, both women made big money in the scheme. 

The complaint alleged that Ms. Bongiorno managed hundreds of investment accounts that had a cumulative balance of $8.5 billion before the fraud was uncovered. Ms. Crupi, who allegedly tracked investors’ daily deposits and redemptions, oversaw accounts that totaled about $900 million, the complaint said.

The two women are also accused of earning millions from the fraud. Prosecutors said Ms. Bongiorno withdrew more than $14 million from 1975 to 2008, but had invested only about $920,000. Ms. Crupi is accused of receiving more than $2.7 million in payments from Mr. Madoff directly in 2008 alone.

Of course, the biggest mystery about Madoff's co-conspirators may never be known: How could they? How could they knowingly defraud so many people of their life savings? We're hoping that one of these people will eventually confess and answer that troubling question. 

Mini-Madoff Goes to Court for $168 Million Scheme

Arthur Nadel, 77, was sentenced to 14 years in prison due to his role in a massive Ponzi scheme through which he obtained over $300 million from clients around the country. During his sentecing clients called him "evil" and a crook.

His response? "Their anger and outrage became mine at myself," Nadel said. "I blame only myself for my acts."

• Read report from Reuters.
  

Are There More Madoffs Still Out There?

Nobody knows the answer to that chilling question. Although it seems highly unlikely that there is another ongoing Ponzi scheme of comparable size, smaller investment frauds are revealed all the time. In the years since Madoff was unmasked, at least a half dozen other Ponzi schemes have come to light.

The SEC says that it has learned from the terrible mistakes it made during the Madoff affair -- namely, missing the whole thing even as a whistleblower spelled out what Madoff was doing in detail -- that agency still doesn't have nearly the resources it needs to properly police large corporations, much less smaller brokerages.

None of this is very reassuring. The best protection for investors is to put their money in the most well-established institutions they can find.