One of the most useful things an economist can do in litigation consulting is to put abstract numbers into context. Bernie Madoff’s theft of $65 billion dollars is almost mind-boggling. To illustrate the significance of his crime, I compared his theft with other financial crimes most people are familiar with- burglary, theft, pick pocketing and purse snatching. The table below contains statistics from the US Department of Justice’s 2006 Crime Victimization Report including the total number of victimizations, average loss and gross loss by crime.
There were 18 million victims of these five crimes with average losses in the range of a few hundred dollars to just over a thousand dollars. By comparison, Madoff’s victims number somewhere between the 8,800 who have filed claims with SIPC and estimates in the “tens of thousands”. The average loss for the 8,800 SIPCfilers is $7.3 million dollars. If we assume that there are many more investors yet to be named (say 30,000) then the average loss per investor drops to $2.1 million.Madoff’s theft of $65 billion was uncovered in 2008 although it was a multi-year or multi-decade endeavor so this is not an “apples to apples” comparison. But what is clear is that the dollar value of this theft is five and half times greater than all stick-ups, burglaries, purse snatchers, and other thefts in 2006.