Judge Allen Stanford’s Sentence Using the Madoff and Stewart Standards

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Bernie Madoff, Martha Stewart, and Allen Stanford

Bernie Madoff, Martha Stewart, and Allen Stanford

June 17, 2012
Copyright 2012 Tony Lima.  All Rights Reserved.

Almost exactly three years ago, I wrote about the appropriate sentence for Bernie Madoff using the standard established in the Martha Stewart case.  Now we have another conviction: Allen Stanford, 110 years, for a Ponzi scheme that defrauded investors of about $7 billion.  In this article, I’ll judge Allen Stanford’s sentence using the Madoff and Stewart standards.

Summarizing my earlier work, Madoff made off [sorry] with $15 billion of customer wealth and was sentenced to 150 years in prison.  Stewart made $51,000 illegally (allegedly) and got five months jail time (0.416667 years).  Using our BFF Mr. Microsoft Excel 2011® for the Mac, I found that under the standard established in the Stewart case, an appropriate sentence for Madoff would have been 122,549.0196 years.  (Number freaks are welcome to click here to download the Excel workbook.)  I also found that Stewart served about 816 times as many years per dollar of fraud compared to Madoff.

The lone remaining issue is how we go about expressing such a number. For that we turn to the ancient Mayans.[1] In their calendar one calubtun was about 158,000 years.[2] Thus Mr. Madoff should have received a sentence of about ¾ of a calubtun (0.7756 to be precise).

Using the same standard and methodology, Stanford should have been sentenced to 57,189.5425 years, about 1/3 of a calubtun (0.3620).  Madoff remains the undisputed fraud champion.  But what if we use Madoff’s sentence as a standard instead?

Using the Madoff standard, Stewart should have served about 4-1/2 hours in prison (4.4676).  And Stanford’s sentence would have been a “mere” 70 years.  Justice is strange.  Not that it matters.  Stanford and Madoff will undoubtedly both spend the rest of their lives in jail.

In an intriguing footnote to history, many people wonder whether Allen Stanford is a relative of the Stanford family (Stanford University).  According to Wikipedia, Allen Stanford actually paid genealogists to try to prove this relationship.  He never found anything and the Stanford family denies any ties to Allen Stanford.

Repeating what I wrote three years ago, what does it all mean?  If you’re planning to steal money, go for the big filch.  If you’re going to tell a lie, make it a whopper.  But we also suggest that perhaps exposing the judiciary to some elementary algebra (not to mention Mr. Excel®) would be a good thing.

[1] Thanks to Thomas S. Laxar for suggesting this line of inquiry.

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About Tony Lima

Retired after teaching economics at California State Univ., East Bay (Hayward, CA). Ph.D., economics, Stanford. Also taught MBA finance at the California University of Management and Technology. Occasionally take on a consulting project if it's interesting. Other interests include wine and technology.