Criminal Defense:Investment Fraud and Willful Blindness Doctrine

Criminal Defense: U.S. District Judge Laura Taylor Swain sentenced Bernie Madoff’s assistant, Annette Bongiorno, 67, to six years in prison – a lenient sentence far less than recommended by the federal sentencing guidelines. During sentencing, Judge Taylor told Ms. Bongiorno that she had “willfully blinded herself,” and “chose Madoff’s blessing” over “her own moral compass.”

The term willful blindness is the key issue in many white-collar criminal cases involving phony investment schemes like Madoff’s and other types of fraud schemes. The practical legal purpose of thewillful blindness doctrine is to allow prosecutors a way of proving that someone involved in implementing an investment scheme, regardless of their role in the scheme, should have known it was illegal but willfully chose to turn a blind eye to the illegality, because they were making good money.

So, as an employee, if your boss tells you he is selling ownership shares in Santa Claus’ workshop at the North Pole and someone who invests $100,000 will receive a one percent ownership of Santa Claus’ workshop and reap guaranteed returns on their investment of $10,000,000; and you participate in selling this “investment opportunity” to the public, a judge or a jury can find you guilty under the willful blindness doctrine of participating in an investment fraud scheme. Your defense at trial will be, of course, “hey, who doesn’t believe in Santa Claus? My boss told me he personally knew Saint Nick, so I figured it was a good investment.” Under the willful blindness doctrine you can be found guilty anyway, unless, of course, your lawyer is able to actually subpoena Santa from the North Pole to come testify on your behalf.

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