Elizabeth Butler is no Ruth Madoff. Every morning, she gets up and goes to work as an executive assistant in Manhattan. She can walk down the street without being recognized or scorned. Like Madoff, though, Butler also happened to marry a man who turned out to be a crook.
Eric Butler is a former Credit Suisse Group broker who was convicted of misleading clients about risky auction-rate securities in order to generate higher commissions for himself. He duped them into believing the instruments were backed by federally guaranteed student loans, rather than risky debt and subprime mortgages—a fact that became clear to those clients after they lost almost $1 billion when the market collapsed. Butler is now serving five years in prison while his wife works and raises their 5-year-old son.
The problem, it seems, is how the Butlers handled their money. As my Bloomberg News colleague Christie Smythe reported on July 17, Elizabeth maintains that she viewed her husband’s accounts at such institutions as Charles Schwab, JPMorgan Chase, and Morgan Stanley as joint accounts in which she would deposit and withdraw funds, using Eric’s PIN numbers. The government maintains that those were his accounts alone, making the assets fair game to seize in order to help pay the $5 million fine and $250,000 forfeiture order that were part of the conviction. Which version reflects reality is something the U.S. District Court in Brooklyn will ultimately decide. But it raises interesting questions about the assumptions and practices of how couples handle their assets.