After Bernie was arrested, there was an online buzz about his political contributions but it quickly died down. A Jewish voter in NYC donating mostly to Democrats was not news nor was the dollar amount, $298,000 between Bernie and Ruth over ten years, unusually high. All told, BMIS employees donated $392,00 to federal candidates in that period.  

But what most people didn't know was that Bernie was under investigation by the SEC when he donated $25,000 to the Democrat Senatorial Campaign Committee in May 2005. In the preceding eight years, Bernie had made only one political contribution over $2,300 and that was a $5,000 contribution to the Securities Industry PAC in July 2004.

Bernie continued to make $25,000 contributions to the DSCC in 2006, 2007 and 2008.    

Why contribute to the DSCC?   

Chuck Schumer became chairman of the DSCC in 2004 where his fundraising prowess became legendary. He sits on the senate finance and banking committees and, as such, can attract a lot of money from the financial sector. Schumer's reputation is that of a friend to Wall Street.

After Bernie was arrested, Schumer's office acknowledged that the senator had met Bernie several times but not in the last few years. According to an article in Fortune magazine, Schumer stopped in at BMIS during the runup to the Iraq War and gave a rousing talk. 

(Bernie, Ruth, Peter, Marion, Mark and Andrew each contributed $2,000 to Schumer's campaign in April 2002 and then again in August 2004.)  

Bernie may have thought he needed another powerful friend in Washington in May 2005 because the SEC probably was asking a lot of questions that made him very nervous.

The SEC had opened an investigation of BMIS in January 2004. As reported by the Washington Post, one of the investigators asked a series of pertinent questions about Bernie's operations that were shelved in March 2004 in favor of a more pressing investigation.

The investigator wanted to know whether Bernie had custody of investor assets, among other things.

The case was shipped to the SEC's NY office shortly thereafter and re-opened in early 2005. The SEC subsequently charged Bernie with three minor violations of securities law  and the case was closed some time before November 2005.  

According to a statement in another SEC BMIS investigation opened in January 2006 as a result of the Markopolos complaint, Bernie had misled the 2005 investigators about the nature of his business.

The SEC inspector general's report on the internal workings of the BMIS investigations is due on August 31. Presumably, Inspector General David Kotz will have inquired about outside influences.

The FBI probably already asked Senator Schumer's office about the nature of any contacts the senator or his staff had with Bernie in past years.

One possbility is that Bernie's lobbyists, the firm of Lent Scrivner & Roth, suggested to Bernie that he contribute the maximum to the DSCC.

(Norman F. Lent, a founder of the firm, is on the Madoff customer list. Lent, Bernie and Ruth's sister, Joan Roman, all contributed to Camp Chingachgook at the same time so it appears Bernie had a personal relationship with Lent, another Hofstra grad and former congressman.)

Politicial issues impacting the trading side of Bernie's business could have spurred his $25,000 contribution in May 2005. On the other hand,  Bernie had a lot of riding on the outcome of the SEC investigation that year.

Senator Schumer's former chief legal counsel, Preet Bharara, was confirmed as the next US Attorney for the Southern District of NY last week. In effect, he will now be heading the Madoff investigation.  

I'm sure Mr. Bharara is familiar with the details of Senator Schumer's contacts with Bernie over the years.

Note: Several people have asked me if the DSCC and Senator Schumer returned their contributions from Bernie. Whether the money was returned does not change what happened in 2005  but for those interested, the DSCC gave $100k to the Madoff bankrutcy trustee in March 2009. Schumer did not return the $6k he received, according to FEC records..