The convictions earlier this week of five of Bernard Madoff’s office workers gives the lie to Madoff’s long-held assertion that his massive Ponzi scheme was essentially a one-man show.

No one really believed that lie, certainly not the prosecutors and investigators who have scoured over the remains of Madoff’s fraudulent investment firm ever since the disgraced financier was arrested in late 2008.

Still, while trying and convicting the people who performed the scutwork that gave the illusion Madoff was conducting legitimate transactions is an important step in the process, bigger fish in the food chain have gone unpunished.

I’m talking about the scores -- if not hundreds -- of well-paid investment professionals who either laundered Madoff’s money for him (unintentionally, they would claim) or used their own reputations as financial gurus to rope unwitting investors into Madoff’s web of lies.

Let’s start with the presumably top-notch bankers at JPMorgan (JPM), where the bulk of Madoff’s money was deposited. Madoff himself told FOX Business Network’s Adam Shapiro a year ago that “the banks must have known.”

"There's no question that JPMorgan is guilty; they would have to be idiots to not realize what  was going on," Madoff said. 

Of course, Madoff’s credibility and motives are suspect, but his accusation really boils down to common sense. And his assertion was loudly echoed in a civil suit filed against JPMorgan by the trustee overseeing recovery of funds from the fraud.

The bank “was at the very center of that fraud and thoroughly complicit in it,” the suit filed by Irving Picard stated. As a sophisticated financial institution, JPMorgan was “uniquely situated to see the likely fraud.”

No One At JPMorgan is Going to Jail

Red flags -- not least Madoff’s utter lack of transparency and the fact that his returns were consistently too good to be true -- were ignored “as the drive for fees and profits became a substitute for common sense, ethics and legal obligations.”

JPMorgan, which has denied knowingly assisting Madoff, agreed to pay more than $2 billion earlier this year to make potential criminal and civil charges related to its Madoff problems go away. The settlement speaks for itself.

In any case, unlike Madoff’s employees, no one at JPMorgan is going to jail.

Just as infuriating is the lack of criminal prosecutions against the myriad so-called feeder funds that for decades funneled money into Madoff’s coffers, usually without the knowledge or consent of the feeder funds’ clients.

One of the more egregious offenders was the high-profile, New York-based money manager Ezra Merkin, a well-respected figure both in the worlds of finance and philanthropy.

In his quarterly statements distributed to his clients, Merkin, rather than explaining exactly how he made his clients money, often cribbed quotes from the great philosophers and from classic works of literature. The effect was to suggest that his clients should simply trust him because he was obviously very smart.

In fact, without their knowledge, he was simply funneling his clients’ money to Madoff, more than $2.4 billion over the course of nearly two decades, according to one lawsuit filed against Merkin.

Merkin’s association with Madoff ruined his professional career and dragged his name through the mud, but he’ll never do jail time.

Feeder Fund Gurus Aren’t Going to Jail

Walter Noel, a Greenwich, Conn.-based financier, used his Madoff connection to build his Fairfield Greenwich Group investment firm into a small powerhouse, considerably enriching himself and his family along the way.

Initially, Noel, similar to Merkin, failed to disclose to his clients the fact that he simply turned their money over to Madoff. But later, after a Securities and Exchange Commission investigation forced his hand, Noel practically flaunted his Madoff connection, leveraging Madoff’s extraordinary returns to goad profit-hungry clients into investing in his firm’s signature Fairfield Sentry Fund, which at one point had more than $7 billion tied up with Madoff.

In the fall of 2008, as Madoff’s world was closing in on him and he desperately sought new  influxes of cash to keep his Ponzi scheme afloat, Noel and his colleagues allegedly stepped up their marketing efforts on behalf of Madoff, even suggesting to clients that they’d be cut off from future Madoff opportunities if they failed to pony up immediately.

Like Merkin, Noel’s career and reputation were ruined by Madoff, but he too will never see the  inside of a jail cell.

The list could go on.

The worst part of this isn’t that slick-talking wiseguys like Merkin and Noel aren’t in prison. It’s that investors whose money made its way to Madoff through feeder funds were struck with a double blow.

Not only did they lose their investments – for many of them their life savings – but, according to the recovery plan approved by the bankruptcy trustee overseeing the process, feeder fund investors aren’t eligible to recoup lost funds through the established process because they didn’t invest their money directly with Madoff. Instead they face a tortuous legal morass that could go on for years.

In other words, they’re getting screwed a second time for no other reason than because they were deceived by the likes of Merkin and Noel.

Follow Dunstan Prial on Twitter @DunstanPrial