With all of the drama surrounding the swindler’s petite and much maligned wife, it wouldn’t take too much to imagine Barbara Walters, Diane Sawyer, and Oprah Winfrey burning up the lines trying to book Ruth for a teary-eyed, tell-all sit-down. With Bernie put away for good on July 13th in the medium security Butner Federal Correctional Complex in North Carolina, Ruth Madoff was the big media “get,” next to the ghost of Michael Jackson. If she escaped the long arm of the law, one could also see a big book deal in her future: The Ponzi King and the Woman Who Loved Him.
Meanwhile, sources close to the investigation see the probe lasting through 2010 with as many as a dozen others being formally implicated and with close attention being focused on certain family members, top associates within Madoff, close colleagues of Bernie, and European links to the Madoff organization.
“Now that he’s been sentenced, we have a long way to go, but we know who we’re after and we’re hoping they can lead us to the billions still missing,” says a person with knowledge of the probe. “From intelligence it’s apparent Bernie didn’t mastermind this scheme himself. It’s far from a one-man operation. It’s just too vast. There are feelers out regarding organized crime here in the United States and abroad—the Russian mafia, the Israeli mafia, people in high places—very high places.
“When you have billions of dollars floating around across continents and oceans, there are some very bad people, and some very big people, who have a hand out, or a hand in. Was Bernie a puppet, a middleman who became the fall guy, who decided to fall on his sword? The radar is starting to show such blips. The other shoe is certain to drop, but it takes time. This is an enormous scheme that goes way beyond anything we’ve ever seen. It makes Watergate look like a smash and grab.”
At Butner, a state-of-the-art prison where Bernie will spend the rest of his years, he has all the comforts of home. Well, not quite all. Living in a dormitory or two-man cell, the Big House is no penthouse or beach house in the Hamptons. But Bernie certainly has a lot more amenities than many of his destitute victims had after he robbed them.
Within the locked doors and barbed wire of Butner, located in a poor, rural community almost 500 miles south of his swank Upper East Side apartment, Bernie gets free cable TV, three free square meals a day, air conditioning in the summer, and the best medical care in the federal prison system—all at taxpayers’ (and Madoff victims’) expense. He has the freedom to order books and magazines, and he can receive visitors—although it is doubtful there is anyone, including members of his own family, possibly even prison widow Ruth, who would care enough to come.
His days aren’t too bad. He’s up and about at 6 A.M. for an all-day work assignment. Forget about the Hollywood prison movies of old where inmates broke rocks. At Butner Bernie can be assigned to plumbing or groundskeeping—after all, he was an expert at installing sprinkler systems, and his late father once fixed toilets for a living. And he even gets paid, as much as $104 per year. For relaxation after work there is always the well-equipped gym (no outlandish fees to pay), or he can walk the outside track or participate in sports. In his free time he can even teach a course—finance is one possibility—to some of his 4,800 fellow inmates.
Besides the robbers and rapists, Bernie has some once respectable prison mates as peers to schmooze with, such as the father-and-son team of 84-year-old John and 53-year-old Timothy Rigas, the Adelphi Communications founder and his scion, who were found guilty of securities fraud. Another is Franklin C. Brown, with whom Bernie will have even more in common—Brown is serving time for a $66 million Ponzi scheme.
If Bernie takes the advice offered him by his hired prison consultant, Herb Hoelter, he’ll probably do okay in his golden years. That advice was, keep your space, respect fellow inmates, and “bring some meaning to your life.” Hoelter, who waived his fee for the financially and morally bankrupt Prisoner #61727-054, release date November 14, 2139, believed his client would “do some good things” behind bars.
“He’s sensitive enough and smart enough.”
Author’s Note on Sources
Since Bernie Madoff was a relative unknown until his arrest, his bibliography was limited to a couple of magazine profiles noted in the text of this book, a mention in at least one book about Wall Street, the subject of a couple of “red flag” articles such as the Barron’s piece, and quotes and references here and there over the years in financial stories. In essence, not a whole lot.
Therefore, it wasn’t until his arrest that Bernie became an ongoing, headline-making story wherever around the world people had been scammed by him. As of July 6, 2009, for example, there were 212 million Google references for his name, while President Barack Obama garnered 61.4 million.
Much of this book was based on interviews conducted by the author (see Acknowledgments), with much help from the daily newspaper chronicles and the few monthly magazines (and all their related web sites) that covered the ongoing investigation. Dozens of excellent reporters worked the story.
That said, I would like to point out that all persons directly interviewed by the author are quoted in the present tense. The past tense is used only for quotes or other material coming from newspapers, magazines, or court documents, and I’ve attempted to cite those sources in the text of the book.
In some cases I’ve interviewed persons in greater depth who were first mentioned in news accounts or online. I’ve attempted to differentiate the author interviews of those people by using the present tense where applicable.
Among the newspapers, magazines, and related and separate web sites used as reference and source material are:
The Wall Street Journal, the New York Times, the Washington Post, the Financial Times, the New York Post, the New York Daily News, the Palm Beach Post, the Los Angeles Times, the Guardian (London), the Telegraph (London), the Daily Mail (London), Reuters, Associated Press, Bloomberg News, ABC News, CNBC, CBS News, CNN, Fox News, Vanity Fair, New York magazine, Traders Magazine, Portfolio, Forbes, BusinessWeek, Barron’s, Newsweek, Time, Fortune, and Wall Street & Technology, among others.
Other research sources were the web sites of the town of Laurelton, Far Rockaway High School, the University of Alabama, Hofstra University, Brooklyn Law School, Fordham Law School, The Huffington Post, The Daily Beast, TPMCafe, and various government web sites.
Acknowledgments
Bernie who?
He was someone few had ever heard of, who had committed a monstrous crime no one had been aware of.
But after his story began unfolding following his arrest in December 2008, Bernie Madoff became a household name overnight, the ultimate poster boy for extreme Wall Street greed, and the most reviled and cunning crook America and the world had ever come face-to-face with. He was compared to one of those psychopathic serial killers who murder anonymously, live among us, and are loved and respected by their friends and associates until someone comes across the bodies buried in the backyard.
In Bernie’s case, the financial victims numbered in the thousands and his take was in the billions of dollars. Besides losing life savings, two of his investors had taken their lives. There was blood on his hands.
When the Madoff story broke—and headlines about his massive Ponzi scheme blared around the globe, for his victims were everywhere—I had just completed writing an expose of a company called Toy Monster:The Big, Bad World of Mattel, my ninth book.
While I was quite aware of the exploding scandal, my focus still was on Toy Monster, which had taken more than a year of intensive reporting and writing. But in late January to early February 2009 I was convinced that the story of Bernie’s amazing rise and calamitous fall was a business crime story of historic proportions, and I dove into research and reporting.
As I stated in the Prologue, my goal was to tell the story of the man behind the scam. I was in for some tough competition. Some of the best business and investigative reporters in daily and magazine journalism had been on the Madoff case since day one.
But I
wasn’t trying to play catch-up. My goal was to find and talk to the people who knew Bernie intimately, who saw him in action, who knew him for what he was, from the days when he was playing stickball in the streets of Laurelton, in the New York borough of Queens, to playing hardball on the Street and beginning his giant Ponzi swindle.
With a lot of old-fashioned reportorial shoe leather and telephone work, I was able to track down dozens of people who had seen Bernie operate, who had gone to school with him, who had worked with him and under him, and who had been robbed by him.
This book could not have been completed without their gracious help, their candid memories, their on-the-mark perceptions, and their colorful anecdotes, which together morphed into a telling, frightening portrait of the man, ending with the drama of his being put behind bars for the rest of his life—his family and legacy forever demolished.
That said, I wish to offer my heartfelt thanks to those who opened their doors and took time out of their lives—many of those lives being tragically sad because of Bernie’s victimization—to help me tell the story. I could not have done so without you. In no particular order of importance, hale and hearty thanks to:
Jennifer Madoff, Bill Nasi, Richard Glantz, Jay Portnoy, Ed Heiberger, Sheldon Fogel, Fletcher Eberle, Mike Gandin, Eli Greenbaum, Gordon Ondis, Carol Ann Lieberbaum, John Maccabee, Peter Zaphiris, Charles Lubitz, Sheila Olin, Martin Schrager, Andy Monness, Justin Fox, Robin Warner, Gale Hayman, Joe Kavanau, Cynthia Arenson, Amy Joel, Toniann Astuto, Albert Reitman, Hoong-Yee Lee Krakauer, Miles Goslett, Ocean Robbins, Stanley Shapiro, Doug Abrams, J. M. Brown, Levi Touger, Jonny Lieberbaum, Gary Hartnick, Erin Robbins, Neil Fenwick, Jeff Nelson, Paul Finfer, Anthony Guerra, Howard Samuels, Richard Bucksbaum, Arnold Schotsky, Elka Weiner, Deb Kass, Sherry Fabrikant, Robert Gettinger, John Shoup, Frederic von Anhalt, Marsha Veit, Jane Kavanau, Patricia Samuels, David Neff, George Somlo, Nina Mehta, Justice Litle, Daryl Montgomery, Barbara Curreri, Leonore Feldman, David Arenson, and a number of others. If for some reason I missed offering an appreciation for your help, please accept my apology.
I’d also like to thank one of the best editors I’ve worked with in a long time, Kelly O’Connor, who put her fine touch on the manuscript.
I’d like to offer a very special thanks to my wonderful wife, the journalist, illustrator, and photographer Caroline Walton Howe, for helping me chase down sources, locate relevant materials, and conduct some interviews, particularly when the workload and hours seemed to be burying me. She deserves major kudos. This book is also being written in memory of our beloved Westie, Cuco, who at age 12 sadly had to be put to sleep on the day I began my reporting. May he rest in peace.
Index
ABC News
Abend, Reed
Accounting errors
Accounting firm
Ackerman, Gary L.
Affairs
A.I.S. Steel Corporation
Alpern, Bill
Alpern, Joan
Alpern, Minette
Alpern, Ruth “Ruthie”See also Madoff, Ruth (Alpern)
Alpern, Sara
Alpern, Saul
Alpern & Heller
Alperns, Saul and Sara
America Hedge Fund
Angel investors
Antique furniture
Appearance
facial ticks
facial ticks and squints
as a youth
Arenson, Cynthia Levinson
Arenson, Dan
Arenson, Marilyn
Army Reserve Officer Training Corps (ROTC)
Army uniforms
Arvedlund, Erin
Asset dissipation
Asset freeze
Asset sales
Aston Martin (James Bond car)
Astuto, Toniann
Avellino, Frank
Avellino and Bienes
Avirom, John
Bacon, Kevin
Bail
Baroni, Lisa
Barron’s
“Before the Fall” (Traders magazine)
Bernard L. Madoff Investment Securities LLC (BLMIS)
“Bernie Madoff Giveth and Bernie Madoff Taketh Away” (New York Post)
“Bernie Madoff Screws Leukemia Patient” (Arenson, David)
Bienes, Dianne
Bienes, Michael
Bill payment promptness
Blacks
Blood cancer
Bloomberg News
Blumenfeld, Susan
Boats:
asset sales
Bull (motor yacht)
Bull (ocean going yacht)
Bull (Rybovich fishing vessel)
little Bull (fishing boat)
Boesky, Ivan
Bongiorno, Annette
Book report fraud
Bowery Savings Bank
Boy Scouts of America
Breakfast habits
British asset recovery efforts
British operations
Broker-dealer registration
Brooklyn Law School
Bucksbaum, Richard
Bull statues and boat names:
Bull (motor yacht)
Bull (ocean going yacht)
Bull (Rybovich fishing vessel)
bull statues
little Bull (fishing boat)
Cacioppi, Theodore
Campaign contributions
Cancer
Care packages. See Christmas presents; Hanukah gift packages
Carroll, Richard
Cars
Caruso-Cabrera, Michelle
Cash-hunting expedition
Cash redemptions
Catholic Archdiocese of Miami
Catholic Archdiocese of New York
Catholic organizations as victims
Catskill Mountains
CBS News
Celebrity victims
Center for Enterprise Modernization
Chais, Bernie
Chais, Stanley
Chavkin, Peter
Childhood
Childhood friendships
Chin, Denny
Christmas party
Christmas presents
Cincinnati Stock Exchange
Client eagerness
Closet obsession
Clotheshorses
Clothing fetish
Cohmad company
Cohn, Marcia
Cohn, Maurice “Sonny”
College:
Army Reserve Officer Training Corps (ROTC)
Army uniforms
Brooklyn Law School
Crimson Tide Battalion
friendships in
Hofstra College
Jewish recruitment
roommates
Sigma Alpha Mu (Jewish fraternity)
University of Alabama
Yeshiva honorary degree
College friendships
Company so-called loans
Computer skills
Cornell University
Country clubs
Court appearance
Court-ordered seizure
Crabbe, Buster
Credit card expenses and charges:
friends and family
Mark and Andy Wyoming trip
Ruth
Crimson Tide Battalion
Crupi, JoAnn
Curreri, Barbara Aronson
Dassin, Lev
Davidoff cigars
De la Villehuchet, Bertrand
De la Villehuchet, Claudine
De la Villehuchet, Rene-Thierry Magon
Dennehy, Brian
Denny, George
Denver, John
Diet for a New America (Robbins, John)
Dirty old man act
Donghis, Angelo
“Don’t Ask, Don’t Tell: Bernie Madoff Is So Secretive He Even Asks Investors to Keep Mum” (Barron’s)
Draft deferment
Dreyfus, Jack
D
reyfus Fund
Duke University
Dun and Bradstreet rating
Dworsky, Bill
Dworsky, Bobby
Dworsky, Ida
Early friends
Eaton, Thomas F.
Eberle, Fletcher
Editor & Publisher
Elementary school
Emotions
Employees
Fabrikant, Andrew
Fabrikant, Sherry
Fairfield Greenwich Group
Family as investment
Family members. See also specific family members:
involvement of, in Bernie’s business
protection of
Family relationships
Family roots
Family victims
Far Rockaway High School:
50th reunion
book report fraud
Cynthia Greenberger
Eddie Rochelle
Edwin Heiberger
Elliot Olin
high school friends
Hoong-Yee Lee Krakauer
Jay Portnoy
Michael Gandin
Michael Lieberbaum
Ruth Alpern
Ruth’s activities in
selection of
Sheldon Fogel
Sheldon Lieberbaum
swim team
unofficial football team
FBI arrest
Feeder funds
Fenwick, Julia
Final distribution
Financial Industry Regulatory Authority (FINRA)
First Asset Management
Fitzmaurice, Tom
Flumenbaum, Martin
Fogel, Sheldon “Shelly”
Fonda, Jane