Although Bernard L. Madoff’s name is now synonymous with fraud, on December 11, 2008 when two FBI agents knocked on his door to investigate a report they’d received from Madoff’s sons, the man they were about to interview was an icon.
“We’re here to find out if there’s an innocent explanation,” Agent Theodore Cacioppi told Madoff, who founded Bernard L. Madoff Investment Securities LLC and was once chairman of the Nasdaq Stock Market…
“There is no innocent explanation,” Madoff, 70, told the agents, saying he traded and lost money for institutional clients. He said he “paid investors with money that wasn’t there” and expected to go to jail. Via Bloomberg.com ,12 Dec 2008
In total, investors had contributed approximately $20 billion to Madoff’s fund. They watched their investments “grow” to a total of $64.8 billion until December 11, 2008, when it all disappeared. Madoff’s prestigious hedge fund was a fraud.
But it’s wonder investors trusted Madoff. One year earlier, in October, 2007 with the sub-prime mortgage crisis visibly about to erupt, Madoff’s prestigious, rock-solid unregistered “hedge fund” was still making his investors rich. In October, 2007, Madoff’s contribution to a roundtable conference discussion was widely broadcast on television and I recall watching the Wall Street icon persuasively reassure the world about the safety of the modern stock market. (video via YouTube)
It was all a con. In 2009 Madoff was convicted and sentenced to 150 years for his financial crimes. Now, seven years after his confession and arrest, the Madoff fraud persists in the headlines, as the criminal courts work to allocate responsibility to individuals alleged (or convicted) of helping Madoff perpetuate his fraud, and civil lawsuits negotiating settlements with those judged to have failed in their fiduciary duty to protect investors.
A few recent examples from the fall of 2015:
- Nov, 2015: Ernst & Young LLP was found liable by a jury for its failure to vet financial audits
- Nov, 2015: A US court awarded damages against EY of $10.15m (£6.64m), after a jury found the firm was negligent over audits of a Madoff-related feeder fund (Via Economia)
- Dec, 2015: Irving Picard, the trustee appointed to liquidate the assets of convicted Ponzi schemer Bernard Madoff and return money to his victims, has filed a $95 million lawsuit against some of Israel’s largest educational and medical institutions. (Via Jewish Journal)
Among those prosecuted and convicted in the ongoing wake from the Madoff Ponzi scheme were five of Madoff’s aides, who were sentenced in late 2014. Now, with 2015 drawing to a close, comes the news that the U. S. government has dropped its attempt to have the sentences of those five convicted aides increased.
U.S. prosecutors dropped their bid to boost the prison terms for five of Bernard Madoff’s ex-employees, who received “merciful” sentences after being convicted of aiding his $17.5 billion fraud. A jury in March 2014 found the five former colleagues guilty on all charges in a total victory for the prosecution. Swain, who oversaw the five-month trial, cited the fundamental responsibility of Madoff, rather than his aides, as a key reason for the shorter prison terms, saying he manipulated loyal employees who lacked proper financial training…
When U.S. District Judge Laura Taylor Swain passed sentence in December 2014, prosecutors warned the prison terms could hinder justice for victims of the biggest Ponzi scheme in U.S. history and set a bad precedent for future white-collar prosecutions.
(via Bloomberg Business)
The year 2016 is scheduled to keep Madoff’s Ponzi fraud in the news with two high-profile screen events. ABC is scheduled to broadcast a mini-series about the rise and fall of Bernie Madoff starring Richard Dreyfuss as the Wall Street icon on February 3 and 4, 2016.
Madoff Trailer 2016. Via YouTube.com
Those familiar with Madoff’s face, voice, and manner may find it hard to associate Dreyfuss with the real man. I’ll be watching the video regardless, but I’m much more interested in seeing HBO’s upcoming The Wizard of Lies, starring Robert De Nero and Michelle Pfeiffer. From the short trailer below I found De Niro believable as Madoff. (Via YouTube)
I’m curious to watch both productions and hoping for meaningful glimpses into the workings behind the scene, and especially the dynamics between Madoff, his aides and his other accomplices. The HBO movie is based on Diana B. Henriques biography The Wizard of Lies: Bernie Madoff and the death of trust, which predates the 2014 courtroom revelations of the Madoff aides trial.
For the real insider story, I recommend Lionel S. Lewis’s upcoming book, Bernard Madoff and his accomplices: anatomy of a con. (Update, March 25: The author has advised me that he’s received his copies of the book, so watch for it soon at your favorite reseller.)