Bernard Madoff, Bernie to his friends (and at one time he had many friends or what passes for friends in the business canyons of Manhattan), was the Wizard of Wall Street, capable of tactics and strategies that were nothing more than the Madoff Ponzi scheme. Note please, as his victims knew then, and as everyone knows now, five years on, Bernie’s wizardry in building the Madoff Ponzi scheme was in the nature of the Wizard of Oz’s unique powers. He was and remains a a charlatan, a con-man, a phony, a fake, a thief, a crook, who betrayed every person who ever trusted him, who scammed investors (his friends?) of billions, who destroyed lives, drove his son to suicide, and left his family to disintegrate in the wake of his crimes.
Bernie Madoff now resides in a medium security federal prison in North Carolina where the climate is fairly temperate except for some heat in the summer. At 75 Madoff is deemed a celebrity and yard-star by his prison buddies, and, left to his own devices, he spends a few hours a day wiping down computer screens and other hardware. He spends the rest of his time taking it easy, reading magazines and novels.
Madoff is fed three times a day. It might not be the same as New York’s haute cuisine, but the diet’s regulated and he hasn’t lost any weight. He sleeps in a bed with clean sheets, he can watch TV, listen to the radio and use computers with limited access to the internet. He has full medical and dental coverage, and he didn’t have to go through Health.gov to get it. In sum, except for the fact that he’s in a government run facility that discourages overnight trips away, his life sounds something like the lives of many elderly gentlemen living out their end game in America.
If Madoff’s punishment for the Madoff Ponzi disaster was designed to deter other Wall Street Wizards from engaging in same or similar conduct, five years on it isn’t a particularly good design. The notion of deterrence for Madoff Ponzi schemes and other shenanigans will have to come from someplace other than the country club Madoff will inhabit until 2139, when he’s 301. Of course no man lives that long, but, then again, with a wily fox like Madoff …. Well?
There’s something incomplete about all of it, the Madoff Ponzi scheme that destroyed so many people. A country that’s so eager to toss kids and minorities into maximum prisons for maximum sentences for drugs, or three strikes, or shoplifting, or public disturbance, or more serious crimes like assault and battery, grand theft auto, bank robbery, or even the suspicion of terrorist activity, is blind and deaf when it comes to punishing white collar criminals, when it came to punishing the Madoff Ponzi crimes.
Perhaps the punishment is deemed to be sufficient as measured by the distance covered in the criminal’s fall from grace. Madoff’s current situation might be only a few steps down the “quality of life” ladder for some, but it’s a veritable free fall from the mile high place Madoff once occupied, standing astride the highest beams of the tallest buildings, housing the richest masters of the universe.
In the best restaurants and bars in Manhattan would be investors would whisper his name, as in: Can you get me a meeting with Madoff? What do you mean Bernie doesn’t want my money, I got billions to invest, and I know because I laundered it myself. Please, oh please, if you could only help me throw a few bills to him; Quentin’s off to Harvard in the fall, and I’m going to need Madoff’s kind of return next year.
Nobody took the name of Bernie Madoff in vain. Nobody tempted fate or, heaven forbid, questioned how Madoff was able to achieve his kind of numbers. They were outliers, unique, the stuff of wizardry after all.
In the normal run of things, Madoff’s numbers would have raised eyebrows at the SEC, but that commission was under the thumb of the Bush Administration, and the word to “lay off” Wall Street was firm and general. Had the pre-2008 SEC overseen the world of securities as it was commissioned to do, the economic crisis that threatened the world in 2008 might have been averted, and, in particular, Madoff and his Ponzi scheme would have been discovered. The entire fraudulent business wasn’t that well hidden in the first place.
People believe what they want to believe, and people wanted to believe that Bernie was half god, with an insight to the future not allowed mere mortals. Year in and year out Madoff did what couldn’t be done, and five years since the days it blew up in his face, the public now knows that he obsessed the details 24/7 and worked the Ponzi scheme as hard as any fund manager might work an honest fund.
Forget things like honesty, though, and remember things like buying low and selling high, so when the eager broker sits across the table from the elderly woman who’s debating whether or not she should invest her life’s savings, he can convince her that her money will grow quickly and assuredly with Bernard Madoff. The salesman makes his pitch even as he knows the old woman’s money has been earmarked for early payout to some other investor from last year’s pool, who’s now waiting on his return in accord with the exorbitant Madoff rates.
Here’s the state of the art as regards Bernie Madoff and the whole sordid affair:
In 2010 his son committed suicide on the second annual date of the fund’s collapse and his father’s disgrace.
Bernie’s wife, who escaped prosecution, divorced Bernie, and they are no longer in contact with one another.
The court appointed trustee responsible for recovering what can be recovered of the stolen $20 billion has recovered approximately $9.5 billion.
Contrary to anecdotal evidence, Bernie did not scam investors out of $65 billion. His Ponzi scheme stole $20 billion. The number $65 billion arose as Madoff sold investors on the puffery that his fund had generated $65 billion in profits.
After five years of investigation, the authorities still can’t pinpoint a date when Madoff began his crooked ways. Madoff has bandied about different dates: 1987, 1992, though the wise money says Madoff began his scheme in the mid 60’s when he first arrived on Wall Street.
Madoff has said that there are parts of prison life he enjoys, such as the relative inactivity and pace (read: peace and quiet), especially after so many years of stress and anxiety incurred as he worked to keep his whole dishonest life steps ahead of the blind and obtuse overseers employed by the SEC.
Private law firms have pocketed approximately $800 million for cleaning up the Madoff mess. Since less than half the mess has been cleaned up, one can expect that the big firm attorneys will continue to bill hundreds of thousands of hours and continue to make huge fees for the foreseeable future.
Finally, the poor man who can’t sleep wakes at 4:30 AM, not to jog or run in place, but only to be awake, because he can’t sleep. He says he’s haunted by his son’s suicide. He says: “I live with that.”
One might feel sorry for the deceased son, but five years on it’s difficult to feel any sympathy for Bernard Madoff, the man who reinvented the notion of big time theft with his Madoff Ponzi scheme. His very person repels sympathy in the way an oily surface repels water.
By Michael Hogan