Bernard Madoff, Mastermind of Giant Ponzi Scheme, dies at 82

Photographer: Jin Lee / Bloomberg

Bernard Madoff, the Manhattan investment adviser who promised excellent returns to his A-list clients and instead defrauded them of more than $ 19 billion in history’s biggest Ponzi. schedule, died. He was 82.

His death was confirmed by New York law firm Brandon Sample, Madoff’s attorney. Madoff’s home since July 2009 was the Butner Federal Correctional Complex in Butner, North Carolina, where he served a 150-year term. He requested in early 2020 compassion for early release, citing kidney disease at the stage.

Like Charles Ponzi, who earned him a place in the annals of crime in 1920, Madoff apparently delivered a splendid return to his clients, while in fact paying current investors with new money.

Unlike Ponzi, which skyrocketed over the course of a year, Madoff has gained some respect and recognition among professional financiers – he was chairman of the Nasdaq stock market in 1990, 1991 and 1993 – and she has held fraud for at least 15 years, even under the watchful eye of regulators who visited his office to investigate his records.

His thousands of clients have entrusted him with more than $ 19 billion worth of heads and were believed by false statements and trade confirmations to have nearly $ 65 billion in their accounts. Irving Picard, appointed curator to relax the accounts, had recovered more than $ 14.4 billion to partially compensate customers who lost money.

Client list

Among Madoff’s big investors were Fred Wilpon, then majority owner of the New York Mets; male and female actors Kevin Bacon and Kyra Sedgwick; Henry Kaufman, former chief economist at Salomon Brothers; late Boston philanthropist Carl Shapiro; two of the richest women in Europe, Alicia Koplowitz of Spain and Lilliane Bettencourt of France; charities of director Steven Spielberg and Holocaust survivor Elie Wiesel; in New York and Yeshiva University.

A contributing contribution to Madoff’s façade has been the existence of legitimate businesses along with the fraudulent business at his firm, Bernard L. Madoff Investment Securities LLC.

The company’s marketing units, run by his sons and brother, own the 18th and 19th floors of the red, cylindrical Lipstick built in Midtown Manhattan. Madoff’s office on the 17th floor, where the fraud took place, was unlimited for most employees.

With his promise to deliver steady returns through markets and clumsiness, Madoff built up such an excellent reputation that he had to turn away some prospective investors. He has owned homes in Manhattan and Montauk in the state of New York, Palm Beach in Florida and Cap d’Antibes on the French Riviera. He sailed on a yacht ‘Bull’ and dusted off his wife, Ruth, with jewelery.

The end

The scam collapsed in December 2008, when stock markets plunged, prompting clients to seek more withdrawals than it could accommodate. His sons Andrew and Mark notified the Federal Bureau of Investigation that their father had recognized them.

“The money is gone,” Andrew Madoff quoted his father as telling the family. “It was all a big lie.” Andrew Madoff remembers the quote for Laurie Sandell’s “Truth and Consequences: Life Inside the Madoff Family” (2011), an authorized biography.

Madoff pleaded guilty in March 2009 to fraud, money laundering, perjury and theft. In court and in subsequent prison interviews, he insisted that he had a sincere investment business for years before failing to maintain the generous returns his clients expected.

He said that “to the best of my recollection” the fraud began in the early 1990’s, during a period of recession for the US economy, and that he “believed that it would end soon and that I would be able to pull myself out and my customers. ”

“Over the years, I realized that my arrest and this day would inevitably come,” he said.

Prosecutors said the fraud started in the 1980s, if not earlier.

‘Extricate myself’

Although Madoff said he was solely responsible, others also went to jail. His brother Peter, the firm’s CEO, pleaded guilty to security fraud and falsifying records and was sentenced to 10 years in prison. Prosecutors said he filed regulatory statements claiming the firm had only 23 accounts, when the actual number was more than 4,000, a lie that helped the investigation by the U.S. Securities and Exchange Commission. A settlement with the trustee required his family to forfeit assets worth $ 90 million owned by his wife, daughter and others.

Madoff’s key lieutenant, Frank DiPascali Jr., and two of his former accountants, David Friehling and Paul Konigsberg, also pleaded guilty. In March 2014, a jury in Manhattan convicted five former Madoff assistants of aiding and abetting the fraud. Friehling was sentenced to two years probation, including one year under house arrest. Konigsberg also avoided jail and agreed to forfeit $ 4.4 million in commissions his firm received for Madoff clients. DiPascali died of lung cancer in May 2015 before his scheduled sentencing.

Family outing

As for Madoff himself, he loses not only his wealth and freedom, but also the once strong ties of family.

The eldest of his two sons, Mark Madoff, who was head of sales at the firm, killed himself on December 11, 2010, the second anniversary of his father’s arrest. He was found hanging from a dog leash on a pipe in the living room of his Manhattan apartment.

His suicide was the last straw for his mother, Ruth Madoff, who said it prompted her to break off all communication with her imprisoned husband.

“I was responsible for the death of my son Mark, and it’s very, very difficult,” Bernard Madoff was quoted as saying by CNN Money in a May 2013 telephone interview. “I live with it. I live with the remorse, the pain I caused for everyone, surely my family, and the victims. ”

In September 2014, his son, Andrew, died of cancer.

Heart attack

Madoff underwent surgery to open a clogged artery after a heart attack, Politico reported in March 2014 after questioning him in prison. At the time, Madoff said he had medication for his heart, kidneys, blood pressure and anxiety, and that he also underwent weekly counseling.

“I can not tell you how many hours I spent with the psychiatrist trying to make some kind of peace with myself, to understand how I did it,” he said, according to Politico. ‘I would like to believe that something was mentally wrong with me. It would make me bird better. ”

Bernard Lawrence Madoff was born on April 29, 1938 as Ralph Madoff and the former Sylvia Muntner, known as Susie. He grew up in the middle-class Jewish neighborhood of Laurelton, in the New York borough of Queens, with an older sister, Sondra, and a younger brother, Peter.

SEC case

His father worked for Everlast Sporting Goods Manufacturing Co. in Manhattan, the manufacturer of boxing devices, before joining his own sports manufacturer Dodger Sporting Goods Corp. opened, which sold the Joe Palooka punching bag. The company went bankrupt in 1951 after struggling with rising commodity prices due to the Korean War, writes Diana B. Henriques in ‘The Wizard of Lies: Bernie Madoff and the Death of Trust’ (2011).

His father then set up a brokerage firm, Gibraltar Securities, in his wife’s name and at the family home. The SEC accused the company in 1963 of failing to file the required financial reports, and the Madoffs withdrew their registration.

Grass sprinklers

Madoff made the swimming team at Far Rockaway High School, worked as a lifeguard and earned extra money for installing grass sprinklers. He met his future wife, Ruth Alpern, when they were both teenagers.

He left home for the University of Alabama, which takes six months before being transferred to Hofstra University on Long Island in New York. He studied in 1960 with a degree in political science. Then he married Ruth and filed documents to open Bernard L. Madoff Investment Securities.

He tried for a year Brooklyn Law School before devoting himself full-time to investments. He and his wife settled in Roslyn on Long Island to raise their two sons.

From his first office in Manhattan, Broadway 39, then at 110 Wall Street, Madoff traded penny stocks and participated in the push to computerize the off-the-counter market.

Innovator image

This led to the emergence of the Nasdaq Stock Exchange. It also allowed Madoff to “add a few brushstrokes each year to his portrait as a dedicated market innovator, an ally in the crusade to drag the country’s traditional markets into the modern era,” according to Henriques.

“I was very driven,” Madoff said in an interview with the Financial Times in 2011. ‘But I was always outside the club, the club was the New York Stock Exchange and white shoes. They fought me every step of the way. ”

When Madoff exactly started cooking the books, it was a dispute.

Madoff said during his admission of guilt in court: “To the best of my recollection, my fraud began in the early 1990s,” when a bear market made it impossible for him to ‘meet my clients’ expectations’. His response, he said, was to claim that he was pursuing a strategy, which he calls “split strike conversion”, using timely investments in and out of Standard & Poor’s 100 index companies, hedged by option contracts in the same shares.

‘Gray area’