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

Photographer: Jin Lee / Bloomberg

Bernard Madoff, the investment advisor in Manhattan, who promised stellar returns to his A-list clients and instead cheated them with more than $ 19 billion in the largest Ponzi in history system, he died. He was 82 years old.

His death was confirmed by New York law firm Brandon Sample, Madoff’s lawyer. Madoff’s home in July 2009 was Butner Federal Correctional Complex in Butner, North Carolina, where he served a 150-year term. He called for early compassionate release, citing end-stage renal disease in February 2020.

Like Charles Ponzi, whose cunning from the 1920s brought him a place in the annals of crime, Madoff seemed to offer his clients astonishing profits, when in fact he paid existing investors money from us.

Unlike Ponzi, which has risen and fallen over the past year, Madoff has gained a level of respect and appreciation among financial professionals – he was chairman of the Nasdaq stock market in 1990, 1991 and 1993 – and has maintained the trick at least at the age of 15, even under the watchful eye of regulators who visited his office to inspect his files.

His thousands of clients entrusted him with more than $ 19 billion, mainly, and they were led to believe, through false statements and commercial confirmations, that they had almost $ 65 billion in their accounts. Irving Picard, the trustee appointed in open the accounts, he had recovered more than $ 14.4 billion to partially reimburse customers who lost money.

Customer list

Madoff’s major investors included Fred Wilpon, the majority owner of the New York Mets; husband and wife actors Kevin Bacon and Kyra Sedgwick; Henry Kaufman, former chief economist at Salomon Brothers; the late Boston philanthropist Carl Shapiro; two of the richest women in Europe, Alicia Koplowitz of Spain and Lilliane Bettencourt of France; the charitable foundations of director Steven Spielberg and Holocaust survivor Elie Wiesel; and New York and Yeshiva Universities.

The contribution to Madoff’s facade was the existence of legitimate business alongside the fraudulent one from his company, Bernard L. Madoff Investment Securities LLC.

The company’s proprietary market and trading units, run by his sons and brother, occupied the 18th and 19th floors of the red cylinder. Lipstick building in Midtown Manhattan. Madoff’s 17th-floor office, where the fraud took place, was off-limits to most employees.

With his promise to deliver steady returns in the alcohol and bearish markets, Madoff has built such a sterling reputation that he has had to oust some potential investors. He owned homes in Manhattan and Montauk in New York State, Palm Beach in Florida and Cap d’Antibes on the French Riviera. He sailed on a yacht called the Bull and brought the jewelry to his wife, Ruth.

the end

The fraud collapsed in December 2008, when stock market plunges forced customers to seek more withdrawals than they could accommodate. His sons Andrew and Mark notified the Federal Bureau of Investigation that their father had confessed to them.

“The money is gone,” Andrew Madoff told his father’s family. “It was all a big lie.” Andrew Madoff recalled the quote for Laurie Sandell’s “Truth and Consequences: Life in the Madoff Family” (2011), an authoritative biography.

Madoff pleaded guilty in March 2009 to fraud, money laundering, perjury and theft. In court and in subsequent prison interviews, he insisted he had run a genuine investment business for many years before finding himself unable to maintain the generous returns his clients would have expected.

He said that – “as far as I can remember” – the fraud started in the early 1990s, in a period of recession for the US economy and that he “thought it would end soon and I would be able to extract my clients as well.” my. ”

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

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

“Extramic Myself”

Although Madoff said he was solely responsible, others went to jail. His brother, Peter, the company’s chief compliance officer, pleaded guilty to securities fraud and forgery and was sentenced to 10 years in prison. Prosecutors said he filed regulatory statements claiming the company had only 23 accounts, when the actual number exceeded 4,000, a lie that helped avoid control by the US Securities and Exchange Commission. An agreement with the administrator forced his family to give up $ 90 million worth of assets 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 fraud. Friehling was sentenced to two years on probation, including one year under house arrest. Konigsberg also avoided jail, agreeing to lose $ 4.4 million in commissions his company received for Madoff’s clients. Weather in DiPascali died of lung cancer in May 2015 before the scheduled sentence.

Family Fallout

As for Madoff himself, he lost not only his wealth and freedom, but also his strong family ties.

The eldest of his two sons, Mark Madoff, who had been head of sales at the company, committed suicide on December 11, 2010, the second anniversary of his father’s arrest. He was found hanging from a dog leash attached to a pipe in the living room of his Manhattan apartment.

Her suicide was the last break for her mother, Ruth Madoff, who said it caused her to cut off all communication with her imprisoned husband.

“I was responsible for the death of my son Mark and that is very, very difficult,” Bernard Madoff said in a May 2013 telephone interview from prison, according to CNN Money. “I live with that. I live with the remorse, the pain I caused everyone, definitely my family and the victims. ”

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

myocardial

Madoff underwent surgery to open a blocked artery following a heart attack, Politico reported in March 2014, after interviewing him in prison. At the time, Madoff said he was taking medication for heart, kidney, blood pressure and anxiety and was also following weekly advice.

“I can’t tell you how many hours I spent with the psychiatrist, trying to make some kind of peace with me, understanding how I did it,” he said, according to Politico. “I would like to believe that there was something mentally wrong with me. It would make me sense better.”

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

The SEC case

His father worked for Manhattan-based boxing equipment manufacturer Everlast Sporting Goods Manufacturing Co. before opening his own sporting goods manufacturer, Dodger Sporting Goods Corp., which sold the Joe Palooka punching bag. The company went bankrupt in 1951 after struggling with rising commodity prices due to the Korean War, Diana B. Henriques wrote 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 in 1963 accused the company of failing to file the required financial statements, and Madoff withdrew his registration.

Lawn sprinklers

Madoff swam in Far Rockaway High School, worked as a lifeguard and earned extra money by installing lawn sprinklers. He met his future wife, Ruth Alpern, when they were both teenagers.

He left home for University of Alabama, lasting six months before transferring to Hofstra University on Long Island in New York. He graduated in 1960 with a degree in political science. By then, he had married Ruth and filed documents to open Bernard L. Madoff Investment Securities.

Tried a year at Brooklyn Law School before dedicating himself full-time to investment. He and his wife settled in Roslyn, Long Island, to raise their two sons.

From his firm’s first Manhattan offices, at 39 Broadway, then at 110 Wall St., Madoff traded penny shares and participated in the market computerization drive without a prescription.

Innovative image

This push led to the creation of the Nasdaq Stock Exchange. It also allowed Madoff “to add a few strokes each year to his portrait as a committed market innovator, an ally in the crusade to pull the tradition-bound national markets into the modern era,” according to Henriques.

“I was very driven,” Madoff said in a 2011 interview with the Financial Times. “But I’ve always been out of the club, the club being the New York Stock Exchange and the white shoe companies. They fought me every step of the way. ”

When, exactly, Madoff began cooking the books, he was the subject of a dispute.

During his guilty plea in court, Madoff said, “As far as I can remember, my fraud began in the early 1990s,” when a urine market made it impossible for him to “meet my clients’ expectations.” His response, he said, was to claim that he was using a strategy, which he called “split strike conversion,” using well-made investments in and from Standard & Poor’s 100 Index companies, covered by option contracts in the same shares. .

‘Gray area’