Banking on Bernie Madoff
Meticulous and ever more mysterious as his fame grew, Madoff hawked his investment fund to a largely Jewish clientele, eventually sucking in large European banks too. Promising unwavering 10 to 12 percent returns whatever the market, Madoff became known as “the Jewish T-bill,” as in risk-free. Of course, there was no investing. For more than […]
Meticulous and ever more mysterious as his fame grew, Madoff hawked his investment fund to a largely Jewish clientele, eventually sucking in large European banks too. Promising unwavering 10 to 12 percent returns whatever the market, Madoff became known as “the Jewish T-bill,” as in risk-free. Of course, there was no investing. For more than two decades, he used an ever larger stream of money from new investors to pay off earlier ones. His résumé supplied a perfect cover: former head of Nasdaq, a tech wizard who brought computerisation to Wall Street.
The books trace the evolution of his sociopathy: friends remembering shady incidents from earlier in life—and that his parents were also crooked traders. But nothing about his IQ, or any evident evil, portended the breadth of his later crime. On the surface, Madoff’s legitimate trading business gleamed. But in the off-limits-to-his-staff, low-tech office on the secluded 17th floor of Manhattan’s Lipstick Building, Madoff worked darker magic.
Too Good to Be True: The Rise and Fall of Bernie Madoff by Erin Arvedlund (Portfolio) carefully details how Madoff’s marks, some of them supposedly sharp hedge-fund managers, became feeder funds for Madoff’s enterprise by willfully or negligently failing in their due diligence to check out the bogus Madoff claims. “The same people did more research on buying a car than they did on the man who handled their money,” she writes.
Arvedlund has bragging rights: her story in financial weekly Barron’s in May 2001 was an early warning, but ultimately it failed to foil the plot. Her account will delight those more interested in the scam than in the man. Arvedlund goes down the list of entities that were on notice about Madoff’s “trading,” and she holds particular contempt for the all-but-absent SEC (“one of the most dysfunctional and inept periods in the commission’s history”). Also in her sights: Fairfield Greenwich, a tony hedge fund that funnelled more than $7 billion (about N1.08 trillion) into Madoff’s pockets, and J. Ezra Merkin, a major-league Manhattan investor who received a staggering $470 million (about N72 billion) in fees from Madoff. Merkin vacuumed up $2.4 billion (N368 billion) from a veritable Who’s Who of Jewish New York, including Holocaust survivor and Nobel Prize winner Elie Wiesel and Yeshiva University. “You were nothing more than a glorified mailbox,” one of Merkin’s investors fumed.
On the other hand, Jerry Oppenheimer’s Madoff with the Money (Wiley) reflects its tabloid title. Told with faux breathlessness, it reads at times like a quickly compiled clip job. On occasion, he uses the annoying supermarket-rag technique of quoting “Madoff insiders” for banal details, such as that Madoff liked expensive suits, in order to raise the level of suspense. But Oppenheimer can be good at the juicy quote too. One victim told him: “What were we going to do—call up Bernie and tell him, ‘God, I’m making too much money. What’s going on?’” Or the small detail. If you’re in the market for a description of Madoff’s opulent walk-in closet or the titbit that his mother wouldn’t buy him Keds, then Oppenheimer is your man.
Andrew Kirtzman’s Betrayal: The Life and Lies of Bernie Madoff (Harper) offers the biggest payoff of the three books. It’s a perfect meld of business details and personalities, including the still unresolved role played by Madoff’s wife and sons in the scam. The author is more interested than Arvedlund in Madoff the man and in the emotional aspect of this financial soap opera. He has perfect pitch when it comes to the agony and shame of the Jewish community for finding such a gonif (Yiddish for thief) in its midst.
Mournfully, Kirtzman tells the story of Harry Markopolos, a flawed whistle-blower who tracked Madoff’s misdeeds for almost a decade. An eccentric math genius, Markopolos waved his findings in the face of the SEC—he gave them a pointed memo in 2005 that was titled “The World’s Largest Hedge Fund Is a Fraud,” but also made it clear that he wanted a reward for his efforts. Maybe the SEC should have paid him—it could have saved billions.
Kirtzman, for one, believes Madoff was bad from the beginning and scammed for so long that immorality became a way of life for him. But the curse to Madoff’s victims is that he was a superlative actor, right up until his sentencing. “Standing there in his old, expensive suit, you could still see in him the discerning old wise man, reluctantly agreeing to take one more person’s money,” Kirtzman writes. Readers of these three accounts will fare better than those Madoff swindled. The books are not cheap ($25 [N3,841] each), but you at least get a decent return for the investment.