Roughly 15 years ago, I wrote an article about a notable Wall Street figure and his secretive investment fund that never, ever lost money.
His name was Bernard Madoff.
The dot.com bubble had just burst, yet Madoff’s hedge fund earned 10 percent that year, without missing a beat.
In May 2001, I wrote about some red flags surrounding Madoff’s hedge fund: eerily consistent returns and no losing years even when the stock market crashed, no due diligence allowed by investors, no independent brokerage statements, and odd threats that investors could not return to the fund once they had cashed out.
Madoff himself gave me a brief interview by phone, then metaphorically patted me on the head and told me to go away.
Never did I expect that the article, which came out in May 2001, would appear in an ABC television series airing next week.
(At the time, I was a writer for Barron’s magazine, a must-read for Wall Street types.)
For a look into Madoff’s sociopathic mind, tune in to the ABC prime-time mini-series Madoff, airing Feb. 3 and 4 (8-10 p.m.).
Academy Award-winning actor Richard Dreyfuss stars as Madoff, with Blythe Danner as his wife, Ruth. Madoff follows the decades-long rise of the former investment guru and NASDAQ chairman, and his abrupt demise in 2008.
Best part of the show? Real investors, including Philadelphia-area locals Michael DeVita and his mother, Emma, talking about the devastating effect that Madoff’s epic lie had on their lives.
No one, including me, knew Madoff was running a classic Ponzi scheme – paying off old investors with money from new investors – to the tune of $65 billion. His theft is considered the largest financial scam in U.S. history, and the impact was global. Vaporizing billions of dollars worldwide, including the funds of philanthropies, charities, celebrities, and ordinary mom-and-pop retirement portfolios, Madoff used some simple con-man magic tricks to pull off a monumental fraud.
For those unfamiliar with the scheme, Madoff’s fund never invested a single dollar in the markets (emphasis mine).
Instead, the money sat in a checking account at JPMorgan Chase. Madoff and his crew of flunkies never made a single real trade. Instead, they created profits out of thin air, then printed and mailed out phony paper statements to clients every month, starting in the 1970s.
Among those who helped perpetuate the decades-long crime were right-hand man Frank DiPascali Jr. (played by Michael Rispoli), assistant Annette BonGiorno, two computer programmers, and clerical workers with high school degrees.
Frank Whaley plays skeptical competitor and whistle-blower Harry Markopolos, whose boss could not understand how Madoff kept churning out double-digit returns.
Markopolos warned regulators for years that Madoff was a fraud, and he ultimately testified before Congress about the SEC’s failings. (Harry’s best line in testimony: “The SEC couldn’t find their ass with their own two hands.”)
The mini-series also features Charles Grodin as Carl Shapiro, one of Madoff’s longtime investors, who was forced to return millions. Jeffrey Picower, the largest investor, returned $7 billion.
Picower and other billionaires were complicit in Madoff’s scheme, as I detailed in a subsequent book, Too Good To Be True (Penguin 2009).
Linda Berman and Joe Pichirallo produced the ABC film, and I spoke with Pichirallo last year about a few details to include. I’m no film critic, but Dreyfuss inhabits the role to a scary degree.
What’s missing? Any remorse or guilt on the part of the family, and the roughly $300 million in salary, bonuses, and properties that the Madoff family ripped off for themselves. The properties, including son Mark’s mansion in Connecticut, son Andrew’s apartment in Manhattan, multiple boats, and the beach house in Montauk, N.Y. , were later auctioned off to repay investors.
Others I won’t forget: the woman at Madoff’s sentencing who resorted to Dumpster-diving for food, and Nobel Prize-winning author and Holocaust survivor Elie Wiesel, whose foundation lost $15 million to Madoff. Incredibly, Wiesel said afterward: “We have seen worse.”
And the DeVitas, of Chalfont. Emma, now 88, and her son opened accounts with Madoff in the early 1990s, believing the fund was a retirement savings opportunity.
On Dec. 11, 2008, Madoff was arrested. The DeVitas’ life savings vanished.
“We did nothing wrong other than listening to the agency that is tasked by Congress with protecting me against this type of fraud,” Emma DeVita told me. “The Securities and Exchange Commission failed me.”
That’s the final missing piece from the ABC series. It’s up to us not to fall for more Madoffs and to do our own due diligence. We can’t count on the regulators to catch them first.