Madoff Bernard L. - Madoff: the man who stole $65 billion

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First published in the United States under the title Too Good to Be True by Portfolio 2009

First published in Great Britain by Penguin Books 2009

Copyright Erin Arvedlund, 2009

All rights reserved

The moral right of the author has been asserted

Except in the United States of America, this book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated without the publishers prior consent in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser

ISBN: 978-0-14-193274-3

PENGUIN BOOKS

MADOFF

Erin Arvedlund is an investigative journalist who has written for Barrons, the Wall Street Journal, The New York Times, thestreet.com and portfolio.com. In 2001 she wrote the first major critical investigation into Madoff, based on over a hundred interviews, headlined Dont Ask, Dont Tell. The US financial regulators did not follow up her revelations.

Erin Arvedlund lives in Philadelphia.

To Patrick,

My Life is Yours

O n the morning of March 12, 2009, Bernard Lawrence Madoff stood inside courtroom 24-B on the twenty-fourth floor of the Daniel P. Moynihan U.S. Courthouse in downtown Manhattan. Outside, a strong, wintry spring wind blew, but inside the air was stuffy and hot with tension. The seventy-year-old Madoff sat just past the wooden barrier that separated the public seating gallery. He did not look at anyone, just stared straight ahead, as everyone in the room and on the closed-circuit television watched his every move. Always impeccably dressed, Madoff wore a bespoke business suit in his trademark charcoal gray, paired with a lighter gray silk tie. He was flanked by four attorneys, two on either side of him. His longtime lawyer, Ira Sorkin, was seated on his immediate right, and another attorney, Daniel Horwitz, sat to his left. In front of Madoff and his lawyers were another table and chairs, full of federal prosecutors, but Madoff could see only the backs of their heads.

Just a few months before, Madoff had commanded the respect and admiration of Wall Street, of his wealthy friends and his charities, of his thousands of investors and believers. But on this day, he commanded nothing and no one, except his own voice. On this morning, at ten a.m. exactly, Madoff faced up to 150 years in prison on eleven criminal counts.

Madoff rested his fingers on the top of the table in front of him and occasionally took a sip of water from a glass. As U.S. District Judge Dennis Chin entered, everyone in the room stood, including Madoff, the phalanx of attorneys, dozens of reporters, and a court sketch artist. There was also a mob of angry Madoff investors, calling themselves victims and casualties, who had come to seek vengeance on the man who had done them wrong.

You wish to plead guilty to all eleven counts? Judge Chin looked up matter-of-factly and spoke somewhat kindly to Madoff.

Nodding his head of wavy, pewter-colored hair, Madoff listened and answered calmly throughout Judge Chins many questions and clarifications that followed: You understand you are giving up the right to a trial? If there were a trial, you could see and hear witnesses, offer evidence on your behalf, and so forth. Judge Chin wanted to make sure this was what Madoff had chosen: to plead guilty, and thus not to cooperate with the governments investigation or to indict anyone else in his crime, the $65 billion Ponzi scheme that was proving to be Americas largest financial fraud ever. No, Madoff didnt want a public trial; he didnt want to have to point the finger at anyone else. Given the scope of the charges against him, it was a stubborn move.

To each question, Madoff answered, Yes, I do. Madoff was waiving his right to due process in a court of law. He was going to plead guilty and would alone admit to everything he was charged with, including securities fraud, mail fraud, wire fraud, money laundering, making false statements, and perjury.

And that was exactly how he wanted it.

Madoffs blue eyes looked weary and his expression resigned. No longer was he sporting that insane-looking smirk, the smileof what? the unburdened?that had incensed everyone who had seen him walking around freely while he was out on bail in the days after his December 11, 2008, confession and arrest. Now, three months later, the smirk had vanished. He began wringing his hands. One of the prosecutors in front of him, Acting U.S. Attorney Lev Dassin, stood up to address the court. The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over twenty years, Dassin said. While the alleged crimes are not novel, the size and scope of Mr. Madoffs fraud are unprecedented. Assistant U.S. Attorney Marc Litt, the chief prosecutor in the case, then stood up and told the judge that Madoff could face up to 150 years in prison under federal sentencing guidelines.

Finally, it was Madoffs turn to speak. The room stilled.

Mr. Madoff, tell me what you did, Judge Chin said.

Madoff had prepared a statement, which he read out loud from stapled paper pages. He took full blame. He wasnt going to cooperate with the prosecutors, wasnt going to help them out and bargain for leniency or a lesser sentence. He wasnt about to indict his family or anyone else for helping in this frauda fraud so large, encompassing more than four thousand client accounts, that even the Nobel Peace Prize winner and Holocaust survivor Elie Wiesel, whose charity had lost millions, had been driven to calling Madoff a thief and a scoundrel in public.

Madoff wanted everyone to believe that the crime was his and his aloneeven though investigators suspected that his wife, his sons, his brother, and other relatives and top lieutenants helped carry it out, albeit perhaps unwittingly. The only other person indicted had been David Friehling, Madoffs longtime accountant. Friehling later pleaded not guilty to securities fraud, aiding and abetting investment adviser fraud, and four counts of filing false audit reports with the SEC.

Madoffs voice was a strange blend of Queens-accented Noo Yawk and a soft but firm monotone: Your honor, for many years up until my arrest on December 11, 2008, I operated a Ponzi scheme. I am actually grateful for this first opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed. I am painfully aware I have deeply hurt many, many people.