Andrew Kirtzman - Betrayal: The Life and Lies of Bernie Madoff

The Struggler

The Plan

The In Crowd

Friends and Enemies

The Friendly Company

The Seventeenth Floor

The Black Box

The World at His Feet

See No Evil

The Fall of Bernie Madoff

Shattered Lives

The old man was thrilled. Rolls-Royces and Jaguars were pulling up to the valet stop outside of Palm Beachs Club Colette. Under the warm night sky, guests in black tie exited their cars and made their way into Carl Shapiros ninety-fifth birthday party.

They entered a large white tent filled with gorgeous exotic flowers that scented the air as the help passed around flutes of champagne. Inside the restaurant, waiters carrying trays of Iranian caviar and blinis stood ready as guests made their way to tables overflowing with red and peach roses. Steve Lawrence and Eydie Gorme warmed up in the wings.

The problems of the outside world seemed a distant matter on this February evening in 2008. Millions of Americans outside of Palm Beach were coming home from work anxious about the future. The papers were filled with warnings of dark times. Federal Reserve Chairman Ben Bernanke testified in Washington that the economy was deteriorating. The foreclosure rate on subprime mortgages was ballooning. The stock market continued its four-month, 2,000-point slide.

Yet the world of Club Colette seemed perfect tonight. Carls three daughters, Ronny, Ellen, and Linda, had sweated every detail to honor their father, a patriarch of American philanthropy whose name graced a legion of hospitals, university buildings, and research facilities. Guests speculated that the party had cost Carls family seven figures. The next days Palm Beach Daily News would gush that the club had been espaliered with enough greenery and orchids to make Marie Antoinette weep with envy.

The party was a decidedly Jewish affair. Credit card mogul Howard Kessler walked into the room not long after presenting a private performance of the Israeli Philharmonic string quartet in his living room. Financier Abe Gosman had recently lost half a billion dollars from the collapse of his business, but it was just a battle scar in the eyes of this crowd, which welcomed him in his formal wear for another night on the circuit. Shapiros son-in-law, Bob Jaffe, fabulously wealthy by marriage, impeccably attired and deeply tanned, mingled with the crowd. Carl took his place at the head table, reserved for his family and a few close friends. Bernie and Ruth Madoff were as close as they came, and they joined the group. Bernie sidled up right next to his old mentor.

It had been almost fifty years since Shapiro, founder of the womens clothing manufacturer Kay Windsor, had discovered Madoff, fresh out of school and chomping at the bit to conquer Wall Street. Hed given Bernie his big break, throwing him some money to invest as a kind of test, and he had performed brilliantly. A half-century later, Madoff was a titan of Wall Street, and he had more than returned the favor. Hed invested Shapiros fortune and made him a multimillionaire.

Carl was a slight, gray-haired eminence, startlingly spry for a man whose one-hundredth birthday wasnt far off the horizon. Bernie was almost 70 but in the prime of his career. His hair had grayed, but he wore it long, bushy, and combed back, an elegant look for a mogul who fussed over every detail of his appearance.

They chatted about small things, mostly family stories mixed with updates on their golf games, the sort of things old lions talk about when they get together in public for dinners and charity events. They had an ease with one another that had developed over the decades, back to the days when they were just Carl the garmento and Bernie the stockbroker. All the years and the stratospheric wealth theyd accumulated since then seemed to fade away.

It was a glorious night. A cake the size of a dining-room table was presented to Shapiro. New England Patriots owner Robert Kraft presented him with a jersey emblazoned with the number 95. Carl took the microphone and sang Ive Grown Accustomed to Her Face to his wife, Ruth. Steve and Eydie serenaded them with their favorite song, It Had to Be You. The 95-year-old glowed with the spirit of a young man still in love with his girl.

Bernie, as usual, kept a low profile. Between courses, the room buzzed with the patter of socialites flitting from one table to the next, but he sat in his chair, making quiet small talk with the people around him. Except for a dance with his wife, he barely left his seat.

In truth, Madoff hated events like these. People never stopped looking at him when he went out in Palm Beach, even if he shrank into chairs and eluded the spotlight. The founder of Bernard L. Madoff Investment Securities LLC was such a successful investor that people literally begged him to invest their savings for them, sometimes in their black ties at events like these. Always, hed politely demur. It was Jaffe, Shapiros son-in-law, sitting a few chairs from Madoff, who took their money on Bernies behalf, if they were lucky.

For all his reluctance, Madoff was in many ways the real center of attention this evening. For Jewish Palm Beach society, this was a rare sighting of the reclusive money manager. Easily half the men and women in this room had their money in Madoff accounts; many of them had invested every cent of their savings with him. It was a status symbol in this crowd to be accepted as his client.

Shapiro was a figure of respect in this circle, but Madoff was the source of their joy. Some made it a point to toast his name at their private dinner parties. Some would approach him in public and show their appreciation with tears in their eyes. People looked at Bernie Madoff with awe. He had, after all, made them rich.

Some could attend events like these only because of Madoffs success with their money. It was Madoff who freed them to dance into the night with barely a worry about the economic collapse looming outside of their beautiful world. Madoff, not Shapiro, was the real father figure in this room.

What could he have been thinking, sitting at his table observing this river of the wealthy? This gathering of the ruling class comprised a club he had longed to join since the age of 13. They were accomplished men and women, giants of industry who had scaled the heights of American business. Madoff wasnt as bright as they, a fact hed known from an early age. He had achieved his success as an outsider, the architect of an unglamorous, fringe business he had built outside the gleaming walls of the New York Stock Exchange, and for years the barons of Wall Street sneered. Now he was one of them.

What did it feel like to realize that no one there, not even Carl Shapiro, knew the truth? All those social climbers in black tie whose futures he held in his hands didnt seem to have a care in the world tonight as they bathed in their self-satisfaction. How could they know that their fortunes didnt exist, and never had? How could they know that, instead of Bernie fueling their extravagant lifestyle, they had been fueling his? How could the women know that before the year was out, theyd be lining up at pawn shops, desperate to sell the jewelry that glittered around their necks tonight? Or that they and their husbands would be forced to sell their mansions or luxury condos?