Diana B. Henriques - The Wizard of Lies

The author and publisher have provided this e-book to you for your personal use only. You may not make this e-book publicly available in any way. Copyright infringement is against the law. If you believe the copy of this e-book you are reading infringes on the authors copyright, please notify the publisher at: us.macmillanusa.com/piracy.

CONTENTS

For my colleagues at The New York Times ,

yesterday, today, and tomorrow;

and for Larry,

forever

CAST OF CHARACTERS

THE MADOFF FAMILY

Bernie Madoff , founder of Bernard L. Madoff Investment Securities

Ruth Madoff (ne Alpern), his wife

Mark Madoff , their elder son, born 1964

Andrew Madoff , their younger son, born 1966

Peter Madoff , Bernie Madoffs younger brother

Shana Madoff , his daughter

Roger Madoff , his son

Ralph Madoff , Bernie Madoffs father

Sylvia Madoff (ne Muntner), Bernie Madoffs mother

AT BERNARD L. MADOFF INVESTMENT SECURITIES

Eleanor Squillari , Bernie Madoffs secretary

Irwin Lipkin , Madoffs first employee

Daniel Bonventre , the director of operations

Frank DiPascali , the manager on the seventeenth floor

Jerome OHara , a computer programmer

George Perez , his coworker and officemate

David Kugel , an arbitrage trader

THE ACCOUNTANTS

Saul Alpern , Ruth Madoffs father

Frank Avellino , Alperns colleague and successor

Michael Bienes , Avellinos longtime partner

Jerome Horowitz , an early Alpern partner and Madoffs accountant

David Friehling , Horowitzs son-in-law and successor

Paul Konigsberg , a Manhattan accountant

Richard Glantz , a lawyer and the son of an early Alpern associate

INDIVIDUAL INVESTORS AND INTRODUCERS

Martin J. Joel Jr. , a stockbroker in New York

Norman F. Levy , a real estate tycoon in New York

Carl Shapiro , a philanthropist in Palm Beach

Robert Jaffe , his son-in-law

Jeffry Picower , a secretive New York investor

William D. Zabel , his longtime attorney

Mendel Mike Engler , a stockbroker in Minneapolis

Howard Squadron , a prominent Manhattan attorney

Fred Wilpon , an owner of the New York Mets baseball team

MAJOR U.S. FEEDER FUNDS

Stanley Chais , a Beverly Hills investor

Jeffrey Tucker , a cofounder of Fairfield Greenwich Group

Walter Noel Jr. , his founding partner

Mark McKeefry , the general counsel at Fairfield Greenwich

Amit Vijayvergiya , the chief risk officer at Fairfield Greenwich

J. Ezra Merkin , a prominent Wall Street investor

Victor Teicher , his former adviser

Sandra Manzke , a pension fund specialist

Robert I. Schulman , her onetime partner

INTERNATIONAL INVESTORS AND PROMOTERS

Jacques Amsellem , a French investor

Albert Igoin , a secretive financial adviser in Paris

Patrick Littaye , a French hedge fund manager

Ren-Thierry Magon de la Villehuchet , his partner

Sonja Kohn , a prominent Austrian banker and founder of Bank Medici

Carlo Grosso , a manager of the Kingate fund, based in London

Rodrigo Echenique Gordillo , a Banco Santander director in Madrid

COHMAD SECURITIES

Maurice J. Sonny Cohn , Bernie Madoffs partner in this firm

Marcia Beth Cohn , his daughter

WHISTLE-BLOWERS

Michael Ocrant , a writer for an elite hedge fund newsletter

Erin Arvedlund , a freelance writer for Barrons magazine

Harry Markopolos , a quantitative analyst in Boston

SECURITIES AND EXCHANGE COMMISSION (SEC)

Christopher Cox , chairman from August 2005 to January 2009

Mary Schapiro , his successor as chairman

H. David Kotz , their independent inspector general

Grant Ward , a regional official in Boston

Ed Manion , his coworker

Lori Richards , a senior official in Washington

Eric Swanson , a lawyer in Washington

Andrew Calamari , a senior regional official in New York

Meaghan Cheung , a lawyer in the New York office

Simona Suh , her colleague

William David Ostrow , an examiner in the New York office

Peter Lamore , his colleague

Lee S. Richards III , a New York lawyer in private practice, appointed as receiver for Madoffs firm

FAMILY LAWYERS

Ira Lee Ike Sorkin , defense lawyer for Madoff

Peter Chavkin , lawyer for Ruth Madoff

Martin Flumenbaum , lawyer for Mark and Andrew Madoff

FEDERAL BUREAU OF INVESTIGATION (FBI)

Ted Cacioppi , special agent

B. J. Kang , his colleague

FEDERAL PROSECUTORS IN MANHATTAN

Preet Bharara , U.S. attorney for the Southern District of New York

William F. Johnson , chief of the Securities and Commodities Fraud Task Force

Marc Litt , the lead prosecutor in the Madoff case

Lisa Baroni , his colleague

SECURITIES INVESTOR PROTECTION CORPORATION (SIPC)

Irving H. Picard , the trustee for the Madoff bankruptcy case

David J. Sheehan , his chief legal counsel at Baker & Hostetler

FEDERAL JUDGES IN MANHATTAN

Louis L. Stanton , a district court judge

Burton R. Lifland , a bankruptcy court judge

Denny Chin , a district court judge

Richard J. Sullivan , a district court judge

Jed S. Rakoff , a district court judge

VICTIMS ADVOCATES

Helen Davis Chaitman , a lawyer in New Jersey

Lawrence R. Velvel , a law school dean in Massachusetts

PROLOGUE

T UESDAY, A UGUST 24, 2010

Glimpsed through the glass double doors at the end of a long prison hallway, he is not recognizable as the impassive hawk-faced man who was marched incessantly across television screens around the world less than two years ago. He seems smaller, diminishedjust an elderly man in glasses talking deferentially to a prison official and looking a little anxious as he waits for the locked doors ahead of him to click open.

Escorted by an associate warden, he steps from the sunshine of the prisons sealed courtyard into the dim, cheaply paneled visiting room. The room would have fit easily into a corner of his former penthouse in Manhattan. Its furnishings consist entirely of faded plastic lawn furniturered armless chairs around low tan tablesand it is illuminated today only by light from one large window and a row of vending machines.

On most of his occasional visits to this room, it had been filled with prisoners and their families. But as he enters with his escort on this Tuesday morning, the room is empty except for his lawyer, a guard, and the visitor he has finally agreed to see. As the rules require, he sits facing the guards desk, where the associate warden settles down to wait. He unfolds a single sheet of ruled paper; it appears to be some handwritten notes and a few questions for his lawyer. He spreads the sheet out on the table in front of him.

The creases in his tan short-sleeved shirt and trousers are knife-sharp, despite the humidity of this late summer morning. His hair is shorter, but it suits his slimmer frame. His black leather sneakers are gleaming. Aside from a small spot where the brass plating on his belt buckle has worn away, he is as carefully groomed as ever. Even though he does not much resemble the heavier, better-dressed man shown so often in the news reports after his arrest, he still has a quiet magnetism that draws the eye.