Madoff with the Money

by Jerry Oppenheimer

  Recounts Fabrikant:

  I called Bernie personally. I knew him for 30 years. I said, “Andrew and I want to invest with you; is that okay?” He said, “I need a certain amount of money from you,” but he didn’t say how much. I said, “Well, we can’t do that.” And then he said, “Well, whatever you want. Okay, Sherry, come up.”

  She did, handing over $3 million to $4 million.

  We did not give him all our money, thank God.

  She says she began getting a return of 8 to 9 percent—on paper, because whenever she did need money she usually took it out of her stock brokerage account, but periodically took some out of Madoff.

  Whenever I wanted money I called him. I said, “I need ten dollars,” whatever. The check was in the mail the next day. To me it looked legit. You should see his statements—they’re gorgeous!

  My accountants said, “Don’t take it out of Madoff, because he’s doing so nicely.” Not that he was making me a fortune. It was nothing so outstanding that I would call him a genius.

  But when he thought the market was going down he said he invested in T-bills, which we thought was brilliant. We thought it was a decent, safe investment.

  Then we lost everything. It was a big shock to me. I’m not as rich as the people who lost $20 million—except for my art collection, which is worth a fortune because luckily I have put most of my money on my walls.

  She says that some other members of Fresh Meadow lost so much money in the Ponzi scheme that they “went bankrupt” and other members were going to support them financially. “It’s an older club with people who are much more like family, much more into each other.”

  Not only did Bernie cheat his friends, family members, and other investors by offering questionably high and steady returns in good economic times and bad, but he also scammed in another way by possibly misrepresenting himself on the golf course.

  Bernie had started playing golf when he was in high school, driving balls down the median strips of highways, and then playing at public courses. Later, when he belonged to clubs like Fresh Meadow and the Palm Beach Country Club, whose members were also ravaged by him, his golf scores were suspiciously and eerily as consistent as the returns he was promising.

  For instance, he never went below 80 or above 89 in 20 rounds during the period 1998 to 2000, scores that surfaced after his arrest.

  As golf pro Michael Hebron observed, “Consistency this high is very unusual. And that’s even before I knew who they [the scores] belonged to.”

  Chapter 8

  The Bagel Baker Becomes a Financial Guru, and the Mob Boys from Rockford Pay a Visit

  “I’ve known of Bernie my whole life in a messiah kind of way,” states Jonny Lieberbaum. “My family regarded Bernie like as a messiah. He was spoken of as if godlike.”

  All of those intense and respectful feelings evaporated in anger and hate after Jonny Lieberbaum’s mother, Carol Ann Lieberbaum, lost most if not all of the millions she and her late husband, Shelley, had invested through the years in Bernard L. Madoff Investment Securities.

  Other family victims in Madoff, according to the list made publicly available after Bernie was arrested, included Shelley’s brother and sister-in-law, Mike and Cynthia Greenberger Lieberbaum, and her two brothers, John Maccabee, the writer of the New York magazine piece about Bernie, and Robert Greenberger, the former Wall Street Journal reporter. Greenberger’s wife, the former Phyllis Eileen Morel, a Brooklyn girl and the first president and CEO of the Society for Women’s Health Research, was named one of “The 100 Most Powerful Women” alongside then Senator Hillary Clinton and then Secretary of State Condoleezza Rice in 2006 by Washington magazine. One of their sons and a daughter-in-law had been on the staff of the Boston Globe.

  As related earlier, Bernie’s lifelong close relationship with Mike and Cynthia Lieberbaum started when they became friends at Far Rockaway High School and graduated together. Mike Lieberbaum also was a student at Hofstra. And Shelley Lieberbaum helped finance Bernie’s lawn sprinkler business when he was at Hofstra.

  After Bernie was arrested, maintains Carol Lieberbaum, “I was wiped out, basically. I lost 90 to 95 percent of what we had in Madoff ”—investments that began around the time Bernie started his now-infamous company.

  “We all helped Bernie get off the ground by investing with him,” she says regretfully.

  However, in exchange, she and her husband (and some other family members) had many, many years of what Lieberbaum describes as spectacular returns. She says the Lieberbaum and Greenberger families “definitely believed” that Bernie had given them “special consideration” with higher returns because of their long friendship, and what family members had done for him in the early years.

  Lieberbaum asserts:

  You don’t question when the going is good.

  What were we going to do—call up Bernie and tell him, “God, I’m making too much money. What’s going on?” We made a lot of money with him. Nobody made more money than people with Madoff. It was absurd the amount of the returns—they were amazing.

  We had friends who would have done anything—they would have killed to have gotten in Madoff, and Bernie turned them down. For whatever reasons, he said no. We had friends of tremendous wealth who couldn’t get in, but that was part of Bernie’s allure. He made it absolutely intoxicating and exclusive.

  When the news broke of the Madoff Ponzi scheme and Bernie’s arrest, Lieberbaum couldn’t believe it. She had last talked to Bernie several months before he was arrested to “just say hi” and to say she was getting ready to take a trip to Mexico.

  I thought there was a misunderstanding. I was in utter shock and disbelief. Bernie and Ruth were the nicest couple you can ever imagine—kind, generous, warm. They were phenomenal, terrific, very devoted. I knew them for 50 years—or thought I did.

  She immediately called the Madoffs’ penthouse hoping to talk to Ruth, who she knew “had kept the books” for Bernie at one time and presumably was aware of everything that was going on. She and Ruth had close ties. For years Ruth’s parents rented a Manhattan apartment from the Lieberbaums that the Alperns used as a pied-à-terre. Over the years, she says, she came to the conclusion that Ruth was “definitely classier” than Bernie. “She was refined. He acquired as much as he could, if you can say you can buy class. But he wasn’t showy. He was not ostentatious. He was humble. It sounds ludicrous to say that today, but I mean he was a good guy. He was low-key wealth—enormous wealth. That’s how it looked.”

  No one picked up the phone at the Madoffs’, and Lieberbaum left a message on their voice mail.

  “I told Ruth, ‘I can’t believe what’s going on. This is all a terrible, terrible mistake, right? I hope everyone will be all right. My prayers are with you. Call me.’”

  She never heard back.

  “Now I’d like to put a bullet in both their heads.”

  Carol Lieberbaum’s sister-in-law, Cynthia Greenberger Lieberbaum, came from an immensely wealthy family. “I know Cynthia’s parents had a lot of money with Bernie from the very beginning,” says Carol Lieberbaum.

  The patriarch, Sidney S. Greenberger, who died of heart disease in 1964, made his fortune as founder of the Graphic Paper Corporation in New York. Before joining the Wall Street Journal, one of his sons, Robert Greenberger, was listed as secretary-treasurer of Graphic Paper.

  Robert and Cynthia’s brother, John (Greenberger) Maccabee, says their late mother, Ruth, who died in March 2004, “would have killed” Bernie had she lived to see how he stole the family’s investment in his Ponzi scheme—an investment that began in 1961, a year after Bernie started his company.

  When Ruth Greenberger’s funeral was held in Queens, Bernie and Ruth Madoff were two of the few nonfamily members who were among the mourners. At the time, Bernie’s Ponzi scheme had been in operation for years without the Greenbergers’ knowledge.

  Maccabee recalled that as he was leaving the cemetery following the interment Bernie approached him and
discreetly told him that “the deal” he had had with the Greenberger family was over now that the matriarch, whom he always called “Mrs. G.,” was gone.

  Maccabee says that Bernie “was able to get away with this kind of dark humor,” but he meant what he said.

  He’s tainted so many people. He’s corrupted us all by his very presence, and by having been welcomed into our house and our family. It’s so fucked up. Somebody asked me if I’m angry and I’m not. I’m amazed by the complexity, the lunacy, the absolute pathological lunacy. The thing about Bernie is—he’s crazy.

  When Maccabee learned that he and his wife, Sherry, and their two sons had lost their invested money in Madoff, he said:

  I felt punched in the stomach. I said to myself, or I said to my wife, “Well, if this motherfucker made it his business to steal my money, then I’m going to make it my business to make some money with him.”

  He decided to write the magazine piece about Bernie, and planned to write a book about the Greenberger family, and the impact that Bernie had on it through the years.

  He fucked everybody—his own sister; Elie fucking Weisel. How do you fuck over Elie Weisel? How do you do that? Bernie was giving to Yeshiva University and then stealing their money on the other end. It’s just amazing.

  Yet, Maccabee did not always feel this way about the former “messiah.” At one point in his life, acknowledges Maccabee, “I was proud of Bernie, actually. There was something about him that he engendered that made you want to take care of him as well as be taken care of by him. I did like Bernie and Ruth, and we had a long and complicated relationship. There were a great many people who revered Bernie for what he made of himself. He was a legend. A lot of people felt that way about him.”

  A 1963 graduate of Far Rockaway High School, Maccabee characterized his parents as Bernie’s “angel investors”—meaning they had been in business with Bernie from the very beginning, just like the Lieberbaums. He recalled that when Bernie first approached his parents to invest, he whipped out a recent bank statement that showed he had invested $5,000 of his own money in his fledgling business—proof that he believed enough in himself and his abilities to make money for Bernie Madoff and for other people. Later, he convinced Mrs. Greenberger, after she became a widow, to invest another $300,000.

  Yet, the Greenbergers were tough angels who demanded and received returns on their money every quarter in the form of a “golden-yellow” check from the Madoff company—along with a detailed accounting.

  Maccabee’s mother, who had knowledge of bookkeeping, and had been his father’s secretary at Graphic Paper, would sometimes catch an error in the Madoff accounting and immediately call Bernie, usually speaking to his assistant, believed to be Annette Bongiorno. She would come under suspicion as a participant in Bernie’s fraud for allegedly ordering the creation of fake trading tickets, and for feeding Bernie investors from her Queens neighborhood, according to reports.

  Bernie usually returned Mrs. Greenberger’s call to say that the error was minor. Maccabee quoted Bernie in his New York magazine piece as telling her, “Give me a break, Mrs. G. Don’t worry, I’ll make up the $17 to you next quarter.” He said his mother actually wanted the full amount that she was shortchanged—“17 dollars and 63 cents.”

  Bernie’s response, in his Queens accent, was:“Mrs. G., ya killing me.”

  His mother ended the conversation by saying, “On the contrary, Bernie. I pray for your health daily.”

  And then Bernie would often flatter her, probably in hopes of softening her up for more money. He used niceties like, “I’ve got a lot to learn from you, Mrs. G.”

  However, he was incredibly mean-spirited with Maccabee’s sister, Cynthia, with whom he had bonded in high school, and who married his pal, Mike Lieberbaum. Maccabee quoted Bernie as once telling his sister: “If you think you’re any prize, and that your husband should kiss your ass for the measly couple of million bucks you stand to inherit, you are fuckin’ delusional.”

  Despite their close ties, Bernie felt no qualms in laying into his longtime friend. That was Bernie, they all thought. Don’t take him too seriously. After all, look at those golden returns. But with friends like Bernie, who needed enemies?

  If Bernie ever had a Wall Street guru and someone he hoped to emulate, it was Mike Lieberbaum’s father, Lou Lieberbaum, who would serve as Bernie’s third mentor on his journey to fraud, deception, and deceit.

  Originally from Brooklyn, Lieberbaum had moved his family to Belle Harbor, one of the fancy communities on the Rockaway peninsula of Queens, up the road from the wealthy Greenbergers in Neponsit. But in the beginning he was considered the neighborhood schlepper.

  Surrounded by mostly affluent Jewish families, the Lieberbaums had moved into a small two-family house about a block and a half from the ocean. In order to put food on the table and pay the rent, the patriarch worked as a milkman in Belle Harbor and, his daughter-in-law Carol says, a bagel baker in Brooklyn.

  But like Bernie, who would become a partner of sorts, Lieberbaum was a shrewd, street-smart hustler who had an interest in the stock market.

  Bernie could have been his son.

  The stock that would make Lieberbaum very, very wealthy was Polaroid.

  In the mid-1950s, he is said to have switched from delivering milk to selling mutual funds and stock for a relatively new firm, Dreyfus and Company, one of the first on Wall Street to aggressively hawk mutual funds to the public through its Dreyfus Fund. Lou’s son, Shelley, four years older than Bernie, also worked for Dreyfus for several years in the late 1950s. The founder, Jack Dreyfus, considered one of Wall Street’s most successful investors in the 1950s and 1960s, was a onetime candy salesman who started his company on the advice of a gin rummy partner. These were the kind of wheeler-dealers who ran the Street long before the MBAs came along.

  The former candy salesman is said to have taken a liking to the former bagel baker.

  Lieberbaum started making decent money hustling everyone he knew to buy into Dreyfus, targeting among others the well-to-do in Belle Harbor and Neponsit who had been on his milk route. It wasn’t a difficult sell. The Dreyfus Fund was a gold mine. For the period from the mid-1950s to the mid-1960s, the fund had a return of a whopping 604 percent while the Dow Jones Industrial Average showed a measly 346 percent return.

  In 1957, when Bernie was still a Sammy fraternity boy at Alabama, Jack Dreyfus, who by coincidence was born in Alabama, invited his protégé Lieberbaum to take a tour of the Polaroid factory. Still a privately held company, Polaroid a year earlier had sold its one-millionth camera, and was about to go public. After the tour, Dreyfus gave the former bagel baker a piece of advice: He said, “Lou, if I were you I’d run up and down the street trying to sell everyone Polaroid,” according to people who knew Lou Lieberbaum and his legendary rags-to-riches story.

  A fast learner, Lieberbaum didn’t have to be told twice. “My father-in-law was extremely self-taught. He was brilliant,” observes Carol Lieberbaum.

  “Lou became enamored with Polaroid when it was down at a new issue price, and he told everybody and his brother, ‘Buy Polaroid! This stock’s gonna fly!’ And voilà, the stock flew,” says Bernie’s high school classmate Peter Zaphiris, who later worked for Lieberbaum. “Lou, along with a whole bunch of other people, made quite a bit of money, and better than that, Lou was smart enough to understand that he now had a following, people who loved him, trusted him, and would invest their money with him.”

  It was just like the kind of following Bernie would develop and captivate.

  While Lou Lieberbaum never made it as big or became as famous as his mentor, Jack Dreyfus—who was a bridge expert, won many amateur golf championships, owned thoroughbred racehorses, served as chairman of the New York Racing Association, and lived like royalty, according to his obituary in the New York Times—Lieberbaum did quite well for himself.

  Not only did he make millions on Polaroid as the stock soared, but he bought a seat on the New York Stock
Exchange. With his following of avid investors, he also opened his own brokerage, Lieberbaum & Company, sometime in the late 1950s or early 1960s, with the blessing of his mentor, Jack Dreyfus, who died at the age of 95 in March 2009, as the Bernard Madoff scandal raged.

  Lieberbaum would become one of Bernie’s mentors.

  Flush with riches, Lieberbaum bought a spectacular home in Hewlett Harbor. In order to let guests know where all his money came from, he is said to have had the Polaroid logo etched on a big mirror “like it was a Picasso” in the expensively and overly decorated living room of his mansion. The ex-milkman and his wife, Lillian, staffed the huge home with servants, had chauffeurs to drive their fleet of Cadillacs, and oversaw a small flotilla of boats moored at their dock.

  The Lieberbaum brothers, Mike and Shelley, were weight lifters and because Shelley was especially buff, his proud and newly wealthy father commissioned a sculptor to fashion a bronze statue of him in a muscleman pose.

  On one memorable occasion Lieberbaum invited some pals to the house to show off a gift he’d bought for his wife.

  “We were having bagels and coffee in the kitchen at Hewlett Harbor, and he says, ‘What do you think of this? I just bought this for Lillian,’” recalls Zaphiris, who was present.

  He opens up this flat case that must have had a thousand diamonds in it. The gift was like a cluster diamond necklace. Forget about the diamonds—the case looked like it cost a fortune. The necklace that I saw, and again that was 50 years ago, cost $600,000. God, it was spectacular.

  Later, someone told me Lou was full of shit, that he takes this stuff out on consignment. They give it to him because supposedly he’s going to buy it, but he’d never bought anything like that necklace. Lou had the ability to paint pictures in the sky—just like Bernie did.