In April 1998, however, without admitting any guilt, the Lieberbaum firm agreed to pay $1.75 million in an out-of-court settlement with the EEOC—the second largest settlement ever reached by the commission in a case of harassment. By then the company, facing a sharp drop in revenue because of the publicity surrounding the case, had changed its name to First Asset Management, and Mark Lew had changed his last name to Lev. Four months after the settlement, Lew Lieberbaum & Co. went out of business.
Carol Lieberbaum maintains that Shelley had gotten involved with “bad guys” and was “really devastated” by the scandal. “Shelley was a very classy guy, very quiet and refined, everything that his new partners were not. Shelley was just a very aboveboard guy, and my recollection of the others was that they were not.”
Shelley Lieberbaum died in March 2007 at the age of 72, having suffered from Parkinson’s disease and dementia, she says.
Bernie and Ruth, loyal to the end—except for the fact that he was stealing the Lieberbaum-Greenberger money in his Ponzi scheme—attended the funeral service in Fort Lauderdale.
Lieberbaum’s death notice in the New York Times was filled with love and respect, and described him as “A true mensch who was loved by his friends, family and fine doggies and who loved him [sic] back in double doses. Master of the one-liner, author of epic comedic poems, victor over countless landlocked salmon, tennis player whose game was feared from Boro Park [Brooklyn] to Emerald Hills [an exclusive club in Hollywood, Florida]. He will be lovingly remembered.”
Speaking of her late husband, who was instrumental in many ways in Bernie’s early successes, Carol Lieberbaum declares:
Shelley would die a second time. He had the utmost respect and admiration for Bernie all through the years. He would have put everything he owned on the fact that Bernie was legit, that he was an upstanding citizen of the world.
I guess he was wrong.
Chapter 9
“Whatever You Do, Kid, Never Invest a Penny in the Stock Market, Because It’s Run by Crooks and Sons of Bitches”
By the mid-to-late 1960s, Bernard L. Madoff Investment Securities was making good money—from Bernie’s take of the business being fed to him by his friends at Lieberbaum & Company, from positions he was personally holding and selling in over-the-counter and penny stocks that were possibly if not probably manipulated, and from fees and commissions related to the business he got from his growing private investment group that would eventually turn into his massive Ponzi operation.
Life was good at 39 Broadway, although Bernie was starting to act weird—and Bernie’s world would become even more bizarre as time went on. His obsessive-compulsive tendency was beginning to manifest itself so that others who worked with him saw his odd behavior for the first time, such as when he personally began vacuuming the office floors on a daily basis, even though the building had a cleaning crew to do that every night.
Ruth, a mother of two, would stop in every so often from the Long Island suburbs to see how things were going, and she’d be there especially around the holidays to help Bernie dispense gifts. In exchange for probably getting stock tips and business from other brokerage houses, he was giving away bottles of expensive Chivas Regal scotch whiskey.
“At Christmastime the office was awash with cases of Chivas,” says Bill Nasi, Bernie’s longtime trusted messenger, who spent some 20 years at Madoff during two separate stints, and was there when the Ponzi scheme came crashing down, ruining his life and the lives of so many others.
He continues:
I was running the bottles with little cards that said “Thank You!” to stock traders at other companies within the financial district. They were guys feeding him business. He sure wasn’t sending bottles of Chivas to people who had no connection with him. I’d get there and they’d stand up and say, “Hey, look what’s here from Madoff!” I usually got a five-dollar tip from each. I was making more on tip money delivering whiskey from Bernie than on my regular salary.
It was during one such frenetic holiday time in the late 1960s that Nasi witnessed a most curious tableau in the office involving Ruth, then in her late 20s, ministering to Bernie, who was nearing 30, one that in a strange, indecipherable way seemed to underscore their close bond.
Recalls Nasi:
Bernie’s holding a glass in one hand and Ruth’s pouring Chivas into it on the rocks, and Bernie takes a sip and puts it down as Ruth pours another shot into it.
In his other hand Bernie has another glass without ice, and Ruth’s pouring Milk of Magnesia [an antacid and laxative] into it and Bernie’s drinking that as a chaser.
I said to Bernie, “What’s going on? What are you getting ready for?” because he’s drinking this weird mix—whiskey, and taking this other stuff to calm his stomach—and all he says is, “I’m getting ready to do battle. I’m getting ready to make a decision.”That’s all he said. It sounds nuts, but it’s more like the bizarre world of Madoff.
It was at 39 Broadway that Bernie began hiring devoted employees like Nasi who would work for him their entire lives. Unlike Nasi, who went on to college later in life, the others for the most part were barely educated ‘dem’ and ‘dose’ bridge and tunnel people—from Queens, Staten Island, and Brooklyn—who spoke Bernie’s Noo Yawk-ese.
“They had minimum training and learned on the job,” says Nasi. Through the years entire families—brothers, sisters, cousins—worked at Madoff, and a number were there until the very end when the FBI and SEC took over, some losing their life savings in the boss’s scheme. Those employees ranged from Charlie Wiener, Bernie’s sister Sondra’s son, who was given the post of office administrator—both of whom lost their savings—to Frank DiPascali Jr., his reputed right-hand man, who Nasi believes may have started as a driver for Bernie at 39 Broadway.
“There was a lot of nepotism. It was almost like tribes working there,” says Nasi, who between stints at Madoff worked for several years at a Times Square porn emporium called Peepland, where he collected the quarters and mopped the floors. After having toiled in the sleazy 42nd Street hellhole and at Bernard L. Madoff Investment Securities, Nasi saw a metaphysical connection between the two. “They were basically the same type of cultural atmosphere,” he observes. “If you had money in your pocket you’d go in one and get a sexual thrill, or you’d go up to Bernie and make money and get a thrill.”
One of those who fit Bernie’s hiring profile in those early days was Annette Bongiorno, who worked in his 17th-floor office and whose role in his investment advisory business was being scrutinized by prosecutors, as were a number of others.
Bongiorno, the wife of a retired New York City Department of Transportation electrician, was reportedly Frank DiPascali’s neighbor growing up. She liked to tell the story around the Madoff office of how she was a poor Italian-American girl who grew up in a “lower-middle-class neighborhood in Howard Beach, in Queens” and ended up “getting this great job of just answering the phone in an office, not working in a factory.” She’d boast about how she was “making $95 a week at the start, and how Bernie treated me nice,” and how she kept getting promotions and making more and more money, and how her “parents were proud of me, and that a Jewish guy pulled me up and out.”
Next to DiPascali, among non-Madoff family members, Bongiorno became one of Bernie’s closest in-house associates, earning as much as seven figures a year. The Bongiornos, at the time of Bernie’s arrest, had come far courtesy of Bernie—with homes valued at as much as $2.6 million in the exclusive towns of Manhasset, on Long Island, and Boca Raton, Florida, and with three Mercedes-Benzes to choose from.
Another Madoff recruit showed up with long, unkempt hair, unshaven and smoking marijuana. Bernie hired him. He cleaned himself up and rose to second in command of one of the Madoff departments.
According to a veteran Madoff worker:In the early days when those employees were hired they were literally sleeping in the office because Bernie was trying to get his business off the ground, and everyone liked h
im, and he told them, “I promise if you take care of me now, I’ll take care of you later.” People worked all night, slept in the office, and went home to shower and get clothes, and came back. For a while that’s how he treated them.
No one intimately familiar with the way Bernie operated believes for a second, however, that he was the patron saint of hiring the underprivileged.
As one veteran Madoff insider asserts, “Bernie made it a point to hire people who weren’t that smart so they wouldn’t trip over anything incriminating. You could have a great job at Madoff even if you were a semimoron, because you were well-trained on the job and paid far better than anyone on Wall Street, and didn’t ask too many questions.”
Bernie’s father, Ralph, was in the 39 Broadway office on a day-to-day basis, says Nasi, who had bonded with him.
“Ralph would just show up, come in, and talk and listen. He was a real outgoing guy. He was a blustery, tough Brooklyn type who sounded like he grew up next to the Brooklyn Navy Yard. He was street-smart, the type of guy who feels Brooklyn’s the center of the universe—‘I can get anything accomplished even if I have to fix broken toilets for 30 years.’”
Ralph Madoff took a liking to Nasi, and the two together would ride the R train, the subway that rumbled between Brooklyn and Queens. On one of those jaunts, the Madoff patriarch turned to Nasi with a bit of startling advice.
He told him: “Whatever you do, kid, never invest a penny in the stock market, because it’s run by crooks and sons of bitches.”
Nasi was dumbfounded. Here was the father of a young man whose entire life revolved around Wall Street every waking hour warning him to stay away from his son’s world, one that the patriarch himself had had a questionable role in.
Years later, not long before Bernie’s crooked world came apart, Nasi mentioned the conversation to his boss, who, at the time, was “up to his neck in this goddamn fucking Ponzi scheme,” unbeknownst to Nasi.
“Bernie starts laughing and says, ‘My, God, if everyone thought like my father, where would I be today?’”
One of Bernie’s young colleagues on Wall Street back then was a fellow by the name of Andy Monness, who had a small boutique firm at 120 Broadway called Monness, Williams & Sidel. Monness lived out on Long Island, too, near Bernie’s home in Roslyn Estates, and he often picked him up at the house and the two drove into the city together.
On one sunny spring morning as Monness was thinking how great it was to be young and that both of them had money-making businesses, Bernie got in the car and the first thing he said was, “The best fucking thing about today is that I have one less day to live.”
Many years later, after Bernie’s arrest, Monness clearly remembers the moment as if it had just happened.
“Bernie was sort of joking,” Monness believes, looking back, “but I think there was a note of something in what he said. I think it was more insightful than what I thought it was at the time.”
Through the years Monness would run into Bernie at United Jewish Appeal dinners and later at the Palm Beach Country Club. While Monness watched him become “almost a living legend” on Wall Street, “we [the Monness firm] were in the camp that were really suspicious about Bernie’s record. No one’s performance was ever like that. I never saw anyone remove the unpredictability of the market. I’ve seen guys not have good months, and I’ve seen guys have very few bad months, but never like Bernie. It’s almost comical. I thought, ‘How could this be that no one’s skeptical?’ That’s a little beyond my beliefs.”
But, the question remains: How did Bernie garner all of the business of all these wealthy investors? As his victims have said, they trusted him. They trusted him because they had no reason to distrust him. He was making money for them. His returns were extraordinary. His credentials got better and better, such as becoming chairman of Nasdaq. If there were red flags, few knew about them. As Carol Ann Lieberbaum observed, why question a good thing? Even investors in Madoff with real financial acumen kept putting money in without doing any real due diligence. The promise of good returns (or greed, it appears) took many forms when it came to investing with Bernie Madoff.
Yet, Monness suggests otherwise. He believes that a good part of Bernie’s success in pulling off the biggest Ponzi scam in history was the fact that “he was not so conspicuous. He was not so flamboyant. He didn’t have the nicest house. He didn’t have the nicest car. He didn’t have the biggest plane. He had all the trappings, but none of them crossed the line. I think that was his skill.”
Still, he was shocked like everyone else when the news broke and the details of the fraud emerged. Months after Bernie’s arrest, Monness wonders what the thief ’s “end game” was. The problem, he fears, is that it will never be discovered because “I don’t think anyone can possibly get into his mind. I think it’s so distorted. I’m not a religious man. I don’t believe in an afterlife. But I wouldn’t want to die and leave my family or my reputation in such shambles.”
While he feels sorry for the little old ladies who lost their money in the feeder funds, people who had never heard of Bernard Madoff, he questions the big institutions and especially charities that got taken for hundreds of millions, if not billions.
“They were investing so aggressively. I didn’t realize they were in the business of making money,” he observes wryly. “I thought they were in the business of giving out money.”
Nonprofits, however, needed to raise money, too. Most if not all of those that got taken in the Madoff mess had invested in feeder funds, so they were completely unaware of Bernie’s name until it was too late. At the same time, Bernie connected socially with people. As documented, he was even named to the board of Yeshiva University, and was prominent in other organizations. Again, he was a trusted friend, and a philanthropist (with other people’s money, as it later turned out). “The nonprofits weren’t going out and buying houses in Palm Beach, but using the money made in Madoff for good causes,” says a developmental executive with one such organization. “Through [these investments] all the nonprofits probably did more good for their causes than through routine fund-raising. That is, until the roof caved in. Now many charities don’t have a dime to spare.”
Back when Monness’s firm and Bernie’s firm were young upstarts, Monness was a bit of a wild man himself. His partner, Kenny Sidel, once boasted to the author, “We were kicking the shit out of the staid, white-shoe, alcohol-drinking jackasses on Wall Street. The competition had become fat and stupid, and we went in and took the business away from them.”
Monness liked to hire brokers who were a bit offbeat. As detailed in the author’s biography of Martha Stewart, Just Desserts, one of his firm’s crackerjack salesmen back then was a big, good-looking Irishman from Brooklyn who had been driving a meat truck by day and acting in amateur theatrical productions on Long Island by night. His name was Brian Dennehy.
Monness started bright, aggressive, and leggy former model Martha Kostyra Stewart, a Jersey girl, at a salary of $100 a week, plus her share of a commission pool. Before long she was making as much as $250,000 a year, according to Monness, and was running in a circle that included the likes of Ross Perot and financier Saul Steinberg.
Years later, as the world knows, the domestic diva, like Bernie Madoff, wound up behind bars, in her case for conspiring to cover up a government insider-trading investigation of a personal stock sale. Unlike Bernie, who presumably will die in prison, Stewart spent five months in the slammer, served five months of home detention in her mansion, and paid a fine—the lightest possible sentence under federal guidelines.
“If Martha did five months,” says her onetime boss, Monness, “then Bernie should get 140 years. There’s no similarity. I felt what they got Martha on was so silly when you think of things done not only by Bernie, but by others in Wall Street in the last decade.”
In the mid-1960s, Bernie began sharing office space at 39 Broadway with another broker also relatively new to the business—Marty Joel Jr. A dozen years Bernie
’s senior, Marty was the founder of Martin J. Joel & Company and was determined to make a bundle selling stocks rather than working a slide rule as an engineer. Like Bernie, Joel started with over-the-counter and penny stocks, and the two did business together and apart, but were never formal partners back then.
Socially, the Madoffs and the Joels became close friends. One of Joel’s daughters, Patty, babysat for Mark and Andy Madoff; and her sister, Amy, would spend some 20 years in management at Madoff. After the death of his first wife, Marty Joel went to work for Bernie as what his daughter, Amy, calls a “star broker.” He put all of his trust and faith in Bernie, and millions in Madoff.
Looking back now, that was a big—and costly—mistake.
Like so many other cases where Bernie had close family ties, virtually every member of the late Marty Joel’s family would be financially ruined in the Ponzi operation.
In total, they lost a whopping $23 million, according to Amy Joel.
Among the family victims was Patty and Amy’s 82-year-old step-mother “who’s left with nothing,” says Patty Joel Samuels.
As recently as a few days before Bernie was arrested my step-mother was with Bernie and Ruth. When she heard about the Ponzi scheme she didn’t believe it. She said, “He would never do that to us. We’re not affected.” And I had to convince her that we were. My father left all her money in Madoff [for Bernie] to take care of. Every cent he ever earned was put in Bernie. There was never a reason to even worry about all of our money. It’s just really a case of misplaced trust. I’m glad my father wasn’t around to see what happened. He wouldn’t believe it.
Madoff with the Money Page 13