“There were many obvious material red flags evidencing the giant Ponzi scheme that were recklessly ignored,” according to the complaint. The lawyer for the Lautenbergs, Ronald Riccio, said that Peter Madoff “had a duty to protect the individuals and entities that invested in the firm from fraud and misconduct.”
The Lautenbergs’ private foundation, which had made investments in 2001 and 2002, saw its money more than double to $15.4 million in the month before Bernie was arrested. But that spectacular growth was just on paper based on the fraudster’s bogus investments. It was pure hot air. The recipients of the foundation’s money included a New Jersey hospital and a Jewish organization.
Lautenberg, the senior senator from the Garden State and a liberal Democrat, was among a number of politicians to whom Bernie had made campaign contributions—no surprise in Lautenberg’s case since he was one of the richest in the U.S. Senate, and one whose foundation saw Madoff as a good place to invest.
The Record newspaper of Bergen County, New Jersey, analyzed election filings and found that more than $400,000 in campaign contributions had been given to federal candidates in New Jersey since 2006 by Madoff and family members tied to the firm. Lautenberg received $13,600 for his 2008 reelection campaign.
The senator’s spokesman said after the suit was filed, “We will be ridding ourselves of the contribution.”
Lautenberg’s son, Joshua, had invested $1 million with Madoff in 2003, and by the month before Bernie was arrested, his principal had also grown on paper—to $1.78 million—and daughter Ellen Lautenberg’s $600,000 investment in the same year had grown to $1 million, the lawsuit claimed.
But, now, all of it was lost.
Chapter 10
A Madoff Speaks Out and an Empty Promise
In the months leading up to the formal sentencing of Bernie in late June 2009, the close-knit Madoff family remained tight-lipped, refusing to make any public statements, except through attorneys as many of them came under scrutiny for their intimate business connections to the patriarch-felon.
On her visits to see her jailbird hubby at the Metropolitan Correctional Center in lower Manhattan, Ruth Madoff, the once coiffed and beautified matriarch of the now embattled and infamous dynasty, looked drawn and pale and thinner than her usual sprightly 100-pound self, and was mum whenever journalists approached.
On one such visit, however, an aggressive ABC News field producer pursued Ruth on camera and asked whether she had anything to say to her husband’s many victims. “I have no response to you,” she said, and then it was reported that she had added, “Fuck you” under her breath as she got into a taxi. Her purple language was not out of character. Bernie’s longtime secretary, Eleanor Squillari, asserted that Ruth could speak “very harshly to people. If Bernie said something to Ruth that annoyed her, she’d say, ‘Go fuck yourself,’ or ‘I don’t give a shit.’ That’s the way they talked to each other.”
To make matters even worse than having been branded Bernie’s trash-talking moll, Ruth had been banned from her chic Upper East Side Manhattan hair salon, Pierre Michel, where she’d been a VIP client for a decade, getting her conservative and preppy bob cut and colored—at 69, the gray naturally was starting to show. After the New York Post ran a “Page Six” gossip item declaring that “Bernie Madoff is costing his wife her looks,” a representative for the salon, which billed itself as a “magnet for celebrities, socialites, fashionistas, and trend-setters” said in a statement:“The Pierre Michel salon’s clients are among some of Manhattan’s most elite. Unfortunately some of those clients were victims of the Madoffs and therefore Pierre Michel didn’t feel comfortable having her in the salon.”
While Ruth had not been charged with any crimes, she had now been sentenced to the hardship of finding an upscale Manhattan salon that didn’t have Madoff victims as clients—a difficult task indeed—and one that would treat her in the manner to which she was accustomed.
She wasn’t the only Madoff woman who was so snubbed. Not long after Bernie was arrested, Peter Madoff ’s wife, Marion, was said to have been in a tony salon in Manhasset, on Long Island, and was overheard “talking about going on a vacation,” according to Madoff victim Sherry Fabrikant. “Two of my friends were there and were disgusted, and they told me,‘We left.’” The salon in question declined to confirm or deny that Marion Madoff was a client.
The only Madoff family member who granted the author an interview (in response to a message from the author) was Jennifer Madoff. Not only was Jennifer a victim of Bernie’s fraud, but she was also a widow whose young husband, Roger Madoff, Peter and Marion’s son, had died on April 16, 2006, from leukemia at the age of 32.
The lengthy death notice that appeared in the New York Times the next day had loving eulogies from Madoff family members and friends. There were even some kind remarks from those who would be Bernie’s victims, among them his close friend, the Boston philanthropist Carl Shapiro, who later came under investigation, and Susan Blumenfeld, Bernie’s interior designer who also had the task of helping Ruth choose her wardrobe, and who along with her developer husband, Edward, lost millions. Roger’s cousins, Mark and Andy Madoff, wrote, “Our dear Roger, you fought bravely to the end, never losing any of the wonderful spirit of you. . . . You will be in our hearts forever.” His parents called him their “most special, courageous son. . . . May you rest in peace. We love you. XOXO, Mom and Dad.”
After Roger died, Jennifer Madoff had self-published a touching, inspirational, and often humorous memoir he had written while he was dying entitled Leukemia for Chickens: One Wimp’s Tale about Living through Cancer.
Thinking of himself as “the black sheep of the family,” young Madoff had reluctantly left a career he loved—writing about and covering business news for Bloomberg News—to work in a new Madoff family venture called Primex Trading at the behest of his father. He described himself as “becoming the last of my generation of Madoffs to succumb to joining the family firm.” Peter Madoff envisioned Primex to be a virtual reality type of Big Board. “My father is an entrepreneur and always looking for new ideas,” Roger said in his book. “My father had become enamored with this concept and had laid the groundwork for the project.”
Because of the Madoff firm’s sterling reputation back in 1999 when Primex was born, two giants of Wall Street—Merrill Lynch and Goldman Sachs—had joined in the venture. But Roger had once told a friend in an e-mail, “This job is killing me.”
Primex never succeeded.
Jennifer and Roger had married on August 30, 2001, in a big and flashy affair in the atrium of the old Bowery Savings Bank on 42nd Street. They were on their honeymoon in South Africa when 9/11 happened, and their apartment was just a mile north of Ground Zero where the World Trade Center towers had once stood. The two had been introduced some years earlier by her roommates at Cornell University, who had been his friends growing up, and at the time they met he was a student at Duke University.
Roger got leukemia when he was 29, when they had been married only three years.
Still heartbroken by her husband’s death, and furious about the ramifications of Bernie’s crimes—a promised grant from the Madoff family in her late husband’s name to help emerging writers in Queens was never given—Jennifer Madoff was devastated, but defensive of everyone in the Madoff family except, of course, Bernie.
In an interview lasting more than 20 minutes, she never once uttered Bernie’s name, clearly viewing her late husband’s uncle as a pariah.
Late in February 2008, after Bernie’s arrest but before his shocking guilty plea and other revelations about the scheme and the Madoff family, she said to the author:
Members of my family have, unfortunately, had their lives destroyed, and the family is being torn apart [by the crimes committed by Bernie]. No one can grasp what’s going on, and how huge and deep this runs. It’s unimaginable to all of us. Everybody’s in shock and feeling completely devastated.
My heart is breaking for my in-laws, Pete
r and Marion, as I think they’ve suffered enough in this. I’m so heartbroken for my father-in-law. What it comes down to is he’s losing another member of his family—I mean losing a brother [Bernie] after his son is gone. It’s devastating.
Jennifer says “it goes without question” that Bernie’s crimes had caused a major breach with his brother, Peter. “He’s just shocked and devastated by all of it.”
Her honesty and concern for both the legacy of her husband and her family were sincere, and the hurt could be heard in her voice. Had at that point the public heard something similar from Ruth, Peter Madoff, or Bernie’s sons, the perception of them, even by many victims, might have been different. But there would be no expressions of contrition, no words of sadness for all those who had been hurt or even for their own feelings from Ruth until much later. All were listening to their lawyers’ advice, which surely was: don’t say a word.
In the very early years of the new millennium—when Bernie’s Ponzi scheme was going full tilt—cancer was frighteningly ravaging the Madoff clan. Within a time frame of just six months, three closely related family members were diagnosed with blood cancers. As Roger Madoff was going through the hellish and ultimately unsuccessful treatments for his leukemia, his cousin, 38-year-old Andy, Bernie’s son, then the head of the trading desk at Madoff and the father of two, was diagnosed in March 2003 with a rare form of lymphoma after a lump was discovered in the crook of his neck. Another cousin, 9-year-old Ariel, the daughter of Madoff executive Charles Wiener, Bernie’s sister’s son, had also been diagnosed with leukemia, and Peter Madoff had previously had a couple of bouts with cancer that were said to have entailed surgery.
“My family’s luck of late made me wary,” Roger stated in his book.
A very dark cloud had settled over the family, and a still darker one was yet to come.
With cancer striking family members, the Madoff family started a foundation to fund leukemia and lymphoma research and treatment.
“Using resources from the family’s trading and investment business,” Roger Madoff disclosed in his book, “the fund ballooned in size to well over eight figures. To me, the sum was enormous. Not being closely involved in the trading operations, I hadn’t realized the extent of the wealth that existed there.... In less than a year, the Madoff family became the largest benefactor for leukemia and lymphoma research in the U.S., and probably the world. We didn’t make public pronouncements about our charity. Different members of the family had different reasons for keeping quiet. For me, the fact that three family members were suffering acutely from blood cancers seemed reason enough not to crow about research funding.”
Roger never explained the reasons for remaining mum. Was it possible that Bernie didn’t want it revealed because of the impact it might have had on his firm? Or was it simply that people prefer to keep cancer a secret when it strikes? Even today it’s sometimes still described in obituaries as “a long illness.”
One also has to wonder whether any or all of that eight-figure endowment came from money stolen from the accounts of Bernie’s money-management investors. And was the Madoff family’s donation kept secret in order to not scare away investors in Bernie’s very exclusive fund with the specter of cancer looming over the family?
A few weeks after Roger Madoff died, Ruth was chairperson for the Gift of Life Bone Marrow Foundation’s sixth annual Partners for Life gala at New York’s Grand Hyatt Hotel, which was hosted by the Tony Award-winning actor Ron Rifkin. A photograph in the organization’s magazine showed Bernie and Ruth, benevolently smiling.
Jennifer Madoff, a strong and self-confident young woman, emphasized in her interview with the author that the public and the media, and even the thousands of Ponzi victims, don’t personally know the Madoff family members, and she considers that a shame. Specifically she mentions “my father-in-law and his kindness, and his generosity, and his wonderful loving nature. If they don’t know everyone personally, they just associate it with how awful this all is.”
For instance, she’s very defensive of her sister-in-law—Roger’s sister, Shana Madoff Skoller Swanson—who tried to save her brother’s life by being the donor for a stem cell transplant. “We’re very close,” asserts Jennifer. “I’m the godmother of her daughter [Rebecca]. She and Roger were very close, so I feel very protective of her.” Jennifer says she was particularly upset “and kind of repulsed” by the New York magazine cover story on Bernie that went into details about Shana’s private life and her second marriage—to Eric Swanson, a former lawyer at the Securities and Exchange Commission. “Unfortunately, their loving, wonderful relationship is being dragged through this for no reason whatsoever.”
However, her late husband in his memoir—published posthumously by Jennifer herself—also revealed some very embarrassing details about his sister’s private life, details more appropriate for a tell-all, but he had his reasons.
He wrote:
Her personal life had become more of a concern to me once I learned that I had relapsed, since the next phase of my treatment would require her to donate stem cells, shown in previous tests to be a “perfect” replacement for my damaged bone marrow.
My sister was thirty-two at the time . . . [and] worked at our family’s trading firm as its Head of Compliance making sure everyone played by the rules. Besides being a single mom, she had an active social life.... She was rail thin and attractive and had little trouble meeting potential mates. Her longer relationships always seemed to be with previous boyfriends. No matter how difficult the breakup, Shana’s beaus never disappeared for long.
In that summer of 2003, Shana was spending most weekends at the Hamptons beach house of her current boyfriend, Randy. Occasionally, Shana wouldn’t stay at Randy’s for the entire weekend, usually because a row had erupted between them. Although Randy never threatened Shana physically, if the two had a heated verbal spat, Shana wouldn’t flinch at packing her bags and driving home to Manhattan at any hour of the night. Normally I found Shana’s dramas amusing. But that summer Jen and I were more frightened than amused by them: frightened because we now saw Shana as my lifeline. I tried to convey my unease to her. . . . Jen seconded my feelings in a separate talk.
Roger quoted Shana as telling his wife, “I know you think I’m reckless. But I would never do anything to put Roger in jeopardy.”
He then revealed that after Shana had taken two routine blood tests to make sure she was a “perfect match” for the stem cell procedure, a major problem was found. She came into her brother’s hospital room and, laughing nervously, declared, “Well, I’m pregnant! I guess it happened last weekend. They said it just barely showed up on the test.”
Peter and Marion Madoff were in the hospital room and were shocked by her announcement, while Roger “was floored, speechless.”
Shana then told her brother that it was probable that the much-needed stem cell harvest would damage the fetus.
He disclosed that Shana attempted to abort the pregnancy by taking a morning-after pill; the first time it failed, but the second time she took the pill it worked.
“The immediate crises,” he said, “passed, but indefinable feelings of hurt lingered on both sides.”
At the Gift of Life gala of which Ruth was chairperson, Shana spoke “proudly” about donating blood stem cells to her brother, “and talked lovingly of his courageous battle and kind spirit.” She told the wealthy gathering, “Roger lost his fight, but the memory of the passion and promise with which he lived will always be with us.”
Naturally, there was nothing said about the scandalous situation that her brother had revealed in his memoir.
Among those listening in the audience were a number of future Madoff victims such as Fred Wilpon, the hugely wealthy real estate investor and owner of the New York Mets baseball team, who had turned over hundreds of millions of dollars to his longtime friend Bernie to invest over the years.
Prior to Bernie’s confession and incarceration, Jennifer Madoff notes that “ever
ybody in the family was close, everybody worked together, so many of the cousins worked together. They had a nice, close relationship. It was a big, happy family. Now everyone is crestfallen—that’s the best way to describe it. Everyone is just reeling. In the wake of this, they’re all trying to understand it themselves—it’s devastating, like an earthquake. You don’t know that it’s coming and it just turns your world upside down. As the news comes out, everybody in the family feels crushed.”
She adds sadly, “I hate the idea that my late husband’s name and his legacy would be associated with this horror.”
The Madoff family, in particular Roger’s parents and Bernie and Ruth, had pledged to fund the Roger Madoff Literary Fellowship sponsored by the Queens Council on the Arts. Compared to the billions lost by investors, and the promised Madoff funding for education and research that was lost, the $10,000 fellowship was minuscule, but it had enormous meaning for those involved.
The council’s director, Hoong-Yee Lee Krakauer, says:
It was intended to really bring focus to the literary community of Queens, which is populated by some amazing writers from different countries. Peter and Bernie knew this.
They’re Queens guys. They know what Queens is, so for us to be able to offer a fellowship that was large enough to really confer validation upon an emerging writer, and to attract other funders to support translation services for an anthology was very exciting on many fronts.
The Madoff money just made it more exciting because it would have really put this fellowship on the level of the other fellowships in the literary world—highly endowed and highly publicized—and give emerging writers that are sort of in the backwater a chance to write.
Everything was in place on December 4, 2008, when the deadlines for entries had closed. Panelists had been chosen for judging; a Queens public access cable TV program about the fellowship had been taped with Jennifer Madoff and was ready for airing, and publicity was being generated.
Madoff with the Money Page 15