Continues the friend:
Unless Ruth was scared for her own protection, she didn’t go to court with him.
I expected her to be at his side. I said to myself, “Wow, this is interesting. This is intriguing.” Bernie didn’t know whether he was coming back to his $7 million penthouse or if he was getting put in the slammer. Wouldn’t you think that she would be by his side?
Perhaps more interesting, Ruth had invoked marital privilege, meaning she would never have to testify against her husband if she didn’t want to. The question remained, however, whether she would be formally brought into the case or would be considered simply an enabler—the little-woman-at-home bystander who never questioned how they got all those homes and boats and jewels and cars and all that other stuff they had.
The friend adds:
So while he’s in the Metropolitan Correctional Center I see her coming out of this fancy, very expensive home furnishings store on Lexington Avenue in the 60s [where a dinner plate by Raynaud from France costs $118] and she’s carrying three large shopping bags. I mean Ruth has everything in the world, and here she is carrying three more shopping bags of stuff—I mean the woman is crazy.
She didn’t see me. I said to myself, “Oh, my god, if I come face-to-face with her I’m going to punch her lights out, spit in her face, and get arrested,” so I crossed the street.
A few days later my cousin went into the store and asked whether Ruth Madoff was one of the better customers, and they go, “Oh, yeah. She just bought three shopping bags full of china for thousands upon thousands of dollars and she was headed to her Palm Beach estate. We’re going to be starving now because he’s in jail.”
In the wake of that shopping sighting, Ruth was spotted enjoying Palm Beach with some friends—with a precious $7,500 Birken bag on her arm.
The evidence of Ruth’s piggishness was in black and white.
Her charges on the Madoff corporate American Express Platinum card just for December 2007 through January 2008 totaled $29,887.94. The total Amex bill for that month for the Madoff clan was $100,121.99, paid in full.
In a one-day shopping spree in Paris she splurged at Armani ($2,000), Jil Sander ($1,237), and a shop called Marni ($555), and back at home her wardrobe bloomed with new things totaling almost $1,800 from Polo and the Diane Firsten boutique in Palm Beach. She charged $5,015 at the Montauk Yacht Club. She used the card for everything from mundane groceries at a Publix supermarket in Palm Beach to a fancy Manhattan shop specializing in “the world’s best caviar.” There were movie tickets, wine, lots of prescriptions, purchases at Tiffany and Gracious Home, and hundreds of dollars over several weeks in dry cleaning. She even charged charitable contributions—$1,000 to Project Sunshine, $10,000 to the 92nd Street YM-YWHA, among others.
As a commenter on the New York Times DealBook blog observed, “This woman used the credit card to make charitable contributions. But it wasn’t HER personal card . . . she was using stolen money to contribute to charities. And from whom was the money stolen? Other charities—at least in part. . . . ”
Because of her initial failure to show any sympathy or remorse for the Ponzi scheme victims and suspicions that she knew all along what her mate was up to, Ruth had become a pariah in the eyes of the American public, the wealthy circle she had run in, and especially the many investors who had once liked and trusted her.
Aside from being banned from coming to the beauty salon where every month or so for a decade she’d get foil highlights—Soft Baby Blonde, revealed the New York Times—done by a colorist whose hair work had been mentioned in fashion magazines, the Pierre Michel salon, also refused her request to do her hair in the privacy of her penthouse.
That wasn’t the only place from which she was 86ed.
A florist in Amagansett in the chichi Hamptons, where the Madoffs had a spectacular beach home, refused to do business with her after the scandal broke. Every summer for years the florist had supplied flowers for the Madoffs’ annual company beach bash.
Ruth had been a regular at a trendy Upper East Side gym—she liked to keep in shape for Bernie, knowing he had a roving eye and past dalliances—but she stopped going, possibly suddenly unable to afford the $1,200-a-month membership, or actually having been told not to show her face there, or even because Bernie was now locked away and she didn’t have to worry about looking good for him. (A joke emanating from the Metropolitan Correctional Center was that obsessively clean and neat Bernie had been renamed “Susan” by other inmates.)
Bernie and Ruth frequently had dined together at fancy Upper East Side Italian restaurants where they walked in hand in hand from their penthouse. But after Bernie was taken down, the owners had a hands-off policy toward the inmate’s mate. Marco Proietti, general manager of Bella Blu, didn’t think he’d serve her because “People definitely think she knew what was going on . . . one of our customers lost $10 million.” Sette Mezzo was another chic Italian eatery where the Madoffs often dined. The general manager said he’d consider Ruth as a customer again—but only if she ponied up the $160 for the bill he was left holding after the Madoffs had dined there shortly before Bernie’s arrest.
“She’s perceived as the succubus to Bernie’s incubus. She was inside a circle of people whose wealth has been sucked out of the system,” observed Richard A. Shweder, a professor of cultural anthropology at the University of Chicago, in a story in mid-June 2009 that the New York Times Sunday Styles headlined “The Loneliest Woman in New York.”
Not only was Ruth becoming lonely, but she was also experiencing a major lifestyle overhaul.
Ruth was a limo, town car, or worst-case scenario, taxi kind of girl, but the extent of how far she had fallen in the lifestyles of the rich and infamous food chain was graphically documented in the New York Post four days before Bernie’s sentencing. There she was—in a color photo that practically filled page 3—the despised Madoff wife riding on the New York subway system’s grungy F train, transport for the city that never sleeps commoners. Her green eyes covered by trendy aviator-style sunglasses, wearing a sporty outfit that included jeans and loafers, the wife of the most hated man in America was sitting under an advertising sign that trumpeted “99¢ Does More.” As the Post noted in its caption, the ad reflected “about how much her hubby left some victims.”
Spotting the photographer snapping her picture, Ruth snarled, “Are you having fun embarrassing me—and ruining my life?”
The Post headline blared: “The Ruth Hurts.”
Like their mother, the Madoff boys were big spenders, as verified by their charges on the Madoff corporate American Express card.
For a holiday vacation in Wyoming, Mark and Andy Madoff combined racked up more than $35,000 in expenses and other goodies. Despite their royal standard of living, Bernie and his scions weren’t known as big tippers—Andy had one restaurant tab for $1,126.41, but left the waiter a chintzy $60.
In a July 2008 Amex bill, Mark charged a whopping $77,388.21 with a Connecticut aviation company for an apparent airplane charter while vacationing in Nantucket. That same month, his brother had charges for the month of almost $19,000, including $4,464 for a flight to Nice in the south of France, and $2,395.41 for casual wear at Ralph Lauren Polo in New York. The total for the Madoffs’ July bill was $137,171.01. Every bill was paid immediately.
But their spending wasn’t limited to airplanes, vacations, and clothes.
In the months leading up to the patriarch’s arrest, the younger generation of the Madoff dynasty were on a home-buying spree—at a time when the nation’s real estate market was in the toilet and thousands were being foreclosed on and made homeless. Bernie’s boys were spending big bucks for roofs over their heads: Mark Madoff, with a loan from his father, paid $6.5 million for a Nantucket home on more than three acres after selling another Nantucket house for more than $2 million. Two months before his father’s arrest, Mark’s brother, Andy, also with his father’s financing, paid $4.3 million for a condo on the Upper East Side of
Manhattan, in close proximity to the building where his cousin, Shana, had planned to live; but then Uncle Bernie was busted.
As the blogger known as “Mrs. Panstreppon,” who wrote much about the Madoff affair, observed: “Were the Madoffs trying to stash as much cash as they could in the months before their empire collapsed? Sure looks like it.”
Bernie’s close associates at BLMIS were also racking up charges.
On the August 2008 Amex bill, Madoff associate 52-year-old Frank DiPascali racked up $10,066.81, mostly for eating out. One charge was for $2,355 at a Shell station, apparently to fuel his boat, the multimillion-dollar 61-foot Viking sportfishing craft Dorothy-Jo, named after his daughter and wife. In 2007 aboard the boat he won the South Jersey Mid-Atlantic Tuna Tournament, raking in the prize of $55,070. The captain of the Dorothy-Jo was listed as an employee of BLMIS. Besides the boat and a salary estimated at seven figures, DiPascali owned a seven-acre estate in Bridgewater, New Jersey—not bad for a high school graduate from Queens who started with Bernie at the bottom and came to work every day in jeans.
Fortune reported in late April 2009 that 33-year Madoff veteran DiPascali—“the chief lieutenant” in Bernie’s money-management operation on the 17th floor of the Lipstick Building—was trying to work out a deal for himself with federal prosecutors, although he hadn’t been charged with any crimes at the time. The magazine stated, “In exchange for a reduced sentence, he would divulge encyclopedic knowledge of Madoff ’s scheme. And unlike his boss, DiPascali is willing to name names.”
Like DiPascali, JoAnn Crupi, a Jersey girl, was a Madoff employee for a quarter century, and worked in the 17th-floor asset-management area where the Ponzi scheme originated. Court filings indicated that she received $2.7 million from company funds to buy a waterfront home. Before Bernie pleaded guilty in March 2009, Crupi and two other Madoff employees, including DiPascali’s brother-in-law, made deals with the prosecutors to talk about DiPascali’s role in the company in exchange for an agreement that what they had to say, as long as it was truthful, would not be used against them.
The family’s and friends’ credit card charges were just the tip of the iceberg of how and where the Madoff money went. Real estate, yachts, private planes, country club memberships, loans, housekeepers, boat captains—“In Bernard Madoff ’s world nearly everyone seemed to be on the payroll,” the New York Times observed.
For example, Marion Madoff, Bernie’s sister-in-law, was said to have been paid a salary of $163,500, though it was known that she didn’t work at the firm. According to a former Madoff executive, Marion’s only contact with the company was to have her BlackBerry fixed or replaced, and to partake in the orchids the firm bought.
Big so-called loans that never had to be repaid were another perk of being a Madoff.
In December 2007, for instance, a year before Bernie was arrested, Peter Madoff received $9 million in Madoff largesse. The unsecured promissory note had a maturity date of December 2012, with an interest rate of 4.13 percent per annum, and came out of the Madoff account at the JPMorgan Chase bank, where Bernie had been keeping the funds of his money-management clients—the Ponzi victims—rather than actually investing it.
There was speculation that the loan to Peter was used all or in part as a wedding gift for his daughter, Shana, and her groom, Eric Swanson, the former SEC attorney.
Five months after Peter got the loan, the newlyweds paid $2.8 million for a home in the celebrity-studded town of East Hampton, on Long Island. The Swansons also had planned to plunk down a whopping $4.195 million for an apartment in the Diamond House condominium building on the Upper East Side. Their bid was accepted, but then Shana’s uncle was arrested and that same day she and her groom withdrew their offer; they claimed one of the rooms was too small.
The Madoff-Swanson nuptials had raised a lot of questions. In May 2009, as Bernie awaited formal sentencing, the inspector general of the SEC, David Kotz, gave the U.S. Congress an update on his internal investigation begun after Bernie was arrested.
While no names were given in the Kotz report, which a New York congressman quickly complained didn’t tell enough, CBS News reported in early June 2009 that “Kotz is looking into a former SEC official who allegedly had a personal relationship with a Madoff family member”—a veiled reference to Shana Madoff’s husband. The Wall Street Journal had previously reported that the SEC was looking into Eric Swanson’s relationship with Shana. Swanson had met her “through her trade association work in the industry,” according to a spokesman for Swanson. He had left the SEC a year before he married into the Madoff dynasty.
For a decade, he had worked as a senior inspections and examination officer, and his duties included trading oversight at stock exchanges and electronic-trading platforms. At least twice, in 1999 and 2004, he was involved in Madoff firm examinations, according to press reports. It was the Office of Compliance Inspections and Examinations that had probed Madoff, turning up zero evidence of any crime. A spokesman for Swanson said that his client “did not participate in any inquiry” of Madoff “while involved” with Bernie’s niece.
Still, at least on the surface, the Swanson-Madoff relationship appeared fishy, and sparked much speculation.
The snarky media web site Gawker, noting that Shana was a fashionista, headlined one story, “Ponzi Schemer’s Label-Whoring Niece Married SEC Lawyer.”
On April Fools’ Day 2009, the government started taking away some of the treasured luxuries Bernie and Ruth had accumulated with his investors’ money, as Irving Picard had charged. It was the beginning of the federal court-ordered seizure of the $823 million in assets Bernie was known to have just before his arrest, much of it in Ruth’s name.
Around dinnertime, U.S. marshals along with members of Palm Beach’s finest descended on the Madoffs’ $9.4 million, 8,753-square-foot, five-bedroom mansion at 410 North Lake Way, changed the locks, set an alarm, and conducted an inventory of the contents. Property records showed that the house had been purchased under Ruth’s name in 1994 for $3.8 million.
The house had a bullish decorative theme that was discovered when marshals spent several hours photographing items in the house for possible eventual removal. “There were bulls everywhere,” said Deputy U.S. Marshall Barry Golden. “There were large statues of bulls, small statues of bulls, bull bookends, even bulls on clothing. There’s a lot of bull in the house. I’ve never seen so much bull in my life.”
He stated that once the judge signed the seizure order, “It stopped being Bernie Madoff’s home.”
A “No Trespassing” sign was posted out front.
Further south on Florida’s Gold Coast, in Fort Lauderdale, the marshals made another big catch. Just after dawn they swarmed into the Roscioli Yachting Center on the Marina Mile and permanently anchored one of Bernie’s prized possessions, his 55-foot, custom-built classic 1969 Rybovich motor yacht that he had named Bull. Not long before he was arrested, the $2.2 million boat had been given a complete renovation at a cost of $130,000—from the paint to the keel.
A former close friend who was burned by Bernie in the Ponzi scheme asserts, “Bernie loved that boat more than he loved Ruth. Believe me when I say that Bernie and the Bull were married to one another. He talked about her all the time—Bull, not Ruth.”
As Robert Roscioli, the marina’s owner, said, “The boat is immaculate. It’s an antique that has been well taken care of and maintained.”
Much like the boat owner’s mate.
Golden, the marshall, observed, “A lot of money was put into maintaining that boat. [It] was extremely well kept, extremely clean. The engine compartment was spotless. It looked like somebody took a bottle of 409 and scrubbed it every day.”
Shades of Bernie’s OCD.
The same day the house and yacht were seized, the marshals also nabbed another of Bernie’s fishing boats, a 24-foot Pathfinder—Little Bull—that was docked in Palm City, Florida.
A week later, across the pond, French authorities seized the
other Bull that Bernie treasured—an ultraluxurious $7 million ocean-going yacht, the one he bragged about to David Neff, his clothier in Palm Beach. She was docked at a marina in the chic Mediterranean hideaway of Cap d’Antibes where the Madoffs also owned—in Ruth’s name—a million-dollar Riviera getaway located at Villa 2, Chateau des Pins.
The seizure of the yacht—owned by a Madoff company registered in the Cayman Islands—had been demanded by Meeschaert, a French investment manager that was attempting to retrieve losses to clients who had bought shares in a Swiss bank’s feeder fund that had invested in Madoff.
“We decided to act quickly to prevent the yacht leaving French waters,” said Chairman Cedric Meeschaert.
A heavy chain was thrown around the boat’s propeller, and bailiffs posted a warning on the boat, cautioning that “major judicial problems” would result if anyone attempted to sneak off with the vessel.
With Bernie’s yachts in tow, a battle ensued between authorities in France and in the United States over the Madoffs’ chic French retreat. Both governments wanted to seize the chateau that was purchased under Ruth’s name in 2000. Valued at $1 million, it was said to have furnishings worth an estimated $900,000, according to court records.
While the assets seized in Florida and France came off without a hitch, or a fight from the Madoff side, Ruth was reported “ready to rumble” if attempts were made to take her New York penthouse and Hamptons abode, along with more than $60 million in what she claimed were her own private funds—a $17 million bank account and $45 million in municipal bonds. Moreover, she intended to fight for the money from the sale of the Florida boats and home when that happened.
The Madoff attorney, Ira Sorkin, asserted in court papers that the tens of millions in cash and bonds, and the two remaining homes, weren’t linked to Bernie’s fraud.
Madoff with the Money Page 19