by Brian Ross
Ruth told people close to her that she had not seen the end coming. In fact, a wonderful retirement had seemed around the corner for both of them. She said she believed Bernie’s version of events, that he had been trapped in the scheme for decades and that he had not set out to be a crook. Bernie’s wandering eye could be forgiven; Ruth told people she knew that Bernie never set out to hurt her. If she’d had her doubts over the years, as she balanced the books and offered advice on business strategy, she had not raised them. Not to Bernie, who was the one she and everyone she knew “respected and trusted with our lives and our livelihoods.”
He had destroyed everything. In person with Bernie, Ruth was both sympathetic and forgiving. She was glad her husband had found a way to deal with prison life and she was comforted by the irony that he seemed so free behind bars. She told Bernie it reminded her of what could have been possible if he had not cheated so many, lied so grandly, and stolen so much.
Ruth told Bernie, “What a waste of a life.”
THE GUILTY PARTIES:
Madoff Employees and Relatives Convicted of Crimes
THE TEAM OF CRIMINALS BEHIND BERNIE MADOFF
Appendix A. Bernie Madoff’s “little black book” of what he deemed his essential contacts contained 151 names, ranging from his housekeeper in France, to his investors and victims, to his inner circle on the seventeenth floor. His secretary, Eleanor, typed an annual version in case he lost the book. She provided it to the FBI and the author.
Appendix B. SEC investigators prepared an “opening narrative” in early 2006 when they finally decided to investigate allegations from Harry Markopolos that Bernie Madoff was running the world’s biggest Ponzi scheme.
Appendix C. SEC investigators closed out their investigation of Bernie Madoff’s alleged Ponzi scheme with a finding of “no evidence of fraud” in a closing.
Appendix D. In the last federal tax return they would file before Madoff’s scheme collapsed, Bernie and Ruth reported an income of $9,422,238.
NOTES
The information in this book is based on dozens of interviews, documents filed in court, records and files from inside the Madoff offices, and the extensive reporting of the ABC News investigative unit. Given the sensitivity of the ongoing criminal investigations and civil lawsuits, many of the people who were interviewed did so only on the condition that their names would not be used. Bernie and Ruth lived in a world full of secrets and they confided in few people. Some of those few felt it important that the Madoffs’ story be told because of the enormity of the crime and the complexity of assigning guilt, including people who spoke in defense of Ruth and the two Madoff sons, Mark and Andrew.
CHAPTER ONE
Instead of a day: Ira Sorkin
“do the right thing”: Person close to Mark and Andrew Madoff
He had asked his sons: Person close to Mark and Andrew Madoff
Madoff, a meticulous: Law enforcement sources
“an innocent explanation”: USA v. Bernard L. Madoff, Complaint, December 11, 2008
At the time of: Irving Picard
Whatever it was that Sorkin: Person familiar with Bernard Madoff
Within days, Madoff: Person familiar with Bernard Madoff
He believed he could “sell”: Person familiar with Bernard Madoff
“there will be a life after this”: Person familiar with Bernard Madoff
Prosecutors later admitted: Madoff case investigator
His firm’s account: MLSMK Investments Company v. JP Morgan Chase & Co., and JP Morgan Chase Bank, NA, April 23, 2009
had only $234 million: SIPC v. Bernard L. Madoff, Stipulation and Order of Transfer of Funds by J.P. Morgan Chase Bank to Trustee, January 27, 2009
The reports were prepared: Eleanor Squillari
Between 2006 and 2008: MLSMK Investments Company v. JP Morgan Chase & Co., and JP Morgan Chase Bank, NA, April 23, 2009
withdrew $5.5 million: Massachusetts Secretary of State Complaint against Cohmad Securities Corporation, Exhibit 16, February 11, 2009
Madoff flew to Palm Beach: Madoff’s 2008 calendar and Eleanor Squillari
“too stretched”: Madoff case investigator
Carl Shapiro agreed: Person familiar with Shapiro’s affairs
November 19: Madoff case investigator
“hundreds of millions”: Source close to Wilpon
The next day, Tuesday: Ira Sorkin
An hour or so earlier: Eleanor Squillari
ordered $10 million: Massachusetts Secretary of State Complaint against Cohmad Securities Corporation, Exhibit 16, February 11, 2009
brother, Peter, arrived first: Eleanor Squillari
because “he had recently made profits”: USA v. Bernard L. Madoff, Complaint, December 11, 2008
“We have to meet with Dad”: Person close to Mark and Andrew Madoff
Peter stayed behind: Eleanor Squillari
Mark and Andy told the FBI: Person close to Mark and Andrew Madoff
Instead, his sons: Person close to Mark and Andrew Madoff
CHAPTER TWO
She told one family: Sources close to Madoff family
The two met as teenagers: Sources close to Madoff family
“tough guys”: Jay Portnoy
Bernie’s parents: Person familiar with Bernard Madoff
“mislead”: SEC Division of Enforcement Case Opening Report, January 4, 2006
“evidence of fraud”: SEC Division of Enforcement Case Closing Report, November 21, 2007
Bernie went off to college: University of Alabama records
While he was away: Sources close to Madoff family
joining Sigma Alpha Mu: University of Alabama 1957 yearbook
“a fraternity of Jewish men”: Sigma Alpha Mu Web site
“for her own safety”: University of Alabama Web site
He enrolled at Hofstra: Hofstra University records
second lieutenant: U.S. Army Reserve spokesperson
She still found: Sources close to Madoff family
Fortunately for Hofstra: Stuart Vincent, assistant VP for university relations at Hofstra University
In early 1960: FINRA Broker check records
ran a suspect: SEC News Digest, September 20, 1963
In 1963, the SEC: SEC News Digest, September 20, 1963
in January 1964: SEC News Digest, January 23, 1964
Ruth and Bernie: People who attended wedding
Ruth breezed to a degree: Queens College records
Alpern’s accounting office was: Source familiar with the company
The accountants guaranteed: SEC News Digest, November 23, 1993
The SEC imposed: SEC News Digest, November 23, 1993
A second set: SEC News Digest, December 11, 1992; SEC News Digest, November 23, 1993
They were not allowed: Person familiar with the company
and Mendelow insisted: Stanley Arkin, lawyer for Steven Mendelow
“Who was the broker”: Wall Street Journal, December 16, 1992
When Ruth’s father, Saul: Saul Alpern’s will
After her husband’s arrest: SEC v. Madoff, Order on Consent, March 2, 2009
CHAPTER THREE
It was late afternoon: Interview Laurence Leamer, author, Madness Under the Royal Palms
At Madoff’s office: Madoff employees
Peter had seemed: Madoff employees
Calls were coming in: Bernard Madoff’s phone messages, December 11 and 12, 2008
Some friends called: Fax sent to Madoff from James Davin
Carl Shapiro was at home: Source close to Shapiro
“Some late news”: CNN transcript, Anderson Cooper, December 11, 2008
“to take care of the poor”: Person familiar with Madoff
Similarly, Ruth didn’t: Sources close to Madoff family
“Dear neighbors”: New York Times, January 12, 2009
He ignored all requests: Person familiar with Madoff
“can’t snap my picture”: Voice-mail message l
eft for Nick Casale by Bernard Madoff
One package contained: USA v. Bernard L. Madoff, Letter from Marc Litt to Judge Ronald Ellis, January 6, 2009
Bernie enclosed a note: Person close to Mark and Andrew Madoff
“sentimental personal items”: USA v. Bernard L. Madoff, Letter from Ira Sorkin to Judge Ronald L. Ellis, January 7, 2009
CHAPTER FOUR
Ruth was at one point: Madoff case investigator
It was rare: Madoff employees
One of his first: Amy Joel
He became an investor: USA v. Bernard L. Madoff, Government’s Second Notice to Seek Forfeiture of Certain Assets, March 17, 2009
requested the table up front: Eleanor Squillari
more than a trillion: The Philoctetes Center for the Multidisciplinary Study of the Imagination, “The Future of the Stock Market,” October 20, 2007
“the world’s largest market-maker”: Bernard L. Madoff Investment Securities LLC Web site
“scores of leading securities firms”: Bernard L. Madoff Investment Securities LLC Web site
At an industry: The Philoctetes Center for the Multidisciplinary Study of the Imagination, “The Future of the Stock Market,” October 20, 2007
According to Madoff: Bernard L. Madoff Investment Securities LLC Web site
They both became multimillionaires: Madoff case investigator
$2 million home on: Nassau County property records and Palm Beach County property records
Her husband, Rudy: NYC Department of Transportation spokesperson
Investigators came to: Madoff case investigator
When questions were raised: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) LTD, April 1, 2009
Customers were told: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) LTD, April 1, 2009
One prominent investor: Irving H. Picard v. Jeffry M. Picower et al., May 12, 2009
Madoff said he made: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) LTD, April 1, 2009
he refused to answer: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) LTD, April 1, 2009
Then, on a regular basis: Madoff case investigators said Madoff and DiPascali recorded the bogus trades once a month. Bernard Madoff told lawyer Joseph Cotchett that he and DiPascali recorded the trades “every other day.”
They often got sloppy: Irving H. Picard v. Fairfield Sentry Limited, Greenwich Sentry Limited L.P., and Greenwich Sentry Partners L.P., May 18, 2009
“Frankie was wearing”: Madoff employee
Madoff took cash draws: SIPC v. Bernard L. Madoff, Affidavit of Michael Slattery, Jr., May 5, 2009
Madoff used $2,225,000: SIPC v. Bernard L. Madoff, Affidavit of Michael Slattery, Jr., Exhibits 16 and 17, May 5, 2009
on one day in 1998: Irving H. Picard v. Fairfield Sentry Limited, Greenwich Sentry L.P., and Greenwich Sentry Partners, L.P., May 18, 2009
Of the three, only one: Irving H. Picard v. Fairfield Sentry Limited, Greenwich Sentry Limited L.P., and Greenwich Sentry Partners L.P., May 18, 2009
On the day after Christmas: Surveillance photos, Milberg LLP
more than $14 million: Securities and Exchange Commission v. David G. Friehling, Friehling & Horowitz, CPAs, P.C., March 18, 2009
CHAPTER FIVE
But Ruth could: Sources close to Madoff family
“Was Ponzi Bernie Madoff”: New York Daily News, March 29, 2009
Despite what the columnists’: Sources close to Madoff family
Top Ten Signs Your Wife: Late Show with David Letterman, March 30, 2009
Sitting in the luxury Manhattan: Sources close to Madoff family
They traveled the world together: Eleanor Squillari; SIPC v. Bernard L. Madoff, Affidavit of Michael Slattery, Jr., May 5, 2009; SIPC v. Bernard L. Madoff, Agreement by the Trustee and NetJet Sales, Inc., NetJets Aviation Inc., and NetJets Services, Inc., June 19, 2009
Madoff was obsessive about: Person familiar with Madoff family
For the New York apartment: Photographs obtained by ABC News
Bernie arranged his suits: Nick Casale
The office summer party: Madoff employees
In the winter: Madoff’s 2006, 2007, and 2008 calendars
The Madoffs first: Madoff childhood friends
Madoff paid $8 million: Palm Beach property records
Ruth Madoff often used: SIPC v. Bernard L. Madoff, Exhibit 25, May 5, 2009
Investigators discovered that: SIPC v. Bernard L. Madoff, Exhibit 21, May 5, 2009
They enjoyed each other’s: Sources close to Madoff family
In January 2008, company: SIPC v. Bernard L. Madoff, Exhibit 25, May 5, 2009
had several billion dollars: MLSMK Investments Company v. JP Morgan Chase & Co. and JP Morgan Chase Bank, NA, April 23, 2009
Ruth and Bernie spent: Sources close to Madoff family
Her father steered him: David Arenson and Cynthia Arenson
received a master’s degree: New York University records
Mostly, when Bernie: Sources close to Madoff family
Ruth emptied her accounts: Massachusetts Secretary of State Complaint against Cohmad Securities Corporation, Exhibit 16, February 11, 2009.
CHAPTER SIX
“Obviously, first of all”: Massachusetts Secretary of State complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., Exhibit 1, April 1, 2009
His scheme had narrowly: Madoff case investigator
Madoff’s last close call: SEC News Digest, November 30, 1992; SEC News Digest, December 11, 1992; SEC News Digest, November 23, 1993
In 2004 the SEC initiated: Sources familiar with the investigation
Lawyers for Fairfield Greenwich: Answer of Respondents, Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., April 29, 2009, Massachusetts Securities Division, docket number 2009-0028
Either FINRA or NASD: Picard v. Fairfield Sentry Limited, Greenwich Sentry, L.P., and Greenwich Sentry Partners, L.P., Complaint, May 18, 2009
FINRA said it had no: Testimony by Stephen Luparello, FINRA interim CEO, the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, February 4, 2009
At an industry conference: The Philoctetes Center for the Multidisciplinary Study of the Imagination, “The Future of the Stock Market,” October 20, 2007
In 2000 Madoff was: Former SEC chairman Arthur Levitt
He supervised “the commission’s”: BATS Newsletter, January 23, 2008
Swanson was the SEC: Source familiar with the investigation
the separate SEC investigation: SEC Division of Enforcement Case Opening Report, January 4, 2006
Four months after: Madoff family friend
An employee: Mail on Sunday, January 4, 2009
came just two months: SEC Division of Enforcement Case Closing Recommendation, November 21, 2007
Madoff boasted about: The Philoctetes Center for the Multidisciplinary Study of the Imagination, “The Future of the Stock Market,” October 20, 2007
The SEC inspector: SEC official
It turned into a full: SEC Division of Enforcement Case Opening Report, January 4, 2006
Markopolos became intrigued: Harry Markopolos testimony, the U.S. House of Representatives Committee on Financial Services, February 4, 2009
“Where did the missing”: Harry Markopolos testimony, the U.S. House of Representatives Committee on Financial Services, February 4, 2009
Chelo even challenged: Harry Markopolos testimony, the U.S. House of Representatives Committee on Financial Services, February 4, 2009
At the SEC offices: Source familiar with the investigation
“voluntary production of”: SEC Division of Enforcement Case Opening Report, January 4, 2006
Madoff then instructed: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., Exhibit 1, April 1, 2009
There were six: Madoff speaking to lawyer Joe Cotchett from Butner prison
Madoff was asked: USA v. Bernard L. Madoff, Information, March 10, 2009
tens of billions: Madoff case investigator
CHAPTER SEVEN
who drank and partied hard: Little Rick
They talked about the blonde: Little Rick
CHAPTER EIGHT
Since 1989, he had: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., April 1, 2009
His wife “shopped uptown Manhattan”: Town & Country, May 2005
Merkin began investing: Irving H. Picard v. J. Ezra Merkin et al., May 6, 2009
New York attorney general: The People of the State of New York, by Andrew Cuomo, Attorney General of the State of New York v. J. Ezra Merkin and Gabriel Capital Corporation, April 6, 2009
“Despite having clear indications”: Irving H. Picard v. Stanley Chais et al., May 1, 2009
Walter Noel was a: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., April 1, 2009
Noel and Tucker started by: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., April 1, 2009
He claimed he made: Ibid.
Madoff had asked Tucker: Ibid.
Madoff had created: Madoff case investigator
“It had a logo”: Massachusetts Secretary of State Complaint against Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., April 1, 2009
able to honor some $3 billion: Answer of Respondents, Fairfield Greenwich Advisors LLC and Fairfield Greenwich (Bermuda) Ltd., April 29, 2009, Massachusetts Securities Division, docket number 2009-0028