Bernard ("Bernie") Lawrence Madoff (; born April 29, 1938) is an American former stockbroker, investment advisor, financier, and admitted fraudster. He is the former non-executive chairman of the NASDAQ stock market, and the confessed operator of the largest Ponzi scheme in world history, and the largest financial fraud in U.S. history. Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008.
Madoff founded a penny stock brokerage in 1960 which eventually evolved into Bernard L. Madoff Investment Securities. He served as its chairman until his arrest on December 11, 2008. The firm was one of the top market maker businesses on Wall Street, which bypassed "specialist" firms by directly executing orders over the counter from retail brokers. At the firm, he employed his brother Peter as senior managing director and chief compliance officer, Peter's daughter Shana Madoff, as the firm's rules and compliance officer and attorney, and his sons Andrew and Mark. Peter has since been sentenced to 10 years in prison and Mark committed suicide by hanging exactly two years after his father's arrest. Andrew died of lymphoma on September 3, 2014.
On December 10, 2008, Madoff's sons told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme, and quoted him as describing it as "one big lie". The following day, FBI agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted multiple investigations into Madoff's business practices, but had not uncovered the massive fraud.
On March 12, 2009, Madoff pleaded guilty to 11 federal felonies and admitted to turning his wealth management business into a massive Ponzi scheme. The Madoff investment scandal defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the mid-1980s and may have begun as far back as the 1970s. Those charged with recovering the missing money believe the investment operation may never have been legitimate. The amount missing from client accounts, including fabricated gains, was almost $65 billion. The Securities Investor Protection Corporation (SIPC) trustee estimated actual losses to investors of $18 billion. On June 29, 2009, Madoff was sentenced to 150 years in prison, the maximum allowed.
Video Bernard Madoff
Early life
Madoff was born on April 29, 1938, in Queens, New York, to Jewish parents Ralph Madoff, a plumber and stockbroker, and Sylvia Muntner. Madoff's grandparents were emigrants from Poland, Romania, and Austria. He is the second of three children; his siblings are Sondra Weiner and Peter Madoff. Madoff graduated from Far Rockaway High School in 1956. He attended the University of Alabama for one year, where he became a brother of the Tau Chapter of the Sigma Alpha Mu fraternity, then transferred to and graduated from Hofstra University in 1960 with a Bachelor of Arts in political science. Madoff briefly attended Brooklyn Law School, but founded the Wall Street firm Bernard L. Madoff Investment Securities LLC and remained working for his own company.
Maps Bernard Madoff
Career
At the time of his arrest on December 11, 2008, Madoff was the chairman of Bernard L. Madoff Investment Securities LLC.
The firm started in 1960 as a penny stock trader with $5,000 ($41,000 today) that Madoff earned from working as a lifeguard and sprinkler installer. He further secured a loan of $50,000 from his father-in-law which he also used to set up Bernard L. Madoff Investment Securities LLC. His business grew with the assistance of his father-in-law, accountant Saul Alpern, who referred a circle of friends and their families. Initially, the firm made markets (quoted bid and ask prices) via the National Quotation Bureau's Pink Sheets. In order to compete with firms that were members of the New York Stock Exchange trading on the stock exchange's floor, his firm began using innovative computer information technology to disseminate its quotes. After a trial run, the technology that the firm helped to develop became the NASDAQ.
The firm functioned as a third-market provider, bypassing exchange specialist firms by directly executing orders over the counter from retail brokers. At one point, Madoff Securities was the largest market maker at the NASDAQ, and in 2008 was the sixth-largest market maker on Wall Street. The firm also had an investment management and advisory division, which it did not publicize, that was the focus of the fraud investigation.
Madoff was "the first prominent practitioner" of payment for order flow, in which a dealer pays a broker for the right to execute a customer's order. This has been called a "legal kickback." Some academics have questioned the ethics of these payments. Madoff argued that these payments did not alter the price that the customer received. He viewed the payments as a normal business practice:
If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow is an issue that attracted a lot of attention but is grossly overrated.
Madoff was active in the National Association of Securities Dealers (NASD), a self-regulatory securities-industry organization. He served as chairman of its board of directors, and was a member of its board of governors.
Government access
From 1991 to 2008, Bernie and Ruth Madoff contributed about $240,000 to federal candidates, parties and committees, including $25,000 a year from 2005 through 2008 to the Democratic Senatorial Campaign Committee. The Committee returned $100,000 of the Madoffs' contributions to Irving Picard, the bankruptcy trustee who oversees all claims, and Senator Charles E. Schumer returned almost $30,000 received from Madoff and his relatives to the trustee. Senator Christopher J. Dodd donated $1,500 to the Elie Wiesel Foundation for Humanity, a Madoff victim.
Members of the Madoff family have served as leaders of the Securities Industry and Financial Markets Association (SIFMA), the primary securities industry organization. Bernard Madoff served on the board of directors of the Securities Industry Association, a precursor of SIFMA, and was chairman of its trading committee. He was a founding board member of the DTCC subsidiary in London, the International Securities Clearing Corporation.
Madoff's brother Peter served two terms as a member of SIFMA's Board of Directors. He and Andrew received awards from SIFMA in 2008 for "extraordinary leadership and service". He resigned from the Board of Directors of SIFMA in December 2008, as news of the Ponzi scheme broke. From 2000-08, the Madoffs brothers donated $56,000 directly to SIFMA, and paid additional money as sponsors of industry meetings. Bernard Madoff's niece Shana Madoff was a member of the Executive Committee of SIFMA's Compliance & Legal Division, but resigned shortly after the arrest.
Madoff's name first came up in a fraud investigation in 1992, when two people complained to the SEC about investments they made with Avellino & Bienes, the successor to his father-in-law's accounting practice. For years, Alpern and two of his colleagues, Frank Avellino and Michael Bienes, had raised money for Madoff, a practice that continued after Avellino and Bienes took over the firm in the 1970s. Avellino returned the money to investors and the SEC closed the case. In 2004, Genevievette Walker-Lightfoot, a lawyer in the SEC's Office of Compliance Inspections and Examinations (OCIE), informed her supervisor branch chief Mark Donohue that her review of Madoff found numerous inconsistencies, and recommended further questioning. However, she was told by Donohue and his boss Eric Swanson to stop work on the Madoff investigation, send them her work results, and instead investigate the mutual fund industry. Swanson, Assistant Director of the SEC's OCIE, had met Shana Madoff in 2003 while investigating her uncle Bernie Madoff and his firm. The investigation was concluded in 2005. In 2006 Swanson left the SEC and became engaged to Shana Madoff, and in 2007 the two married. A spokesman for Swanson said he "did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship" with Shana Madoff.
While awaiting sentencing, Madoff met with the SEC's Inspector General, H. David Kotz, who conducted an investigation into how regulators had failed to detect the fraud despite numerous red flags. Madoff said he could have been caught in 2003, but that bumbling investigators had acted like "Lt. Colombo" and never asked the right questions:
I was astonished. They never even looked at my stock records. If investigators had checked with The Depository Trust Company, a central securities depository, it would've been easy for them to see. If you're looking at a Ponzi scheme, it's the first thing you do.
Madoff said in the June 17, 2009, interview that SEC Chairman Mary Schapiro was a "dear friend", and SEC Commissioner Elisse Walter was a "terrific lady" whom he knew "pretty well".
After Madoff's arrest, the SEC was criticized for its lack of financial expertise and lack of due diligence, despite having received complaints from Harry Markopolos and others for almost a decade. The SEC's Inspector General, Kotz, found that since 1992, there had been six investigations of Madoff by the SEC, which were botched either through incompetent staff work or by neglecting allegations of financial experts and whistle-blowers. At least some of the SEC investigators doubted whether Madoff was even trading.
Due to concerns of improper conduct by Inspector General Kotz in the Madoff investigation, Inspector General David C. Williams of the United States Postal Service was brought in to conduct an independent outside review.
The Williams Report questioned Kotz's work on the Madoff investigation, because Kotz was a "very good friend" with Markopolos. Investigators were not able to determine when Kotz and Markopolos became friends. A violation of the ethics rule would have taken place if the friendship were concurrent with Kotz's investigation of Madoff.
Investment scandal
In 1999, financial analyst Harry Markopolos had informed the SEC that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. According to Markopolos, it took him four minutes to conclude that Madoff's numbers did not add up, and another minute to suspect they were likely fraudulent. After four hours of failed attempts to replicate Madoff's numbers, Markopolos believed he had mathematically proved Madoff was a fraud. He was ignored by the SEC's Boston office in 2000 and 2001, as well as by Meaghan Cheung at the SEC's New York office in 2005 and 2007 when he presented further evidence. He has since co-authored a book with Gaytri Kachroo (the leader of his legal team) titled No One Would Listen. The book details the frustrating efforts he and his legal team made over a ten-year period to alert the government, the industry, and the press about Madoff's fraud.
Although Madoff's wealth management business ultimately grew into a multibillion-dollar operation, none of the major derivatives firms traded with him because they did not believe his numbers were real. None of the major Wall Street firms invested with him, and several high-ranking executives at those firms suspected his operations and claims were not legitimate. Others contended it was inconceivable that the growing volume of Madoff's accounts could be competently and legitimately serviced by his documented accounting/auditing firm, a three-person firm with only one active accountant.
The Central Bank of Ireland failed to spot Madoff's gigantic fraud when he started using Irish funds and had to supply large amounts of information, which would have been enough to enable Irish regulators to uncover the fraud much earlier than late 2008 when he was finally arrested in New York.
The Federal Bureau of Investigation report and federal prosecutors' complaint says that during the first week of December 2008, Madoff confided to a senior employee, identified by Bloomberg News as one of his sons, that he said he was struggling to meet $7 billion in redemptions. For years, Madoff had simply deposited investors' money in his business account at JPMorganChase and withdrew money from that account when they requested redemptions. He had scraped together just enough money to make a redemption payment on November 19. However, despite getting cash infusions from several longtime investors, by the week after Thanksgiving it was apparent that there was not enough money to even begin to meet the remaining requests. His Chase account had over $5.5 billion in mid-2008, but by late November was down to $234 million--not even a fraction of the outstanding redemptions. On December 3, he told longtime assistant Frank DiPascali, who had overseen the fraudulent advisory business, that he was finished. On December 9, he told his brother about the fraud.
According to the sons, Madoff told Mark Madoff on the following day, December 9, that he planned to pay out $173 million in bonuses two months early. Madoff said that "he had recently made profits through business operations, and that now was a good time to distribute it." Mark told Andrew Madoff, and the next morning they went to their father's office and asked him how he could pay bonuses to his staff if he was having trouble paying clients. They then traveled to Madoff's apartment, where with Ruth Madoff nearby, Madoff told them he was "finished," that he had "absolutely nothing" left, and that his investment fund was "just one big lie" and "basically, a giant Ponzi scheme."
According to their attorney, Madoff's sons then reported their father to federal authorities. Madoff had intended to wind up his operations over the remainder of the week before having his sons turn him in; he'd directed DiPascali to use the remaining money in his business account to cash out the accounts of several family members and favored friends. However, as soon as they left their father's apartment, Mark and Andrew immediately contacted a lawyer, who in turn got them in touch with federal prosecutors and the SEC. On December 11, 2008, Madoff was arrested and charged with securities fraud.
Madoff posted $10 million bail in December 2008 and remained under 24-hour monitoring and house arrest in his Upper East Side penthouse apartment until March 12, 2009, when Judge Denny Chin revoked his bail and remanded him to the Metropolitan Correctional Center. Chin ruled that Madoff was a flight risk because of his age, his wealth, and the prospect of spending the rest of his life in prison. Prosecutors filed two asset forfeiture pleadings which include lists of valuable real and personal property as well as financial interests and entities owned or controlled by Madoff.
Madoff's lawyer, Ira Sorkin, filed an appeal, which prosecutors opposed. On March 20, 2009, an appellate court denied Madoff's request to be released from jail and returned to home confinement until his sentencing on June 29, 2009. On June 22, 2009, Sorkin hand-delivered a customary pre-sentencing letter to the judge requesting a sentence of 12 years, because of tables from the Social Security Administration that his life span was predicted to be 13 years.
On June 26, 2009, Chin ordered forfeiture of $170 million in Madoff's assets. Prosecutors asked Chin to sentence Madoff to 150 years in prison. Bankruptcy Trustee Irving Picard indicated that "Mr. Madoff has not provided meaningful cooperation or assistance."
In settlement with federal prosecutors, Madoff's wife Ruth agreed to forfeit her claim to US$85 million in assets, leaving her with $2.5 million in cash. The order allowed the SEC and Court appointed trustee Irving Picard to pursue Ruth Madoff's funds. Massachusetts regulators also accused her of withdrawing $15 million from company-related accounts shortly before he confessed.
In February 2009, Madoff reached an agreement with the SEC. It was later revealed that as part of the agreement, Madoff accepted a lifetime ban from the securities industry.
Picard sued Madoff's sons, Mark and Andrew, his brother Peter, and Peter's daughter, Shana, for negligence and breach of fiduciary duty, for $198 million. The defendants had received over $80 million in compensation since 2001.
Mechanics of the fraud
According to the SEC indictment against Annette Bongiorno and Joann Crupi, two back office workers who worked for Madoff, they created false trading reports based on the returns that Madoff ordered for each customer. For example, when Madoff determined a customer's return, one of the back office workers would enter a false trade report with a previous date and then enter a false closing trade in the amount required to produce the required profit, according to the indictment. Prosecutors allege that Bongiorno used a computer program specially designed to backdate trades and manipulate account statements. They quote her as writing to a manager in the early 1990s "I need the ability to give any settlement date I want." In some cases, returns were allegedly determined before the account was even opened.
On a daily basis, DiPascali and his team on the 17th floor of the Lipstick Building--where the scam was based (Madoff's brokerage was based on the 19th floor, while the main entrance and conference room were on the 18th floor)--watched the closing price of the S&P 100. They then picked the best-performing stocks and used them to create bogus "baskets" of stocks as the basis for false trading records, which Madoff claimed were generated from his supposed "split-strike conversion" strategy, in which he bought blue-chip stocks and took options contracts on them. They frequently made their "trades" at a stock's monthly high or low, resulting in the high "returns" that they touted to customers. On occasion, they slipped up and dated trades as taking place on weekends and federal holidays, though this was never caught.
Over the years, Madoff admonished his investors to keep quiet about their relationship with him. This was because he was well aware of the finite limits that existed for a legitimate split-strike conversion. He knew that if the amount he "managed" became known, investors would question whether he could trade on the scale he claimed without the market reacting to his activity, or whether there were enough options to hedge his stock purchases. Indeed, at least as early as 2001, Harry Markopolos discovered that for Madoff's strategy to be legitimate, he would have had to buy more options on the Chicago Board Options Exchange than actually existed. Additionally, at least one hedge fund manager revealed that she balked at investing with Madoff because she didn't believe there was enough volume to support his purported trading activity.
Madoff admitted during his March 2009 guilty plea that the essence of his scheme was to deposit client money into a Chase account, rather than invest it and generate steady returns as clients had believed. When clients wanted their money, "I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds," he told the court.
Madoff maintained that he began his fraud in the early 1990s, prosecutors believed it was underway as early as the 1980s. DiPascali, for instance, told prosecutors that he knew the investment advisory business was a sham at some point in the late 1980s or early 1990s. An investigator charged with reconstructing Madoff's scheme believes that the fraud was well underway as early as 1964. Reportedly, Madoff told an acquaintance soon after his arrest that the fraud began "almost immediately" after his firm opened his doors. Bongiorno, who spent over 40 years with Madoff, told investigators that she was doing "the same things she was doing in 2008" that she did when she first joined the firm.
Affinity fraud
Madoff targeted wealthy American Jewish communities, using his in-group status to obtain investments from Jewish individuals and institutions. Affected Jewish charitable organizations considered victims of this affinity fraud include Hadassah, the Women's Zionist Organization of America, the Elie Wiesel Foundation and Steven Spielberg's Wunderkinder Foundation. Jewish federations and hospitals lost millions of dollars, forcing some organizations to close. The Lappin Foundation, for instance, was forced to close temporarily because it had invested its funds with Madoff.
Size of loss to investors
David Sheehan, chief counsel to trustee Picard, stated on September 27, 2009, that about $36 billion was invested into the scam, returning $18 billion to investors, with $18 billion missing. About half of Madoff's investors were "net winners," earning more than their investment. The withdrawal amounts in the final six years were subject to "clawback" (return of money) lawsuits.
In a May 4, 2011, statement, trustee Picard said that the total fictitious amounts owed to customers (with some adjustments) were $57 billion, of which $17.3 billion was actually invested by customers. $7.6 billion has been recovered, but pending lawsuits, only $2.6 billion is available to repay victims. If all the recovered funds are returned to victims, their net loss would be under $10 billion.
The Internal Revenue Service ruled that investors' capital losses in this and other fraudulent investment schemes will be treated as business losses, thereby allowing the victims to claim them as net operating losses to reduce tax liability more easily.
The size of the fraud was stated as $65 billion early in the investigation. Former SEC Chairman Harvey Pitt estimated the actual net fraud to be between $10 and $17 billion. One difference between the estimates concerns the method of calculation. One method calculates losses as the total amount that victims thought they were owed, but will never receive. The smaller estimates use a different method, subtracting the total cash received from the scheme from the total cash paid into the scheme, after excluding from the calculation persons accused of collaborating with the scheme, persons who invested through "feeder funds," and anyone who received more cash from the scheme than they paid in. Erin Arvedlund, who publicly questioned Madoff's reported investment performance in 2001, stated that the actual amount of the fraud might never be known, but was likely between $12 and $20 billion.
Jeffry Picower, rather than Madoff, appears to have been the largest beneficiary of Madoff's Ponzi scheme, and his estate settled the claims against it for $7.2 billion.
Entities and individuals affiliated with Fred Wilpon and Saul Katz received $300 million in respect of investments in the scheme. Wilpon and Katz "categorically reject[ed]" the charge that they "ignored warning signs" about Madoff's fraud.
On November 9, 2017, the U.S. government announced that it would begin paying out $772.5 million to more than 24,000 victims of the Ponzi scheme .
Plea, sentencing, and prison life
On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, including securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC. The plea was the response to a criminal complaint filed two days earlier, which stated that over the past 20 years, Madoff had defrauded his clients of almost $65 billion in the largest Ponzi scheme in history. Madoff insisted he was solely responsible for the fraud. Madoff did not plea bargain with the government. Rather, he pleaded guilty to all charges. It has been speculated that Madoff pleaded guilty instead of cooperating with the authorities in order to avoid naming any associates and co-conspirators who were involved with him in the scheme.
In November 2009, David G. Friehling, Madoff's accounting front man and auditor, pleaded guilty to securities fraud, investment adviser fraud, making false filings to the SEC, and obstructing the IRS. He admitted to merely rubber-stamping Madoff's filings rather than auditing them. Friehling extensively cooperated with federal prosecutors and testified at the trials of five former Madoff employees, all of whom were convicted and sentenced to between 2½ and 10 years in prison. Although he could have been sentenced to more than 100 years in prison, because of his cooperation, Friehling was sentenced in May 2015 to one year of home detention and one year of supervised release. His involvement made the Madoff scheme by far the largest accounting fraud in history.
Madoff's right-hand man and financial chief, Frank DiPascali, pleaded guilty to 10 federal charges in 2009 and (like Friehling) testified for the government at the trial of five former colleagues, all of whom were convicted. DiPascali faced a sentence of up to 125 years, but he died of lung cancer in May 2015, before he could be sentenced.
In his plea allocution, Madoff stated he began his Ponzi scheme in 1991. He admitted he had never made any legitimate investments with his clients' money during this time. Instead, he said, he simply deposited the money into his personal business account at Chase Manhattan Bank. When his customers asked for withdrawals, he paid them out of the Chase account -- a classic "robbing Peter to pay Paul" scenario. Chase and its successor, JPMorgan Chase, may have earned as much as $483 million from his bank account. He was committed to satisfying his clients' expectations of high returns, despite an economic recession. He admitted to false trading activities masked by foreign transfers and false SEC filings. He stated that he always intended to resume legitimate trading activity, but it proved "difficult, and ultimately impossible" to reconcile his client accounts. In the end, Madoff said, he realized that his scam would eventually be exposed.
On June 29, 2009, Judge Chin sentenced Madoff to the maximum sentence of 150 years in federal prison. Madoff's lawyers initially asked the judge to impose a sentence of 7 years, and later requested that the sentence be 12 years, because of Madoff's advanced age of 71 and his limited life expectancy.
Madoff apologized to his victims, saying,
I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This is something I will live in for the rest of my life. I'm sorry.
He added, "I know that doesn't help you," after his victims recommended to the judge that he receive a life sentence. Judge Chin had not received any mitigating factor letters from friends or family testifying to Madoff's good deeds. "The absence of such support is telling," he said.
Judge Chin also said that Madoff had not been forthcoming about his crimes. "I have a sense Mr. Madoff has not done all that he could do or told all that he knows," said Chin, calling the fraud "extraordinarily evil", "unprecedented", and "staggering", and that the sentence would deter others from committing similar frauds. Judge Chin also agreed with prosecutors' contention that the fraud began at some point in the 1980s. He also noted that Madoff's crimes were "off the charts" since federal sentencing guidelines for fraud only go up to $400 million in losses.
Ruth did not attend court but issued a statement, saying "I am breaking my silence now because my reluctance to speak has been interpreted as indifference or lack of sympathy for the victims of my husband Bernie's crime, which is exactly the opposite of the truth. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years."
Incarceration
Madoff's attorney asked the judge to recommend that the Federal Bureau of Prisons place Madoff in the Federal Correctional Institution, Otisville, which is located 70 miles (110 km) from Manhattan. The judge, however, only recommended that Madoff be sent to a facility in the Northeast United States. Madoff was transferred to the Federal Correctional Institution Butner Medium near Butner, North Carolina, about 45 miles (72 km) northwest of Raleigh; he is Bureau of Prisons Register #61727-054. Jeff Gammage of the Philadelphia Inquirer said "Madoff's heavy sentence likely determined his fate."
Madoff's projected release date is November 14, 2139. The release date, described as "academic" in Madoff's case because he would have to live to the age of 201, reflects a reduction for good behavior. On October 13, 2009, it was reported that Madoff experienced his first prison yard fight with another inmate, also a senior citizen. When he began his sentence, Madoff's stress levels were so severe that he broke out in hives and other skin maladies soon after.
On December 18, 2009, Madoff was moved to Duke University Medical Center in Durham, North Carolina, and was treated for several facial injuries. A former inmate later claimed that the injuries were received during an alleged altercation with another inmate.
Other news reports described Madoff's injuries as more serious and including "facial fractures, broken ribs, and a collapsed lung". The Federal Bureau of Prisons said Madoff signed an affidavit on December 24, 2009, which indicated that he had not been assaulted and that he had been admitted to the hospital for hypertension.
In his letter to his daughter-in-law, Madoff said that he was being treated in prison like a "Mafia don".
They call me either Uncle Bernie or Mr. Madoff. I can't walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up. It's really quite sweet, how concerned everyone is about my well being, including the staff [...] It's much safer here than walking the streets of New York.
After an inmate slapped Madoff because he had changed the channel on the TV, it was reported that Madoff befriended Carmine Persico, boss of the Colombo crime family since 1973, one of New York's five American Mafia families. It was believed Persico had intimidated the inmate who slapped Madoff in the face.
Personal life
On November 28, 1959, Madoff married Ruth Alpern, whom he had met while attending Far Rockaway High School. The two eventually began dating. Ruth graduated from high school in 1958, and earned her bachelor's degree at Queens College. She was employed at the stock market in Manhattan before working in Madoff's firm, and she founded the Madoff Charitable Foundation. Bernard and Ruth Madoff had two sons: Mark (March 11, 1964 - December 11, 2010), a 1986 graduate of the University of Michigan, and Andrew (April 8, 1966 - September 3, 2014), a 1988 graduate of University of Pennsylvania's Wharton Business School. Both sons later worked in the trading section alongside paternal cousin Charles Weiner.
Several family members worked for Madoff. His younger brother, Peter, an attorney, was Senior Managing Director and Chief Compliance Officer, and Peter's daughter, Shana Madoff, also an attorney, was the firm's compliance attorney. On the morning of December 11, 2010 -- exactly two years after Bernard's arrest -- his son Mark was found dead in his New York City apartment. The city medical examiner ruled the cause of death as suicide by hanging.
Over the years, Madoff's sons had borrowed money from their parents, to purchase homes and other property. Mark Madoff owed his parents $22 million, and Andrew Madoff owed them $9.5 million. There were two loans in 2008 from Bernard Madoff to Andrew: $4.3 million on October 6, and $250,000 on September 21. Andrew owned a Manhattan apartment and a home in Greenwich, Connecticut, as did his brother Mark prior to his death.
Following a divorce from his first wife in 2000, Mark withdrew money from an account. Both sons used outside investment firms to run their own private philanthropic foundations. In March 2003, Andrew Madoff was diagnosed with mantle cell lymphoma and eventually returned to work. He was named chairman of the Lymphoma Research Foundation in January 2008, but resigned shortly after his father's arrest.
Peter Madoff (and Andrew Madoff, before his death) remained the targets of a tax fraud investigation by federal prosecutors, according to The Wall Street Journal. David Friehling, Bernard Madoff's tax accountant, who pleaded guilty in a related case, is reportedly assisting in the investigation. According to a civil lawsuit filed in October 2009, trustee Irving Picard alleges that Peter Madoff deposited $32,146 into his Madoff accounts and withdrew over $16 million; Andrew deposited almost $1 million into his accounts and withdrew $17 million; Mark deposited $745,482 and withdrew $18.1 million.
Bernard Madoff lived in Roslyn, New York, in a ranch house through the 1970s. After 1980 he owned an ocean-front residence in Montauk. His primary residence was on Manhattan's Upper East Side, and he was listed as chairman of the building's co-op board. He also owned a home in France and a mansion in Palm Beach, Florida, where he was a member of the Palm Beach Country Club. Madoff owned a 55-foot (17 m) sportfishing yacht named Bull. All three homes were auctioned by the U.S. Marshals Service in September 2009.
Sheryl Weinstein, former chief financial officer of Hadassah, disclosed in a memoir that she and Madoff had had an affair more than 20 years earlier. As of 1997, when Weinstein left, Hadassah had invested a total of $40 million. By the end of 2008, Hadassah had withdrawn more than $130 million from its Madoff accounts and contends its accounts were valued at $90 million at the time of Madoff's arrest. At the victim impact sentencing hearing, Weinstein testified, calling him a "beast".
According to a March 13, 2009 filing by Madoff, he and his wife were worth up to $126 million, plus an estimated $700 million for the value of his business interest in Bernard L. Madoff Investment Securities LLC. Other major assets included securities ($45 million), cash ($17 million), half-interest in BLM Air Charter ($12 million), a 2006 Leopard yacht ($7 million), jewelry ($2.6 million), Manhattan apartment ($7 million), Montauk home ($3 million), Palm Beach home ($11 million), Cap d' Antibes, France property ($1 million), and furniture, household goods, and art ($9.9 million).
During a 2011 interview on CBS, Ruth Madoff claimed she and her husband had attempted suicide after his fraud was exposed, both taking "a bunch of pills" in a suicide pact on Christmas Eve 2008. In November 2011, former Madoff employee David Kugel pleaded guilty to charges that arose out of the scheme. He admitted having helped Madoff create a phony paper trail, the false account statements that were supplied to clients.
Bernard Madoff suffered a heart attack in December 2013, and reportedly suffers from end-stage renal disease (ESRD). According to CBS New York and other news sources, Madoff claimed in an email to CNBC in January 2014 that he has kidney cancer but this is unconfirmed.
Philanthropy and other activities
Madoff was a prominent philanthropist, who served on boards of nonprofit institutions, many of which entrusted his firm with their endowments. The collapse and freeze of his personal assets and those of his firm affected businesses, charities, and foundations around the world, including the Chais Family Foundation, the Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT Foundation which were forced to close. Madoff donated approximately $6 million to lymphoma research after his son Andrew was diagnosed with the disease. He and his wife gave over $230,000 to political causes since 1991, with the bulk going to the Democratic Party.
Madoff served as the chairman of the board of directors of the Sy Syms School of Business at Yeshiva University, and as Treasurer of its Board of Trustees. He resigned his position at Yeshiva University after his arrest. Madoff also served on the Board of New York City Center, a member of New York City's Cultural Institutions Group (CIG). He served on the executive council of the Wall Street division of the UJA Foundation of New York which declined to invest funds with him because of the conflict of interest.
Madoff undertook charity work for the Gift of Life Bone Marrow Foundation and made philanthropic gifts through the Madoff Family Foundation, a $19 million private foundation, which he managed along with his wife. They donated money to hospitals and theaters. The foundation has also contributed to many educational, cultural, and health charities, including those later forced to close because of Madoff's fraud. After Madoff's arrest, the assets of the Madoff Family Foundation were frozen by a federal court.
Impact of Madoff
The systemic problems exposed in the Madoff prosecution have not improved remedies for fraud victims. Indeed, since the exposure, it has become far harder for a fraud victim to prevail. In 2009, the Supreme Court required a plaintiff to establish his claim before any disclosure is required by the defendant. "Labels and conclusions" and "a formulaic recitation of the elements of a cause of action" will not suffice. Thus, correct statements about fraud will not be enough by themselves to support a lawsuit; plaintiffs are required to have some actual evidence in order to proceed.
In the media
- On May 12, 2009, PBS Frontline aired The Madoff Affair, and subsequently ShopPBS made DVD videos of the show and transcripts available for purchase by the public at large.
- Imagining Madoff is a 2010 play by Deb Margolin that tells the story of an imagined encounter between Madoff and his victims. The play generated controversy when Elie Wiesel, originally portrayed as a character in the play, threatened legal action, forcing Margolin to substitute a fictional character, "Solomon Galkin". The play was nominated for a 2012 Helen Hayes Award.
- A documentary, Chasing Madoff, describing Harry Markopolos' efforts to unmask the fraud, was released in August 2011.
- Woody Allen's 2013 film Blue Jasmine portrays a fictional couple involved in a similar scandal.
- In God We Trust (2013), a documentary about Eleanor Squillari, Madoff's secretary for 25 years and her search for the truth about the fraud (The Halcyon Company).
- Madoff is played by Robert De Niro in the May 2017 HBO film The Wizard of Lies, based on the best-selling book by Diana B. Henriques. Michelle Pfeiffer plays Ruth Madoff in the film, which was released on May 20, 2017.
- Madoff, a miniseries by ABC starring Richard Dreyfuss and Blythe Danner as Bernard and Ruth Madoff, aired on February 3 and 4, 2016.
- "Ponzi Super Nova", an episode of the podcast Radiolab released February 10, 2017, in which Madoff is interviewed over prison phone.
- Chevelle's song "Face to the Floor", as described by the band, is a "pissed off, angry song about people who got taken by the Ponzi scheme that Bernie Madoff had for all those years."
See also
- Affinity fraud
- Financial crisis of 2007-2008
- List of investors in Bernard L. Madoff Investment Securities
- Madoff investment scandal
- Participants in the Madoff investment scandal
- Recovery of funds from the Madoff investment scandal
- White-collar crime
References
External links
- Criminal complaint, transcripts of hearings and other documents from the United States Department of Justice
- Bernard L. Madoff Investment Securities website at the Wayback Machine (archived August 22, 2007)
- Madoff's current location within the Bureau of Prisons system
- The Independent: Madoff reveals his suffering
- The Face That Launched A Thousand Lawsuits - Madoff's Legacy
Source of article : Wikipedia
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