"Madoff was motivated by control not greed"

AuthorHila Weissberg
Published date21 March 2023
Publication titleGlobes (Rishon LeZion, Israel)
Madoff was on the verge of a nervous breakdown. He decided to gather his family members together at a penthouse in New York - his wife Ruth, and sons Mark and Andrew - and reveal to them the secret, which only he and a handful of his close associates had known about until that day. His investment activity was nothing more than a pyramid scheme. The money was never invested. The phenomenal returns, 11% per year, were fictitious and obtained through more and more investor cash. So, he created, over 45 years, what became the largest Ponzi scheme in history. "I could no longer go on with this show," Madoff said in a videotaped deposition from prison, given in 2016. While Mark and Andrew reacted with astonishment and anger, Ruth looked at her husband in bewilderment and asked: "What's a Ponzi scheme?." His sons hurried to hand him over to the FBI

Ruth talked about her unbelievable "What's a Ponzi scheme?" reaction with Jim Campbell, an American radio broadcaster and author of the book Madoff Talks. The book also became the basis for the successful series on Netflix, Madoff - The Monster of Wall Street, which aired at the beginning of this year.

"We were in the room together and I asked Ruth what were the first words she said after Bernie confessed to the fraud," says Campbell in a recent Zoom interview from his home in Greenwich, Connecticut. In addition to Ruth and Bernie Madoff, Campbell also interviewed his son Andrew (who died of cancer in 2014), Andrew's fiancée Catherine Hooper, Madoff's personal secretary for 25 years Eleanor Squillari, and many other experts.

Campbell worked on the book for almost a decade, and it was finally published in 2021. With Bernie Madoff himself, he conducted a correspondence spanning 400 pages, over five years. "Bernie expressed there a deep desire to be understood," says Campbell. "He had a brilliant mind that was sometimes in denial, sometimes delusional. My attempts to have personal meetings with him in prison were rejected on the grounds that I was a security risk."

What surprised you the most about Bernie?

"His mind. He had no remorse. Narcissists turn themselves into victims. He would write, for example: 'My lawyer tells me I need to show remorse,' and then continued by writing 'These guys [the investors] were greedy. They demanded I show results.' He was open about the scam, saying, 'Yeah, I messed up, it was illegal and so on, but everything else was unfair.'"

The mysteries of the 17th floor

Apparently, everything has already been said and written about the man behind the largest Ponzi scheme in history, amounting to $65 billion, which destroyed the lives of small investors alongside huge entities, many of them from Jewish institutions such as Hadassah and Yeshiva University. Over five decades, 37,000 clients from 136 countries invested with Madoff. Celebrities, aristocratic European families, universities, charities, banks, hedge funds and investment houses. Some didn't even know they were invested with him.

But the book and the series succeeded in arousing a renewed interest in the case because they cast a spotlight on many issues that were not known in depth. They revealed, for example, that Madoff ran two completely different businesses from Manhattan's Lipstick Building. On the 19th floor there was a normal, even thriving, financial business. His sons, Mark and Andrew, were involved in his management, as well as Madoff 's brother, Peter, whose role was - ironically - in charge of regulation. But just two floors below, on the 17th floor, was the shady business. While the 19th floor was technological and sophisticated ("Even the picture frames had to be approved"), the 17th floor was the complete opposite, "with technology from the 1980s. How does one person manage two such different places in the same time? It's crazy," says Campbell.

No one was allowed to enter the 17th floor, except for a small group of employees, who were bribed with huge salaries and allowed the operation to operate in the dark for years. Madoff 's right-hand man in the management of the scam was Frank DiPascali Jr., nicknamed "Chief Fraud Officer" by his own lawyer. DiPascali began working for Madoff in 1975, aged just 19, and eventually died of lung cancer in 2015 while awaiting sentencing.

There were four other people without whom the fraud would not have grown to the huge proportions it reached, a group called "The Big Four." These were the main investors in the fund, led by Jeffry Picower, whom Madoff called "both a devil and an angel". He was the largest investor, who also withdrew amounts from the fund as he pleased, but Madoff was dependent on the funds he put into it. When the fraud was revealed, Picower had $7 billion, seven times Madoff 's own net worth, but according to Campbell, "I don't think Picower knew it was a Ponzi scheme, though he did know Madoff was involved in illegal matters." Some of the funds were returned to the trustee who was entrusted with returning the funds to the victims. "I had to keep Picower happy. Yes, a bribe, if you will," Madoff wrote to Campbell. "You must have heard the saying, 'Keep your friends close and your enemies closer.'"

The series...

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