Bernard Madoff, the imprisoned confidence trickster, has laid the blame for his ruinous Ponzi scheme at the feet of banks and wealthy investors he claims didn’t care whether his firm was legitimate or not in a series of never-before-heard recordings.
The interviews, part of author Steve Fishman’s new audio series, Ponzi Supernova, feature much of Madoff’s characteristic refusal to take responsibility for paying his investors out of each other’s pockets.
Bernard L Madoff Investment Securities promised huge returns from canny investments but in reality paid investors with other early investors’ cash. As the firm became more and more “successful” Madoff said the banks that at first shunned him were suddenly beating down his door: “All of a sudden these banks give you the time of day. They’re willing to give you a billion dollars. I had all of these major banks coming down and entertaining me. It is a head trip,” he tells Fishman.
Madoff was found guilty of defrauding thousands of investors of billions of dollars on 29 June 2009. He was sentenced to 150 years in prison with restitution of $170bn and is serving his sentence at the Butner federal correctional complex in Durham, North Carolina.
Fishman, who conducted three hours of interviews with Madoff personally, points out that while the fraudster ruined many lives, roughly half of Madoff’s investors still ended up in the black. “Yeah, he was a criminal talent, with God-given gifts in a sense, but Madoff was Patient Zero,” Fishman said. “What really makes him a pandemic is all the feeder funds [who introduced new clients to Madoff] and the banks,” Fishman told the Guardian. “They take him around the world. They recruit investors, in Latin America and through Europe, and they basically pour gasoline on this dumpster fire. Madoff could have been kind of a local swindler until he meets this massive distribution network.”
The forgeries committed on some clients’ documents, Fishman said, were even done as if to order by some clients. According to ex-FBI agent Steve Garfinkel, Annette Bongiorno, Madoff’s longtime assistant and first employee, would doctor statements on request. Clients would call to complain that Madoff promised 18% but they’d gotten 16%. Bongiorno would respond with an amended statement showing the promised rate. Bongiorno began her own sentence of six years for her role in the scheme in 2014.
While he will spend the rest of his life in jail, the 73-year-old Madoff is upbeat about his circumstances on the series, bragging about how his doors “are not locked at night”.
“I have a pretty big picture window – you can’t open it,” he tells Fishman.
But life behind bars has not always been easy. Other prisoners say Madoff didn’t learn courtesy quickly enough – one interviewee recounts Madoff trying to change the television to a news report featuring his crimes while another inmate was watching something else. The other – much younger – man ended the dispute with “an open-hand slap”.
Madoff got away with it for so long, he and others tell Fishman, because the inexperienced US Securities and Exchange Commission (SEC) regulators chasing him didn’t know what they were looking for, and because his operation stayed one step ahead of the regulator. In one anecdote, Madoff simply rifles through an inspector’s briefcase until he finds that he’s being pursued for “front-running” – the practice of buying for yourself on advance information before you pass it on to investors.
That seemed logical, Madoff admits, “except it wasn’t true, and it was illegal!”
Madoff orchestrated office-wide performances for the investigators who were sent to his offices to search for evidence of wrongdoing, former US attorney Matthew Schwartz tells Fishman. Because his investment returns were so big the regulators were suspicious, but they didn’t know how or what was going on. When an investigator asked to see a report that a legitimate firm would have on hand in the course of its normal businesses, Madoff’s second-in-command, Frank DiPascali, stalled for time while downstairs others printed out a faked report, put it in the refrigerator so it wouldn’t be obviously warm from the printer, and “played football with it”, Schwartz says – tossing it back and forth across the room like a football to make it look weathered.
Set dressing was also important: on the credenza behind his desk, Madoff displayed a sculpture by the renowned artist Claes Oldenburg of a giant black screw, listing a little to one side. The 1976 sculpture, called Soft Screw, drew nearly $50,000 at Sotheby’s when Madoff’s assets were sold off after his disgrace.
When financial regulators visited his firm’s offices, Madoff put the Soft Screw away.