Ffirs.indd Ii 7/24/09 8:52:41 PM - Weebly
f ro mf ro n tf l a p )Engaging and at times unbelievable, Madoff with theMoney weaves stories of Madoff ’s past with those ofthe present and delves into the details of the elusiveman who lost investors billions. While a lot has beenwritten about the Bernie Madoff debacle, no other account digs as deep or goes as far to uncover the truthbehind the man and his incredible scam.Photo: Caroline Walton HoweJERRY OPPENHEIMER has written eight biographies ofmajor American icons, from Martha Stewart and Barbara Walters to the Clintons and Kennedys, and hasworked in all facets of journalism, from national investigative reporting in Washington, D.C., to producingTV news and documentaries. He’s quoted in magazines such as Vanity Fair and is a frequent guest onnational TV interview and syndicated magazine shows,including Good Morning America, EntertainmentTonight, Extra, Anderson Cooper 360 , Nancy Grace,BBC News, Fox News, and more. He is also theauthor of the Wiley title Toy Monster: The Big, BadWorld of Mattel.Jacket Design: Michael J. FreelandJacket Photograph: Getty ImagesPraise forJerry Oppenheimer’s Toy Monster“Jerry Oppenheimer, best known for mordant biographies like Just Desserts (about MarthaStewart) or State of a Union (on Bill and Hillary Clinton’s marriage), has now trained hissights on the world’s biggest toy company—its egos, scandals, and flawed products. In histoyland, nothing is cute.”—T h e W a l l S t r e e t J o u r n a l“Oppenheimer takes a tour of Mattel’s seamier side, highlighting its dubious corporate practices and kooky cast in this scathing portrait. . . . Fast-paced andengaging, this exposé will absorb readers until the last page and will forever change theway they think about the company.”—P u b l i s h e r s W e e k l y“This juicy exposé shows that life inside the 64-year-old company was hardly always funand games.”—Pe o p l e m a g a z i n ehile Bernie Madoff may have pulled off one of the biggest financial scams ever,the details of his life and long-running ruse are still cloaked in mystery with morequestions than answers. Until now.WIn Madoff with the Money, Oppenheimer goes behind the glaring headlines, the myriad lawsuits, indictments, and complaints to tell the real story of the enigmatic, bizarrelife of Ponzi King Bernie Madoff—who Nobel Peace Prize Laureate and Madoff victimElie Wiesel called “a thief, scoundrel, criminal . . . psychopath [is] too nice a word forhim.” From dozens of exclusive, news-making interviews with the people who knewMadoff best—or thought they did—a shocking portrait emerges. From the one-timenobody who uses his cunning and street smarts we see emerge a respected Wall Streettitan, all the while leading a twisted life with multiple personas like a financial Dr. Jekylland Mr. Hyde.OPPENHEIMERMADOFFMONEY( c o n t i n u e d 24.95 USA / 29.95 CAN“I said to Bernie, ‘What’s going on? What are yougetting ready for?” because he’s drinking this weirdmix–whiskey and taking this other stuff to calm hisstomach–and all he says is, ‘I’m getting ready to dobattle. I’m getting ready to make a decision.’ That’s allhe said. It sounds nuts, but it’s more like the bizarreworld of Madoff.”—From Madoff with the MoneyMWITH THEJERRYOPPENHEIMERN E Wmatte finish w /spot lam on title and author’s nameThrough Jerry Oppenheimer’s in-depth reporting,you’ll discover Bernie Madoff as the high school English class cheat, the gung-ho ROTC cadet who pullsa fast one on Uncle Sam, and the ambitious macherwho has very special reasons for choosing “Josie College” as his lawful wedded wife. The exclusive materialalso includes a Madoff family member who speaks outfor the first time. You’ll find new revelations in thisstartling case and become familiar with the trustingvictims—ranging from nonprofit Jewish charities tothe likes of seemingly sophisticated individuals suchas actress Jane Fonda, who would “like to shake Madoff until his teeth fall out” to the scion of the BaskinRobbins ice cream empire, who lost a bundle and wasforced to rent out rooms in his house. There’s even anumber of Madoff ’s own family members, includinghis sister and sister-in-law and talk show host LarryKing, who apparently didn’t ask the right questionswhen they invested. Some lost their much-neededlife savings, while others saw fortunes small and largeevaporate in the greedy financial operations of one ofhistory’s all-time charlatans. Oppenheimer also unearths details on Madoff ’s “stockbroker guru” doingbusiness with the Mob, the adultery hush money, andthen there are the many compulsions, obsessions, andfetishes that read like something out of a psychologytextbook, and much, much more.Y O R KT I M E SB E S T S E L L I N GA U T H O RMadoff will spend the rest of his life in prison. But themindboggling case of the fraudster is far from over,and will continue beyond many of our lifetimes, asan army of federal prosecutors, lawyers, and forensicaccountants search for the missing money, and tryto find out who knew what and when. His wife? Hissons? His brother? Others?( c o n t i n u e do nb a c kf l a p )
ffirs.indd ii7/24/09 8:52:41 PM
WITH THEMADOFFMONEYffirs.indd i7/24/09 8:52:41 PM
ffirs.indd ii7/24/09 8:52:41 PM
WITH THEMADOFFMONEYJERRYOPPENHEIMERJohn Wiley & Sons, Inc.ffirs.indd iii7/24/09 8:52:41 PM
Copyright 2009 by Jerry Oppenheimer. All rights reserved.Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.No part of this publication may be reproduced, stored in a retrieval system, or transmittedin any form or by any means, electronic, mechanical, photocopying, recording, scanning,or otherwise, except as permitted under Section 107 or 108 of the 1976 UnitedStates Copyright Act, without either the prior written permission of the Publisher,or authorization through payment of the appropriate per-copy fee to the CopyrightClearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax(978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher forpermission should be addressed to the Permissions Department, John Wiley & Sons, Inc.,111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online athttp://www.wiley.com/go/permissions.Limit of Liability/Disclaimer of Warranty: While the publisher and author have used theirbest efforts in preparing this book, they make no representations or warranties with respectto the accuracy or completeness of the contents of this book and specifically disclaim anyimplied warranties of merchantability or fitness for a particular purpose. No warrantymay be created or extended by sales representatives or written sales materials. The adviceand strategies contained herein may not be suitable for your situation.You should consultwith a professional where appropriate. Neither the publisher nor author shall be liable forany loss of profit or any other commercial damages, including but not limited to special,incidental, consequential, or other damages.For general information on our other products and services or for technical support, pleasecontact our Customer Care Department within the United States at (800) 762-2974,outside the United States at (317) 572-3993 or fax (317) 572-4002.Wiley also publishes its books in a variety of electronic formats. Some content that appearsin print may not be available in electronic books. For more information about Wileyproducts, visit our web site at www.wiley.com.ISBN978-0-470-50498-7Printed in the United States of America10 9 8 7 6 5 4 3 2 1ffirs.indd iv7/24/09 8:52:44 PM
For all the legitimate victims of Bernie Madoff’s Ponzi scheme,this story is for youffirs.indd v7/24/09 8:52:44 PM
ffirs.indd ii7/24/09 8:52:41 PM
ffirs.indd vi7/24/09 8:52:44 PM
ContentsProloguexiBeginning of the EndGrowing Up a MadoffBernie Hobnobs with the Wealthy, Strong-ArmsSome Pals, and Courts “Josie College”Chapter 4 From Queens to Alabama, ScammingHomeowners and Hustling StockChapter 5 Tying the Knot and Giving Uncle Samthe BusinessChapter 6 A Borscht Belt Summer Camp Sets the Stagefor Bernie’s Ponzi SchemeChapter 7 Moving On UpChapter 8 The Bagel Baker Becomes a Financial Guru,and the Mob Boys from Rockford Pay a VisitChapter 9 “Whatever You Do, Kid, Never Invest a Pennyin the Stock Market, Because It’s Run byCrooks and Sons of Bitches”Chapter 10 A Madoff Speaks Out and an Empty PromiseChapter 11 Mr. Outside versus Mr. Inside versus the SEC121Chapter 1Chapter 2Chapter 3374761698593113133145viiftoc.indd vii7/24/09 8:52:58 PM
viiiCONTENTSChapter 12 Life inside the Madoff Piggy Bank, Flashingthe Plastic, and Losing the FarmChapter 13 A Family (and Sometimes an Office) AffairChapter 14 Another Arrest, and Blood Relatives GetTaken to the CleanersEpilogueAuthor’s Note on SourcesAcknowledgmentsIndexftoc.indd viii1591832072332412432477/24/09 8:52:58 PM
If you read things in the newspaper and you see somebody violate arule, you say well, they’re always doing this. But it’s impossible for a violation to go undetected, certainly not for a considerable period of time.—Bernie Madoff, speaking at a panel session about Wall Street, October 2007flast.indd ix7/24/09 8:55:07 PM
flast.indd x7/24/09 8:55:08 PM
PrologueAround nine o’clock on the morning of Thursday, December 11,2008, the employees of Bernard L. Madoff Investment SecuritiesLLC began drifting into the midtown Manhattan firm’s high-techoffices, where everything was in tones of black and gray, the boss’s chosen colors. More than a few were a bit hung over. The night before theyhad all joined in toasting the holidays at the festive annual Christmasparty that their respected and beloved financial icon threw every year atan upscale restaurant.Despite the after effects of all the drinking and food consumption,everyone was feeling fine emotionally, if not physically. Some strongblack coffee or a couple of Tums would take care of their ills. The holidays at Madoff were always a joyous time, a time for celebration, andthis holiday season was to be no exception. That morning the employees came to work with visions of their promised year-end bonusesdancing in their heads, and with expectations of the usual splendidChristmas presents dispensed by their munificent boss, Bernie, and hislovely wife, Ruth.Despite 2008 being in the depths of a recession seemingly on a parwith the Great Depression, and with the stock market tanking, generous,xiflast.indd xi7/24/09 8:55:08 PM
xiiPROLOGUEwonderful Bernie still promised all of them bountiful bonus money.Two traders alone had brought in some 7 million in profits and werepledged 25 percent of the take.There also was no reason to doubt that Madoff ’s gifts would beunder the tree. Ruth always knew how to spend money, especiallyaround the holidays.“We used to call it Ruth’s ‘Twelve Days of Christmas,’ ” says aMadoff veteran. “Beginning in the early ’90s she’d spend at least 150,000 a day, give or take, during the holidays, buying gifts, and whoknows what else.”Her expenditures during the holiday time frame were well documented because certain Madoff employees had the responsibility ofkeeping tabs on Bernie’s and Ruth’s cash flow.“They had so much money coming in and out of their accountsthey needed five people to keep track of it,” the employee asserts.“There was a Disneyland atmosphere. Money meant nothing to theMadoffs.”Accordingly, Madoff employees were thrilled. They consideredBernie one terrific, generous, magnanimous boss. The more moneythat flowed, the better. Many of them got well-paying positions withhim right out of high school, and learned what they had to know onthe job. In return for their loyalty, they earned good salaries, better thanmost were paid in the financial sector, and nice perks, too. And a fewvery special ones even became extremely well-off, with big homes andexpensive cars and boats.A job at Madoff, if you watched your p’s and q’s, meant virtual lifetime security. “Bernie seldom fired anyone,” says a lifer. “You just gotrecycled into a different department.”Some invested wisely with Bernie, trusting his financial acumen—after all, the boss was considered an investor’s dream, a genius, and oneof the most powerful money men on Wall Street. How lucky they wereto work for him. They thought of Bernie almost like a father figure,a messiah, and most felt secure that they’d have a very pleasant retirement. Unlike the bleak situation at other financial firms in the terribleeconomy of the latter part of the first decade of the new millennium,no one from Madoff was joining the growing ranks of the unemployed.flast.indd xii7/24/09 8:55:08 PM
Prologuexiii“We were always like one big, happy family,” offers one of thoseMadoff veterans who had invested their life savings. “Bernie was ourgod, a wonderful boss, eccentric, sometimes scary eccentric, but stillwonderful. He was a stand-up guy.”But all of those warm feelings quickly evaporated around 10o’clock on that wintry December morning. Christmas 2008 for the180 or so Madoff workers (and for thousands of other Madoff victimsacross the country and around the world) was going to be far differentfrom Madoff Christmases past.The weather service had forecast “a wintry mess” for the tristateNew York metropolitan area for that Thursday.For the employees of Madoff it would be more like a horrific terrorist attack.As one longtime employee sadly observes, “12/11 was our own 9/11.”Bernie and Ruth Madoff were about to become as controversial a coupleas Julius and Ethel Rosenberg, and as infamous as Bonnie and Clyde.Around 10 o’clock that morning, the boss’s younger brother, Peter,the number two in charge of the family-run firm—Bernie’s sidekickfor some four decades—entered the trading room on the 18th floorand called for everyone’s attention.His hands were trembling, and he needed to lean against a desk tosteady himself. His voice was tremulous.“I have some bad news,” he told the gathered workers. “Bernie’sbeen arrested.”“He looked scared, teary-eyed, and everyone was suddenly in a state ofshock,” vividly recalls one of those standing there, listening in utter disbelief.“Someone asked Peter what happened, and he said he did not know whyBernie was arrested, or for what reason—or whether it was personal, orwhether it was business. He said he didn’t know whether it was for good,and he didn’t know whether it was for evil. (This was a claim that wouldlater turn out to be untrue.) And he said, ‘Don’t discuss this with anyone.’“When we found out later that day what Bernie had done,I remembered how sincere Peter had sounded that morning, and Ithought, ‘In his next career he could win an Oscar.’ ”A close and longtime elderly crony of Bernie’s who was permitted by the boss to use a desk and a phone and conduct private businessflast.indd xiii7/24/09 8:55:08 PM
xivPROLOGUEin the office whenever he wanted to—and was a major investor—happened to come in that horrific morning.“Peter made the announcement that Bernie had been arrested, andall havoc broke loose,” he recalls, the memory of the moment indeliblyimprinted. “I immediately thought, ‘It’s a mistake.’ Maybe his passport hadexpired. Maybe there was an SEC regulation that the company didn’tadhere to, and they were just going overboard on setting an example.”Though no smoking was permitted in the office, he lit one up andheld his head in his hands for half an hour, contemplating what kind ofcrazy jam his chum Bernie had gotten himself into.Then he left the office in a daze.“I was in a state of shock, and I actually walked home from 53rdStreet to 83rd Street, and never went back. People started to call me, andI told my friends, ‘It’s all a big mistake. I’m going to go to sleep tonightknowing that tomorrow morning you’ll find out it’s a mistake.’ ”In another section of the three floors on which Madoff had officesin the striking Lipstick Building, the announcement of Bernie’s arrestwas made by gregarious, likable, jeans-wearing Frank DiPascali, whoeveryone knew was the boss’s right-hand man on the 17th floor. Noone ever really knew what he did for Bernie, or for that matter whatBernie did in one of those offices on seventeen.“We didn’t have a care in the world that morning,” recalls a longtime employee. “Suddenly Frankie comes crashing in telling us theboss has been arrested by the FBI. ‘We’re not certain exactly what happened,’ he says. ‘He’s engaged a lawyer. Do not talk to the news media,period.’ That’s the first time Frankie ever gave orders like that. We wereall sitting at desks and were kind of thunderstruck. ‘What the hell didthe boss do to get arrested by the FBI?’ Little did we know.“A little while later Charlie Wiener, the boss’s nephew who washead of administration at Madoff, came in with two or three other fellows and introduced them as SEC guys and told us, ‘They are going tobe camping out here for a while.’ There was just a little trading that day,and then it stopped and we just sat at our desks like the waking dead.”Before the end of the day Bernard L. Madoff InvestmentSecurities—the firm that engendered trust because the boss’s name wasflast.indd xiv7/24/09 8:55:08 PM
Prologuexvon the door—was taken over by FBI agents, Securities and ExchangeCommission investigators, forensic accountants, and federal prosecutors.There would be no more Madoff bonuses. There would be nomore Madoff presents. There would be no more Madoff investmentreturns. There would be no more life savings. There would be no moreMadoff.All was now gone. My objective in writing this book was to inform the reader aboutBernie Madoff, the man—the self-proclaimed macher behind the biggest fraud ever perpetrated. Up until now, he has been an enigma. Mygoal as an investigative biographer was to dig deep and discover wherehe got his values and ethics—or lack thereof.This is not another static business book, a primer on white-collarcrime, but rather an in-depth profile, weaving together both the forcesthat shaped this swindler and the world in which he lived—showingthe man Bernie really was.As you read on, you will learn about his twisted family roots; hisdreams of power and riches; the questionable characters along the waywho aided and abetted him in his meteoric rise from poor boy in amiddle-class Queens, New York, neighborhood, to one of the mostpowerful men on Wall Street; how that power made him feel above thelaw; and how it resulted in his fall, his public shame and disgrace.In pursuit of that story I tracked down dozens of people whoknew Bernie best—or thought they did. As a result, a true and oftenfrightening portrait emerges from their candid characterizations andoften shocking anecdotes—not only about the man behind the scam,but about his family, the reasons he chose Ruth to be his wife, and hissons’ and brother’s rise in what has now become the infamous Madoffdynasty. The mostly on-the-record accounts shared by those sources forthe first time will, I hope, give readers a fuller, more coherent understanding of the most reviled thief who ever lived.flast.indd xv7/24/09 8:55:08 PM
flast.indd xvi7/24/09 8:55:09 PM
Chapter 1Beginning of the EndAs the economy worsened in 2008, Bernie Madoff was in desperatestraits.Calls from panicked clients had started coming in to his virtually impenetrable 17th-floor private office in the Lipstick Buildingon Manhattan’s Third Avenue—the office later identified by authoritiesas Ponzi Central, the epicenter of history’s most massive fraud—wherehis billions of dollars in personal investment accounts were handled instrictest secrecy.With the stock market crashing, with credit tighter than anyone couldremember, with unemployment hitting record highs, with the housing market in free fall, with big banks and investment houses failing orpleading for government bailouts (and getting them), and with automakergiants like General Motors and Chrysler teetering on the verge of bankruptcy, Bernie was facing his own private hell, his own priv
ffirs.indd ii 7/24/09 8:52:41 PM. ffirs.indd vi 7/24/09 8:52:44 PM. vii Contents . Chapter 11 Mr. Outside versus Mr. Inside versus the SEC 145 ftoc.indd vii 7/24/09 8:52:58 PM. viii CONTENTS Chapter 12 Life inside the Madoff Piggy Bank, Flashing the Plastic, and Losing the Farm 159 Chapter 13 A Family (and Sometimes an Offi ce) .
FFIRS.indd ii 6/2/11 12:34:44 PM. Corporate Governance FFIRS.indd i 6/2/11 12:34:44 PM. FFIRS.indd ii 6/2/11 12:34:44 PM. Corporate Governance Fifth Edition Robert A. G. Monks and Nell Minow FFIRS.indd iii 6/2/11 12:34:44 PM. This edition fi rst published in 2011
ffirs.indd i 11/12/12 12:25 PM. ffirs.indd ii 11/12/12 12:25 PM. LPIC-1 Linux Professional Institute Certification Study Guide Third Edition Roderick W. Smith John Wiley & Sons, Inc. ffirs.indd iii 11/12/12 12:25 PM. Senior Acquisitions Editor: Jeff Kellum Development Editor: Alexa Murphy
ffirs.indd i 11/12/12 12:25 PM. ffirs.indd ii 11/12/12 12:25 PM. LPIC-1 Linux Professional Institute Certification Study Guide Third Edition Roderick W. Smith John Wiley & Sons, Inc. ffirs.indd iii 11/12/12 12:25 PM. Senior Acquisitions Editor: Jeff Kellum Development Editor: Alexa Murphy
ffirs.indd ii 2/11/09 9:12:06 AM. SCJP Sun Certified Programmer . ffirs.indd vii 2/11/09 9:12:08 AM. ffirs.indd viii 2/11/09 9:12:08 AM. Contents at a Glance Introduction xvii Assessment Test xxiv Chapter 1 Fundamentals 1 Chapter 2 Declarations, Initialization, and Scoping 77
ffirs.indd ii 8/9/12 2:02 PM. . ffirs.indd xi 8/9/12 2:02 PM. ffirs.indd xii 8/9/12 2:02 PM. . Understanding the Structure of perldoc 11 Getting Started with perldoc 11 Using Tutorials and FAQs 12 Using the perldoc -f function 14 Using a Terminal Window 14 Using the Command Line 15 Creating a Work Directory 16
ffirs.indd ii 29/12/11 2:41 PM. Pass port to Profi ts fffirs.indd ifirs.indd i 119/01/12 2:38 PM9/01/12 2:38 PM. fffirs.indd iifirs.indd ii 119/01/12 2:38 PM9/01/12 2:38 PM. Passport to Profi ts Why the Next Investment Windfalls Will Be Found Abroad and How to Grab Your Share Revised and Updated .
ffirs.indd ii 1/6/11 10:36:33 AM. For my wife— a heroic woman whose patience and wisdom are without equal. ffirs.indd iii 1/6/11 10:36:34 AM. ffirs.indd iv 1/6/11 10:36:34 AM. v Contents Preface vii Experience Level Rating System (EL) ix Chapter 1 The Big Business of Penny Stocks 1
1003 / 83 1496 / 99 31 / 6 44 / 7 64 / 8 100 / 10 147 / 13 201 / 16 290 / 20 10 20 20 30 40--SYNAC 32 SYNAC 46 SYNAC 68 SYNAC 100 SYNAC 150 SYNAC 220 SYNAC 320 L0932-L0933-L0934-L0935-L0936-L0937-L0938-*Synac Series Fluids are available in Pails & Drums. See page 15 for more information and package part number suffix. LUBRIPLATE PRODUCT SAE NO. VIS. INDEX FLASH POINT FIRE POINT POUR POINT VIS .
