Swindler’s list: the Bernie Madoff story

While they don’t prove the point, the authors certainly allege, and plausibly so, that the main player in the scam was Mr Bernard L. Madoff, a highly respected well connected financier, previous NASDAQ chairman, and a member of a retinue of exclusive clubs. Involved since 1960 in managing financial assets, he claims to have an uninterrupted record of consistent market-defying mind-blowing financial performance. So as to enhance his financial reputation, he often turned away investors only too eager to participate.

While there is no disputing his involvement in the scam, it is reasonable to conclude that he was far from being the only player.

While financial expert Mr Harry Markopolous was the loudest to warn of Mr Madoff in 2005, an alarm with no less than 29 red flags identifying inconsistencies and untruths in what BMIS claimed, he was preceded in 2001 by the well-respected publication Barron's, which published a similar exposé. Unfortunately, both alerts fell on deaf ears.

As to the victims of the Madoff scam, the list includes dozens of major banks, hedge funds, charities, and universities, as well as individual investors.

Having interviewed more than two dozen people, including classmates, attorneys, investors, and Wall Street experts in the month following Madoff's arrest on December 11, 2008, Strobers' book is unsurprisingly constrained by the few facts printed in the media and a handful of individual victims' perspectives. Details as to the quantum of the scam, the number of victims, the size of the damage inflicted on charities, as well as whether Madoff acted alone, all remain very sketchy.

Questions aplenty are raised regarding who knew what and when.

Did he act alone? How could he, given the size of the scam? After all, an enterprise as far reaching as Bernard L. Madoff’s, who claims to have managed US$17 billion in clients’ funds, would require the labours of hundreds of administrators and not those of one individual. Not so?

Three names are canvassed as most likely to be in on the scam, but that’s not to say they were not joined by others.

It is alleged that first among the swindlers (after Bernie) was his brother, Peter. A graduate of Fordham Law School (class of 1967), he joined BMIS in 1970. In BMIS promotional literature he is featured on page four as being “deeply involved” in the firm’s activities.

Bernie’s first born, Mark, 44, a graduate of the University of Michigan was the firm's Director of Proprietary Trading at BMIS. The younger son, 42 year-old Andrew, a graduate of the University of Pennsylvania, was the firm’s Director of Trading.

All deny involvement in the Ponzi scheme. You don’t say?

While Mr Bernard L. Madoff clearly deceived a host of investors including famed director Steven Spielberg; Senator Frank Lautenberg (Democrat-NJ) who lost US$12.8 million of his foundation’s $13.8 million in assets; and husband and wife actors Kevin Bacon and Kyra Sedgwick, the issue remains: did he deceive those who ought to know better?