All featured products are independently selected by our editors. However, when you buy something through our retail links, Vanity Fair may earn an affiliate commission.
It’s been 20 years since I first questioned the suspiciously yummy investment returns of Bernard “Bernie” Madoff and his secretive hedge fund.
And now he’s dead at 82, succumbing to kidney disease while clocking a well-deserved 150-year prison sentence. I will shed zero tears over his passing; he’s the equivalent of a financial serial killer.
Some of his victims remain righteously furious; others found closure and relief in his death. Still others wished he’d lived a much longer, tortured life in jail.
For me, however, it’s simply the end of an era.
In May 2001, Barron’s magazine published my story “Don’t Ask, Don’t Tell: Bernie Madoff Attracts Skeptics in 2001,” the culmination of months of phone calls, meetings with heads of Wall Street trading desks, and lunches with worried private bankers. Some confessed they couldn’t pull client money out of Madoff’s secretive hedge fund—his numbers were so good, they’d be fired.
I was a fairly new reporter at Barron’s pointing a finger at a billion-dollar hedge fund. Only now can I admit I had butterflies.
The strangest part was proving something not there: the ever-smooth Madoff claimed to be running $10 billion in assets. Yet there were no “prints” to be found in the markets, no traders bragging of huge commissions.
My best lead came from a brilliant Deutsche Bank options trader, Ken Nakayama, who’d unearthed an offering document for Fairfield Greenwich “feeder” fund. The tony-sounding firm ensconced in Connecticut has been accused of failing to do due diligence, and it helped raise billions for the world’s greatest con man.
The annual returns—about 10% without fail—were far too good to be true. That year, in 2001, the internet stock market bubble burst, yet Fairfield Sentry, one of Fairfield Greenwich’s most sought-after funds, rocked along undisturbed.
His strategy was “proprietary,” Madoff told me in the Barron’s interview, a word I’ve come to mistrust.
There are few things harder for a young reporter than taking on a highly respected, older Wall Street figure. Madoff, and his brother Peter, had helped invent computerized trading. The Wall Street godfather advised Securities and Exchange Commission market structure committees.
In all things finance, Madoff reigned.
Yet my sources didn’t waver. Investors with Madoff were only too happy to hand over money without questioning how he did it. After he patted me on the head with some pabulum comments, we ran the story.
The following day, I waited…for something, some angry phone call, letters from Madoff’s lawyers, even relieved investors. Nakayama checked in: “Haven’t you heard from anyone?”
Instead, silence.
Was I wrong? Or worse, insane? For a long time after, I carried that. Some stories stick with you; I knew in my gut there was something not right with Madoff.
Seven years passed.
The day of Madoff’s denouement, December 11, 2008, I watched in sweatpants (pandemic-trendy now) as the market continued to crater. On CNBC, news flashed across that he’d been arrested by the FBI in a $65 billion Ponzi scheme.
Holy sh-t, they finally got him.
He’d been unmasked as the public face of the Great Financial Crisis that pilloried America.
Bear Stearns failed. Treasury forced Merrill Lynch into a marriage with Bank of America, one of many in a national bank bailout. Hundreds of thousands of laid-off workers streamed out of their offices—boxes in hand—à la The Big Short and Margin Call. Lehman Brothers filed for bankruptcy the weekend I got married. My husband’s bank was swallowed by Wells Fargo. Would his debit card work on our honeymoon? Friends fell away, ashamed they’d lost everything.
Then, the flood of Madoff’s 10,000-plus victims rose up from everywhere—around the globe and across every social class.
His Palm Beach country club pals fessed up: They too had fallen for the trick, including the founder of Nine West, and who may have been Madoff’s enabler-in-chief, Jeffry Picower, the billionaire businessman and philanthropist found dead in his swimming pool not long after Madoff’s arrest.
Retirees in Europe lost their life savings. Holocaust survivor Elie Wiesel and his nonprofit lost $15 million. Hollywood movie producer Steven Spielberg, stars Kevin Bacon and wife Kyra Sedgwick, John Malkovich, and Beverly Hills adviser to the stars Stanley Chais all emerged net losers.
I felt some vindication. But this was tempered by the horror that his fraud continued unquestioned by the SEC for years. And but for the stock market crashing and the real estate bubble imploding, his $65 billion pyramid scam would have continued.
The ripple effects spread to Major League Baseball. The New York Mets owners, the Wilpon family, revealed they’d lost hundreds of million dollars to Madoff. The phony hedge fund helped make payroll for New York’s national league team.
I predicted the team would be sold. Angry pushback from powerful men followed.
“Losses incurred by the Sterling Partners do not and will not affect the day-to-day operations and long-term plans of the Mets organization. The team is not for sale in any respect,” the organization announced in 2009. Fred Wilpon’s Sterling company controlled the Mets franchise.
Mets executive Dave Howard, in a Fox Business interview, said my claims the team was for sale were “outrageous, unfounded and grossly irresponsible.” Also, “flat out wrong.” Two years later, Wilpon disclosed plans to sell part of the team.
Another billionaire hedge fund manager, Steve Cohen, is the new majority owner.
In recent years, the FBI finally revealed how Madoff got away with the fraud. His crime dated all the way back to 1964. Bureau agents pieced together the paper trail over six years, sorting through a warehouse worth of documents by hand.
What of Madoff’s family? My belief is that his sons were being groomed to take over the massive Ponzi scheme. But the truth went to the grave.
Madoff’s sons Mark and Andrew were never charged, but were both under criminal investigation at the time of their deaths. Mark committed suicide in 2010, and Andrew Madoff died of cancer in 2014. Madoff’s widow, Ruth, lives in Old Greenwich, Connecticut, and received $2.5 million to live on. She was never charged.
One coda: I’m not as afraid as I used to be. But difficult, complex stories still make me vomit.
Twenty years on, there are still not enough women and people of color on Wall Street, although I always try to include at least one in each of my business stories.
And also, greed cannot be quashed. Just this year, Hollywood actor Zach Avery, real name Zach Horwitz, was arrested for his most impressive role ever—pretending to invest in film rights and instead allegedly stealing $690 million.
Former employees leave Madoff off their résumé. Most moved on with their lives, compartmentalizing the trauma.
“His fate was just a matter of time. He was never going to leave prison. It was such a tragedy, such a waste. He saw the advantages of technology, and pushed for that on Wall Street,” said a former I.T. employee at Madoff’s firm, Bob McMahon. “Why didn’t he do something good with that?”
Another investor, a widow and a homemaker, lost her house, her fancy clothes, and her beloved thoroughbred horse. Today, she’s put Madoff behind her.
“I don’t think about him and what could have been, I just try to make the best life I can for myself with what I have, and feel grateful for all of it. If there is a God, he has faced him.”
Finally, I often remember the words of the late Elie Wiesel upon learning he’d lost everything to Madoff.
He turned to his wife. “We looked at each other, and our reaction was, ‘We have seen worse,’” said Wiesel, who survived the Auschwitz concentration camp, where he was sent when he was 15. “Both she and I have seen worse.”
— Inside the Messy Breakup of an OnlyFans Model and Her Über-Wealthy Boyfriend
— Wyoming Tells Donald Trump Jr. to Sit Down and STFU
— A Wave of Displaced New Yorkers Is Upending the Hamptons Social Order
— How a Group of Rich Memphians Acted on Trump’s Big Lie During Capitol Attack
— Prosecutors Are Lining Up Witnesses in Trump Investigations
— Republicans Brave Plan to Stop Mass Shootings: Do Nothing
— Next-Level Harassment of Female Journalists Puts News Outlets to the Test
— Six Photographers Share Images From Their COVID Year
— From the Archive: American Nightmare, the Ballad of Richard Jewell
— Serena Williams, Michael B. Jordan, Gal Gadot, and more are coming to your favorite screen April 13–15. Get your tickets to Vanity Fair’s Cocktail Hour, Live! here.
