When one lives hand-to-mouth the idea of having vast sums of cash is always a pleasing prospect; in my case it would be money to be given away to help in the creative endeavors of others, sponsoring choreographers, dancers and singers, and supporting various charities. Spending it on "things" or travel would not appeal to me, but it might be fun to build a big house near the ocean and invite everyone I love to come and live with me. I would need hundreds of bedrooms, however.
But there are people in the world with truly enormous sums of money, and many of them do exactly as I would do: they are patrons of the opera and ballet and donors to all sorts of good causes. But what do people with vast fortunes like to do most? Make their money grow. Too much of a good thing is never enough and so they invest, hoping to turn thousands into millions and millions into billions.
For years, the man that many of the ultra-rich turned to to make their treasuries overflow was Bernard Madoff (above, in custody). The story of his rise and fall has been told in a book by Andrew Kirtzman - BETRAYAL - which becomes a page-turner by the half-way mark.
Details of Madoff's early years would not hold anyone's interest were it not for what he was to become. As Andrew Kirtzman recounts in the first chapters, Madoff never seemed destined for any kind of notoriety. He in fact was something of a loser, rather colorless of personality. But he did find something he was good at: helping people with money make more money.
As the Madoff star ascends, the book gains momentum. As other investors' returns rose and fell with the markets, those who put their money with Madoff realized consistent results year after year. He fended off queries into the "how" of it by saying it was a secret formula he'd developed, known as the split-strike strategy.
Madoff rose to the top of the financial world: his offices in the Lipstick Building (above) at 885 Third Avenue in Manhattan were the nerve-center of an operation thru which sums of money that people like us can only dream of passed on a daily business. Prospective clients begged Madoff to take their money; he would resist, saying simply that $2,000,000 was below his minimum to accept for investment. Then he'd finally capitulate, as a personal favor to the desperate investor.
Despite the old caveat about putting all of your eggs in one basket, many of the ultra-wealthy had their entire fortunes tied up with Madoff. They delighted in their monthly statements showing how steadily their investments were growing. But the statements, churned out on old computers in low-tech style on the 17th floor of the Lipstick Building, were a sham. Madoff was simply keeping their money, not investing it. When someone wanted a payout, it was made from incoming funds.
One person - Harry Markopolos (above), an independent financial fraud investigator - smelled a rat. He tried for years to get the SEC to investigate Madoff but to no avail. So well-oiled was the Madoff machine that it withstood cursory investigations and kept rolling along. Madoff's operation was still being given the stamp of approval right up til its collapse.
But collapse it did: on December 10, 2008 Madoff's long-standing, elaborate Ponzi scheme caved in. Some of the wealthiest people in the world lost everything, and there were at least two suicides tied directly to Madoff's fraud.
On March 12, 2009 Bernard Madoff entered a guilty plea to eleven criminal charges and on June 29th he was sentenced to 150 years in prison.
About midway thru Andrew Kirtzman's book I was having a hard time putting it down, and I read the last one hundred pages in a single sitting. Andrew has told the story in a way that makes it fascinating to someone who - like me - has no real connection to or interest in the world of high finance.
And what has happened since?
Bernard Madoff is in a medium-security prison in North Carolina. In various searches I have found rumors that he is dying of pancreatic cancer, takes 20 medications a day, attends prayer rituals with Native American inmates, has befriended the prison's homosexual clique ("...strictly platonic!" insisted the un-named source) and is on a fence-painting team to fulfill his obligations of daily labor.
And so this man who swindled clients out of an estimated $65 billion is living out his days at the taxpayers' expense.