So, one of trickiest, most multi-dimensional manipulators in the history of financial fraud was known for his
. One of the biggest crooks who ever lived—perhaps the biggest—was
. And if you read the
, you’ll see he was also a great family man.
Standing Accused: A Pillar of Finance and Charity
By ALAN FEUER and CHRISTINE HAUGHNEY
December 12, 2008
His company’s portfolio was ample: $17 billion. His address was appropriate: East 64th Street, a few blocks off the park. He golfed at the Atlantic in the Hamptons, at Old Oaks in Westchester County, at the sunny Boca Rio in Boca Raton. He was reported to have three homes and a yacht in the Bahamas.
For Bernard L. Madoff, there was also his multimillion-dollar private foundation that doled out money to hospitals and theaters. Indeed, through his charity work at places like the Gift of Life Bone Marrow Foundation or his public service at institutions like Yeshiva University, where he served on the board, Mr. Madoff seemed to have created a stainless persona of integrity and trust.
From the start, in fact, a motto of his business captured this image of simplicity and directness: “The owner’s name is on the door.”
But with his arrest on Thursday on federal charges of cheating investors of $50 billion in a fraud scheme, Mr. Madoff’s classic rise seemed to have had an equally spectacular fall. [LA comments: I wouldn’t call this a “fall.” It’s simply a crook being caught.]
“He was thought of as a great philanthropist, a pillar of the community, the chairman of Nasdaq—all of that stuff,” said one hedge fund executive who knew him.
“There was a joke around that Bernie was actually the Jewish T-bill,” the executive went on, referring to the ultrasecure investment of treasury bills. “He was that safe.”
Mr. Madoff had traveled far from his roots in eastern Queens, where as a young man he cobbled together a $5,000 grubstake from his earnings as a lifeguard and sprinkler installer to start the famed investment firm that eventually bore his name, Bernard L. Madoff Investment Securities.
He had come to move easily in the clubby Jewish world that iterates between New York City and its suburbs and southern satellites like Palm Beach.
Indeed, in the world of Jewish New York, where Mr. Madoff, 70, was raised and found success, he is largely still considered as a macher: a big-hearted big shot for whom philanthropy and family always intertwined with—and were equally as important as—finance.
Mr. Madoff, who attended but never finished law school, was already rich by his early 50s, largely due to his intuitive grasp of the centrality of computers to high finance, he once told Forbes magazine. In an era when many, if not most, transactions were conducted on the phone, he turned his company into a fully automated operation that could make trades in as little as four seconds flat.
And soon the Madoff name—if not quite the equal of the Tisch name, for example—carried a quiet power.
“The guy never flaunted anything,” said one longtime friend. “And that fit with his rate of return, which was never attention-grabbing, just solid 12-13 percent year in, year out.” [LA asks again: HOW was this possible? How could new investments have been plentiful enough to keep paying off existing investors so steadily, and for so many years? It defies belief.]
The friend, a private investor who knows Mr. Madoff from the Palm Beach Country Club and from the Hamptons, said friends and investors had been calling nonstop since the arrest.
“The pain is just unbelievable,” the friend said. “He was part of the family for so many people. There was this quiet culture of people, slightly older-money, who maybe weren’t that interested in the market, who kept saying to each other, ‘Just give Bernie your money, you’ll be fine.’ ” [Do you believe this?]
That culture had perhaps its best expression at the half-dozen golf clubs he belonged to, ranging from the woody Old Oaks in Purchase, N.Y., to the Palm Beach Country Club in Florida.
“He and his wife were nice golfers,” said Denise Lefrak Calicchio, part of the Lefrak real estate family, who knew the Madoffs socially through several of their clubs. “He and his wife seemed lovely.”
With time, some wealthy investors even joined clubs in order to become part of Mr. Madoff’s investments, some who knew him said. It was considered a favor to be introduced to the man as a potential investor.
“There were people joining golf clubs just to get into his fund,” said one investor who declined to be named. “This guy was held in such high regard.”
A member of the Palm Beach club said the Madoffs did not socialize as much as other members did, nor did they fight as aggressively as others to keep up with the club’s more aerobic social climbers. They were well-liked, and did not appear to be part of the “blister pack,” as one club member put it, a term that refers to those who get blisters on their hands and feet from ascending social ladders.
“They seemed to stay apart from the herd,” the club member said. “They chose not to get into that social rat race.”
Mr. Madoff was, in fact, so popular with investors that he often turned away their money. [Emphasis added.]After Barbara S. Fox, president of the Fox Residential Group in Manhattan, had sold his son, Andrew, an apartment, she pleaded with Mr. Madoff—unsuccessfully—to let her invest in the Madoff funds.
“I literally begged him,” she said. While Ms. Fox does not know why he turned her down, she called him “protective.”
Still, his refusal to take some investors added to his allure. [Emphasis added.] Robert Ivanhoe, chairman of the real estate practice of the law firm Greenberg Traurig, said that he asked one of his clients who over two decades invested at least $50 million with Mr. Madoff to approach Mr. Madoff to see if he could invest with him. He knew Mr. Madoff as a major player in charitable groups.
Mr. Madoff declined. Mr. Ivanhoe said that the rejection made investing with Mr. Madoff even more appealing.
“He was turning people away all the time,” Mr. Ivanhoe said. “He didn’t need to be active in a charity to get more investors. People chased to invest in him.” [So he was a bleeping saint!]
As Mr. Madoff’s success increased, so too did his interest in philanthropy, which was often handled, much like his business itself, as a family enterprise. He sits on the board of trustees for Yeshiva, whose officials issued a statement on Friday saying they were “shocked” at the news of Mr. Madoff’s arrest. And with his wife, Ruth, he runs the Madoff Family Foundation, a $19 million operation that last year gave money to Kav Lachayim, a volunteer group that works in Israeli schools and hospitals, and to the Public Theater in New York.
It is perhaps a testament to the family’s importance in Jewish philanthropic circles that when a nephew of Mr. Madoff’s, Roger Madoff, died of leukemia in April 2006, paid death notices appeared in newspapers from charitable organizations ranging from the Gurwin Jewish Geriatric Center to the Lauri Strauss Leukemia Foundation to the Lower East Side Tenement Museum.
Family, too, has always been of outsized importance to Mr. Madoff, evidenced by the number of relatives he has brought into his business. His brother, Peter, joined the firm as a senior managing director shortly after graduating from law school in the late 1960s, and both of Mr. Madoff’s sons, Mark and Andrew, joined the team after finishing their own educations. In 1978, Charles Weiner, a son of Mr. Madoff’s sister, joined the firm; 17 years later, Peter Madoff’s daughter, Shana, took a job with the company as a lawyer.
The family was so close that they even lived within blocks of each other on the Upper East Side.
“What makes it fun for all of us is to walk into the office in the morning and see the rest of your family sitting there,” Mark Madoff told Wall Street and Technology magazine in August 2000. “That’s a good feeling to have. To Bernie and Peter, that’s what it’s all about.”
And when Mr. Madoff finally told two senior executives of his problems, he chose to confide in his sons, who would notify the authorities and begin a quick countdown to his arrest.