Before he died, Bernie Madoff unveiled the biggest Ponzi scheme in history
While Bernie Madoff gained a reputation as a Wall Street scholar, he also acquired an unusual nickname: “The Jewish T-Bill”. The moniker referred not only to the US Treasury Bill – widely regarded as a must-see investment – but also Madoff’s legacy. At one point, around 85% of its investors were also Jews, aka tribesmen, and included well-known people, charities, and institutions – from Nobel Prize winner Elie Wiesel to the Hadassah women’s organization.
As it turned out, Madoff was actually running the biggest Ponzi scheme in history. On December 11, 2008, he was arrested by the FBI, his investors collectively losing nearly $ 65 billion – the biggest scandal on Wall Street ever.
This scandal is the subject of a new book, “Madoff Talks: Untold Story Behind the Most Notorious Ponzi Scheme in History,” by American business radio host Jim Campbell, who has had rare access to Madoff and his family. Interest increased when Madoff passed away in April, with the book being published several weeks later.
In a telephone interview with The Times of Israel, Campbell called Madoff a “serial financial killer” who “wiped out a lot of people – a lot of Jewish charities, in particular.”
Yet he said, “When I do interviews, I get asked how the world should see Bernie. The key to take away from the book is that the system has failed. This allowed him to continue. To the extent that we say, “This guy did this bad Ponzi scheme for a long time that destroyed the lives of 16,000 American citizens, 720,000 around the world”… that’s not really the right way to see it. He was not a guy who acted alone.
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The author seeks to present a balanced portrait of Madoff, with whom he corresponded for more than eight years while the latter served a 150-year prison sentence in North Carolina. It reflects Campbell’s mid-range and deep approach as a radio host.
Over the years, Campbell has helped listeners understand complex issues such as the 2008 global financial crisis, which initially sparked his interest in a business-focused talk show. Still, it was a whole different thing to write a book about Madoff once McGraw-Hill accepted him on the idea.
In the end, he said, it was “like radio – write the facts”.
The book incorporates Campbell’s access to three members of the Madoff family – Madoff himself, his wife Ruth Madoff, and their late son Andrew Madoff, who died of cancer in 2014. The couple’s other son, Mark Madoff, committed suicide in 2010.
The hard-to-get interviews that resulted in the book were “a series of really fortuitous coincidences,” Campbell said.
It started in October 2011, when author Laurie Sandell unexpectedly connected Campbell with Andrew Madoff, who was cooperating with her on a book. The second happy coincidence happened in December. Campbell learned that Ruth Madoff was moving from Florida to her hometown of Old Greenwich, Connecticut. They met for lunch. As Campbell recalled, she came in with a coat and sunglasses, ordered a shellfish salad, asked if he was plugged in, and ended up introducing him to her incarcerated husband.
“Bernie said, ‘My wife and my son said you were a sincere person; I am happy to speak to dispel misconceptions about [me], ‘”Campbell said, noting that Andrew had not actually said“ a word ”to his father since the day before the elder Madoff was arrested.
“If Bernie reported Andrew said I was a good guy, it must have come from Ruth,” Campbell said.
From 2011 to 2019, Campbell corresponded with Madoff, including through the Bureau of Prisons messaging system. Madoff showed off what Campbell described as a lack of soul-searching and spoke about himself in the third person, including the memorable line, “No one knows why Bernie Madoff did this.” Campbell was never able to meet his correspondent in person and was denied a visit to prison on three occasions.
Nonetheless, Campbell accumulated 400 pages of correspondence and developed an ambitious idea.
“I wanted to do the first book on the overall architecture of the case,” he said, calling it “some sort of detective story.” Campbell imagined the first part describing – in reverse chronological order – the day Madoff was arrested, his final months on the job, and his last year on the job.
From temple to temptation
Throughout the book, Campbell explores the Jewish thread that runs through history.
Madoff was the son of a temple president in Far Rockaway, Queens, who got his start as an investor by convincing his in-laws, the Alperns, to deposit their money with him. When he lost their investments, he borrowed money and paid them back – a precedent he would never repeat.
Over time, Madoff gained a reputation for making money rather than losing it, including among members of the Palm Beach Country Club after acquiring a home in the city of South Florida.
“It was all about affinity,” Campbell said. “[The club had a] predominantly Jewish membership. Finally, all these members said: “Give your money to Bernie, he is safe, you will earn 11% [returns] every year it’s big, big, big. Some said they didn’t know how Bernie did it, it probably wasn’t legal or honest, but he’s our guy, let him be.
“The trust has to be there,” said Campbell, who is not Jewish. “The Jews have been expelled from every country in the world for 1,000 years. In the Jewish community, you are not defrauding someone financially. It was devastating… It was a crime of Jewish affinity.
Meanwhile, Madoff escaped five investigations by the Securities and Exchange Commission. While running his Ponzi scheme, he ran a separate, impeccably clean business in the same Manhattan office building.
“I found out that he ran the two companies side by side,” Campbell marvels. “One of the most ethical and one of the most corrupt on Wall Street, all in one place.”
As Campbell explains, “The fully legitimate business on the 19th floor was essentially hiding the criminal enterprise, which was locked up on the 17th floor. Even his sons did not have access.
Decline and fall
Ultimately, Campbell writes, it was the financial collapse of 2008 that brought Madoff down. It was left to the government-appointed bankruptcy trustee, Irving Picard, to attempt to recover the stolen money for the victims. Ironically, Campbell notes, if regulators had asked the right questions, they could have discovered Madoff’s chicane in five minutes.
As for Madoff’s family, “I don’t think they were complicit in knowledge of the Ponzi scheme,” Campbell said. “They didn’t realize he stole money from customers.”
While not aware of the Ponzi scheme, Campbell said, Madoff’s family were complicit in his lies – namely Madoff’s false statement about investments, which Campbell called illegitimate and contrary to protocol. .
Campbell said he understood why Madoff was sentenced to 150 years in prison – “he’s died without telling the whole truth yet.”
Although he described Madoff as a financial serial killer, Campbell noted that an actual sociopath would not have used legitimate business funds to pay for family medical needs and mortgages, as Madoff did. . He also points out that Madoff avoided a lawsuit to spare his wife’s angst and potentially get more money back for his clients.
According to Campbell, Madoff had a “Big Four” of investors who extended the longevity of his Ponzi scheme.
“They would give him money every once in a while when he had a cash flow crisis,” Campbell said. “He grew up hating them. Big Four Big Four Jeffry Picower withdrew $ 7 billion from the Ponzi scheme. Bernie himself is considered to have stolen only $ 800 million.
Campbell’s book also examines whether Madoff, in addition to being an author, was also himself the victim of a tax evasion scheme in which “all kinds of dirty money” came from Eastern Europe, from Russia and Colombia.
“How much he knew how dirty the money was, I don’t know,” Campbell said. “More than a Ponzi scheme was happening.”
“Only a handful of people in total went to jail,” Campbell said. “Bernie was one. After his death three weeks ago, not a single person was still in jail for it… no one was fired at the SEC, eight people were demoted. You got it, you can’t just say it was Bernie.
Campbell wonders what might have happened if Madoff had survived the 2008 financial collapse.
“He probably would have continued,” Campbell said. “I calculated until 2021. He probably would have had $ 240 billion if he had kept his 11% [rate] within this time frame. “