Type 61727-054 in the ‘Inmate Locator’ search window of www.bop.gov, the site of the US Federal Bureau of Prisons, and the result is ‘Name: Bernard Lawrence Madoff; Age-Race-Sex: 71-White-M; Release Date: 11-14-2139.’ And the ‘Location’ is Butner Med I FCI, the Federal Correctional Institution (FCI) Medium, which houses medium security male inmates, as part of the Butner Federal Correctional Complex (FCC) in North Carolina.

“The Federal Bureau of Prisons protects society by confining offenders in the controlled environments of prisons and community-based facilities that are safe, humane, cost-efficient, and appropriately secure, and that provide work and other self-improvement opportunities to assist offenders in becoming law-abiding citizens.”

Bernie Madoff, as you would remember, shocked the world earlier this year as the perpetrator of the largest investment fraud in Wall Street history. “In March 2009, Madoff pleaded guilty to 11 felonies and admitted to defrauding thousands of investors of billions of dollars from the early 1990s onward. Federal investigators believe the fraud began as early as the 1980s, and the investment operation may never have been legitimate. The amount missing from client accounts, including fabricated gains, was almost $65 billion,” informs a Wikipedia page about the convict, faced with a maximum sentence of a century and a half in prison.

And, dedicated to ‘all the legitimate victims of Bernie Madoff’s Ponzi scheme,’ here is a book by Jerry Oppenheimer: ‘Madoff with the Money’ by (www.wiley.com). “Wearing a $7,000 custom-tailored Savile Row suit – under which was a bullet-proof vest to protect him from furious investors – Bernie pleaded guilty to the biggest swindle in history,” the author recounts in the opening chapter titled ‘Beginning of the end.’

What amazed many was that Bernie never invested the money entrusted to him by thousands of investors. He explained how the ‘monstrous Ponzi operation’ had worked: “Those funds were deposited in a bank account at Chase Manhattan Bank. When clients wished to receive the profits they believed they had earned with me or to redeem their principal, I used the money in the Chase Manhattan bank account that belonged to them or other clients.”

Some two decades before Bernie Madoff became known as the evil mastermind of the biggest and worst of all financial crimes, Ivan Boesky had held that title, recounts Oppenheimer. “The son of a Jewish immigrant, Boesky had made hundreds of millions of dollars using insider information to take big positions in companies that were about to be taken over. Mergers and acquisitions were then the rage in the early to mid-1980s, and Boesky became the expert in how to cash in – illegally.”

Bernie had out-Ponzied the Ponzi guy from Italy who came to America to commit his crimes, the author narrates. Like Bernie, Charles Ponzi had a respectable-sounding firm, Securities Exchange Company, to hustle his fraud. And like Bernie, Ponzi was a dapper schmoozer, a macher, a Mr Outside, adds Oppenheimer. “Ponzi’s scheme began shortly after the end of the Great War and at the start of the Roaring Twenties.”

The book speaks of the unmistakable red flags that were getting waved in Bernie’s case. For instance, in May 2001, Barron’s had a story headlined ‘Don’t ask, don’t tell: Bernie Madoff is so secretive, he even asks investors to keep mum,’ and it questioned his ‘enviable stream of investment returns.’ The story, however, received ‘scant public attention.’

Around that time, Rampart Investment Management, a Boston options trading firm assigned Harry Markopolos, a financial wizard, to find a way to match Madoff’s ‘incredible double-digit returns – in both up and down markets.’

Markopolos attempted to reverse engineer Madoff numbers using data from Madoff’s trades in options and stocks, but all efforts at simulation failed, reports Oppenheimer. A stymied Markopolos “finally came to the conclusion that what he was trying to match was, in fact, a genuine, full-blown, red-blooded, all-American Ponzi scheme. Suspecting that a major crime was taking place at BLMIS (Bernard L. Madoff Investment Securities LLC), Markopolos contacted the New York office of the SEC, expressed his concern, and began supplying the agency with memos and data.”

Now, those probing Bernie’s scheme (which ‘makes Watergate look like a smash and grab’) wonder if it really was a one-man operation as he claims. “Was Bernie a puppet, a middleman who became the fall guy, who decided to fall on his sword? The radar is starting to show such blips. The other shoe is certain to drop, but it takes time.”

Meanwhile, within the locked doors and barbed wire of Butner, located in a poor, rural community almost 500 miles south of his swank Upper East Side apartment, Bernie gets free cable TV, three square meals a day, air-conditioning in the summer, and the best medical care in the federal prison system – all at taxpayers’ and Madoff victims’ expense, bemoans Oppenheimer.

“At Butner, Bernie can be assigned to plumbing or grounds-keeping… And he even gets paid, as much as $104 per year. For relaxation after work there is always the well-equipped gym… In his free time he can even teach a course – finance is one possibility – to some of his 4,800 fellow inmates.”

Recommended read.



Keywords: MadoffPonzi scheme

More In: Books | Economy | Business | Markets