One day, early last December, many extremely wealthy people around the world, a large percentage of them Jewish, went about their business unaware that the next morning the vast amounts of money they believed they had amassed would disappear in a puff of smoke.
These people had entrusted their net worth to what was revealed on Dec. 11, 2008, to be a massive Ponzi scheme.
When Bernard Madoff, the man behind the biggest stock scam in history, stood before Judge Denny Chin as he was sentenced to 150 years in prison, he looked haggard and beaten, a far cry from the smiling but mercurial man who had charmed the fortunes out of so many people.
“I knew what I was doing was wrong, indeed criminal. When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come,” he told the judge.
“I cannot adequately express how sorry I am for what I have done.”
It is this season of repentance that will test the more than 3,000 people, some of whose finances were completely wiped out, to their limits of their ability to forgive. Yet it is also apparent that journalist Andrew Kirtzman, whose new book Betrayal: The Life and Lies of Bernie Madoff (Harper, $25.99) does not have forgiveness in mind for this big-time swindler.
Kirtzman introduces the story’s players at the 95th birthday celebration for former garment manufacturer and multi-millionaire Carl Shapiro. Shapiro’s name could be found on buildings all over South Florida, beneficiaries of his philanthropic largesse. The party itself is a who’s who of Jewish Palm Beach, with entertainment provided by the Israeli Philharmonic and presentations by the owner of the New England Patriots, among many others. But it was when Madoff, whom Shapiro treated like a son, entered the room that a hush fell over the crowd. This man was their hero, their kingmaker. And just a few months later, he would leave a large number of those people in the room hocking their jewelry at the town’s pawn shop.
Kirtzman does a mostly good job of giving us Madoff’s history from his youth — not the hardscrabble childhood he fabricated for himself so much as a typical blue-collar, suburban upbringing — to his romance with his wife, Ruth. Young Madoff lived in the shadow of his smarter, better-liked brother, though it was his knack for making money (and from the start it’s apparent the term “make” can be taken more than one way) that eventually brought him the fame and fortune he so desired.
We also learn about Madoff’s innovations that have changed the way the financial world operates: His forward-thinking role in the creation of computerized stock trades, the creation of the NASDAQ index, his pay-for-play scheme in the 1980s that the feds actually favored over the previous stock trading model.
We get a look inside the “Lipstick Building,” as it is known, the Manhattan high-rise in which Bernard L. Madoff Investment Securities ran its business, both licit and illicit — the legal business was needed to fuel the increasingly fragile illegal pyramid. The 19th floor, where visitors would be taken, was high-tech and beautifully appointed in black and gray, without a single piece of paper on any desk, per the obsessive-compulsive Madoff’s mandate.
Yet two floors down, on floor 17, uneducated lackeys would input bogus numbers into an ancient mainframe computer, spitting out meaningless statements on dot matrix printers to be sent to the firm’s starry-eyed clientele. The 17th floor also held the so-called “black box,” the secret formula Madoff used to bring in the impossibly consistent and high returns from year to year, despite fluctuations in the market.
If more than a handful of people suspected wrongdoing — only one is profiled in any detail in this book, a brilliant mathematician whose cloak-and-dagger overtures distract regulators from his proof of actual crimes — they didn’t do anything about it until it was too late.
The victims of Madoff’s crimes don’t get off so easily, either. Kirtzman portrays the clients as greedy investors who ignore so many obvious clues — the shoddy, undecipherable statements, hazy understandings of Madoff’s formula, failure to register the brokerage and traders — though he stops short of saying they got what they may have deserved.
What’s missing from Betrayal is the Madoff family. Of the hundreds of people Kirtzman says he talked to, none has the last name of the convicted. Yet they were all there: His wife Ruth reportedly had access to all of the firm’s books, which suggests she knew what was going on all along, an important question that has eluded prosecutors; his sons Andy and Mark, playboys who still drew paychecks from the firm; his brother Peter, who ran day-to-day operations at the firm; and Peter’s daughter Shana, Madoff’s compliance officer. How was it, Kirtzman asks, they could have been so close to the family patriarch for so many years without a clue of what was going on? That it was such a family operation suggests to the author yet another red flag that money-hungry investors glossed over.
Based on the accounts of many of the people who worked closely with the Madoffs, including secretaries, loyal employees, and longtime clients who thought of Bernie as a son, the man was secretive, vindictive, charming, or, as Kirtzman put it, a sociopath. Yet nobody close to him connected the dots.
It’s apparent, after the fact, that the vultures were beginning to circle for quite some time. And while Kirtzman points to what may have been a growing desperation on Madoff’s part to continue the scam, he spends very little time on the details of what was happening to whom and when. News reports may have to fill in the blanks later.
In the vein of other tell-all biographies of famous criminals — the litany of books about O.J. Simpson come to mind — Betrayal, while timely, also smells of the sensationalism that any books related to Simpson or his trial oozed from their covers. But try as he might, complete with foreshadowing of future events and sprinkling in little clues that lead to what we already know, Kirtzman’s style of journalism is more New York Times than New York Post. His writing is best and most concise when he sticks to the facts without peppering his prose with repetitive nonsense.
What Betrayal ultimately gives us is the how, but not the why. With Bernie Madoff absent from the book bearing his name, we never get into his head to understand what he was thinking, when he realized things were going wrong, and why, ultimately, he gave himself up.
Unless he puts those thoughts to paper during the prodigious amounts of free time with which he now finds himself, we may never know. (Former Hadassah CFO Sheryl Weinstein’s new tell-all, in which she claims an 18-month affair with Madoff, likely has more clues than Betrayal, but I don’t have the stomach for it). In the meanwhile, the investors left penniless can only hope Bernard Madoff pounds his chest during this season of repentance, once for each of the people whose lives he ruined.