In a 2013 jailhouse interview, Bernie Madoff — whose death from kidney disease stole headlines early Wednesday — once admitted that he was "ashamed" of cheating thousands of people out of their life savings.
That admission, however, may be cold comfort to the lengthy list of people who have suffered in the wake of a scandal that first broke during the financial crisis over a decade ago.
I interviewed the famed Wall Street money manager, and crook, at the federal prison in Butner, North Carolina, having covered his famous Ponzi scheme from the day it imploded in December 2008. We exchanged several letters and emails prior to our face-to-face meeting.
At the time, Madoff appeared short and slightly round with thick grey hair and, except for the orange prison suit he was wearing, looked like any grandfather you might see in New York taking their grandchildren to the park. From the first letter he sent, Madoff repeatedly told me he wanted to do the right thing.
I didn't believe him then, and still don't. But in Madoff's twisted mind it was one of the ways he showed remorse for the $65 billion dollar Ponzi scheme that turned millionaires into paupers. When news first broke that the 82-year-old cheat had died, I immediately called his lawyer Ike Sorkin.
"Well, first thing that went through my mind many many times, there were no winners in this case," Sorkin told me. "Everybody lost and all around. The victims, the boys, his wife. No one, no one achieves any degree of success here."
Sorkin defended Madoff in 2009 when he plead guilty to 11 felony charges that included securities fraud, investment adviser fraud, mail and wire fraud, and three counts of money laundering. Looking back at Madoff, his counsel cautioned that there are always crooks trying to scam someone.
"The problem with Ponzi schemes is that they don't come to a happy ending because Ponzi schemes are successful as long as the market is going up," Sorkin told me.
"People are getting massive returns. If the market goes south, people will want money back and getting the returns that they've been promised. That's what happened with Madoff," he added.
Diana Henriques, author of the New York Times bestseller “The Wizard of Lies: Bernie Madoff and the Death of Trust,” once told me regarding Madoff: “I’ve seen him harden, actually, in his resentment towards investors, strange as it seems. Initially, when I was first in touch with him in prison, he was saying the words of remorse, he had the script down pat.”
A $65 billion crime 'not diminished by death'
Madoff insisted the Ponzi scheme started in the 1990s, but government investigators traced it back to 1987. Yet Sorkin says the government believes the entire crime really started in the 1960s when Madoff first became a money manager, and learned the trade from his father in law.
I asked Madoff about that in 2013, but he denied the scheme was decades old.
The federal bankruptcy court appointed Irving Picard to be the trustee charged with clawing back money stolen by Bernie Madoff. On Wednesday, Picard issued a statement on Madoff's death saying, “The pain experienced by the victims of Mr. Madoff’s fraud is not diminished by his death, nor is our work on behalf of his victims finished."
He added: "My legal team and I are committed to continuing to identify and recover Mr. Madoff’s stolen funds and return them to their rightful owners.”
To date, Picard's team has recovered and returned $14.2 billion to 2,654 Madoff clients. But thousands more, 16,521, have filed claims with the vast majority, 13,427, denied. In those cases, the trustee has determined the claimants, unaware of the crime, withdrew more from the Madoff firm than they originally invested. That makes them "net winners" and ineligible to receive any of the recovered funds.
"We hear form time to time why can't I get some of the money that you are recovering and stories like that," Picard told Yahoo Finance in 2018. He pointed out that even though investors may have been unaware of the crime they benefited by getting money that belonged to someone else.
"Those people were hurt [and] it changed their life because they thought they had the money they've referred to, and they unfortunately all of a sudden lost retirement funds," he said.
"It's quite the end of a very sad story for everyone. There were no winners here, just tragedy."Ira Sorkin
My first thought whenever Madoff is mentioned is that no good came to anyone in Bernie's orbit. Innocent people committed suicide when they learned their life savings were gone.
One of them was Rene-Thierry de La Villehuchet, an investor who managed money for several people and lost it all with Madoff. He slit his wrists and bled to death a few days after the Ponzi scheme imploded.
I interviewed his widow Claudine who trembled when she told me what she thought of Madoff: "He killed my husband, I think he’s a murderer."
She's not alone. The list of Madoff victims includes Hollywood celebrities like director Steven Spielberg, actors Kyra Sedgwick and her husband Kevin Bacon. Charities, including Hadassah ($90 million), Los Angeles Jewish Community Foundation ($18 million); pension funds such as Royal Dutch Shell ($45 million); the Town of Fairfield, Connecticut ($42 million); and the Massachusetts Pension Reserve ($12 million); were just a few of the institutional victims.
In some cases, several institutions didn’t even know their money was invested with Madoff.
Many of us focus on the enormous amount of money Madoff stole from innocent people who trusted him to safeguard their futures. One of them, ironically, was his lawyer Ike Sorkin who lost the money he had invested with Madoff.
He summed it up like this: "It's quite the end of a very sad story for everyone. There were no winners here, just tragedy."
Adam Shapiro is co-anchor of Yahoo Finance Live 3pm to 5pm. Follow him on Twitter @Ajshaps
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