Madoff's preternaturally consistent returns were the magic ticket for wealthy people—especially the rich Europeans and South Americans targeted by Sandra Manzke's Tremont Capital, Walter Noel's Fairfield Greenwich, and Sonja Kohn's Bank Medici. Had Madoff stuck with his friends-and-family scam, there would have been little to distinguish him from a handful of other rogue money managers exposed by the market's crash because he could never raise the billions the feeder funds produced. Madoff went from no-name shmendrick to a symbol of the age, though, when he went global.
In almost every case, the feeder funds were run by upstart money managers using Madoff's magical returns as a way to break into the business of lucrative fees. Each firm had inflated its expertise and sought out either very old money or the newest of new money. Where older, more established firms were involved, like Safra Banking Group or Edgar de Picciotto's Union Bancaire Privée, special circumstances overruled the company's safeguards.
UBP lost less than $1 billion. Fairfield Greenwich and Bank Medici lost everything. Tremont's assets were just auctioned to cover some small portion of the $3 billion it lost for investors. What once elevated the feeder funds now made them pariahs. Of course, Thierry de la Villehuchet, who ran the now tragically named Access fund, lost so much more than the $1.4 billion he managed through Madoff.
De la Villehuchet had the odd distinction of marketing erstwhile Madoff whistleblower Harry Markopolos' own options-based strategy in 2002. As Markopolos traveled with the French aristrocrat, he cringed at the Madoff parallel but finally came to understand the secret of Madoff's fraud. De la Villehuchet and dozens of other money managers were convinced that they had special access to Madoff's magic steady touch.
De la Villehuchet could not bear the shame of having brought the scam to the heart of Europe's establishment. Proud of his access and aristocratic heritage, but ashamed of his complicity with Madoff, he took the only Old World remedy left to him: suicide. That, it turns out, is the only real pathos and drama that this story has produced.