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The Monster Mensch

Madoff, though, kept his own mess, his own monstrousness, hidden away. His operation was relentlessly predatory, systematically looting charities, longtime friends, family, as well as investors spread around the globe. And yet it seems unlikely that he was a sociopath in the classic sense, someone indifferent to the feelings of those around him. In daily life, he wasn’t callous or cruel. Just the opposite. He valued people’s good opinion and wanted to impress. He didn’t simply treat people as means to an end. He was a great boss. He took care of his employees as if they were family and, until the end, of his investors, too. “Everybody relied on Bernie,” says one longtime investor. “He was one thing you thought you could count on. And he enjoyed being counted on.”

And yet, of course, to provide for someone is to have power over them, and Bernie liked that, too. Now it was Bernie from Queens who waved his hand and granted entry to the magic kingdom where he minted money—and Bernie didn’t let in everyone. Bernie was simultaneously compassionate and grand. As he told one charity: “I promised the Steinbergs I’d take care of the American Jewish Congress,” which was the Steinbergs’ favorite cause and which gave Bernie $11 million, more than half of its endowment.

Bernie loved the Bernie Madoff he’d become, a Wall Street legend, a protector of charities, a man who was wealthy and so much more. Even if he couldn’t be that man without stealing.

People later wondered how Bernie could ruin so many people he seemingly cared about. But for decades he didn’t hurt anyone. In fact, there were many that he helped. “I lived off Bernie for years,” one investor says, and he was speaking for many. In all likelihood, Bernie didn’t pocket much of the money. He always paid out promptly, never shorted anyone. And money was flowing out all the time, in large quantities, one continual bank run. Hadassah, for instance, invested $90 million but over the years withdrew $130 million.

Some viewed Bernie and Ezra as two sides of the same coin. One was down to earth, the other positively ethereal; one was hiding in plain sight, the other ostentatiously public. They needed each other. “Ezra was captivated by Madoff,” says one person who knows him, especially, perhaps, compared to his father. “Bernie Madoff must have seemed like a kind, haimish sort of guy compared to my father,” says Daphne. Merkin didn’t exactly think of Bernie as a peer. To him, Bernie was an auto mechanic, a blue-collar technician focused on what was under the hood. “I’m only interested in where the market is heading in the next fifteen minutes,” Bernie sometimes said. A man like that could bear down on the details so the Ezra Merkins of the world could concentrate on finer things. For Ezra, Madoff’s returns weren’t eye-popping—Teicher did better—though his average of more than 12 percent a year was more than respectable. But the real selling point was Bernie’s consistency—barely a down month in more than a decade.

There were many for whom Madoff’s consistency was a giant red flag. The SEC missed it, but Teicher, the inside trader, was a skeptic. Ezra and Teicher talked about Madoff on and off for years. Teicher scoffed. “The thing seemed ridiculous,” Teicher told Ezra. But then, Ezra must have thought, Teicher generally didn’t like anyone’s ideas but his own.

And so Ezra took Bernard L. Madoff Investment Securities places Bernie couldn’t have dreamed of going by himself. The list of people and institutions that Ezra Merkin put with Bernie Madoff is a kind of Jewish social register. There was Mort Zuckerman, the media and real-estate mogul, and Ira Rennert, chairman of Fifth Avenue Synagogue and owner of a 68-acre oceanfront Hamptons estate. Over 30 charities invested with Ezra, many of them with a Jewish affiliation. Ramaz was in, as was Yeshiva. Not every investor says they knew that Ezra’s fund Ascot was fully invested with Madoff, an assertion that will be at issue in forthcoming lawsuits. Ezra maintains that, at the very least, he let people know that he might invest with other managers. And in some instances, he claims he was more direct. In the case of Yeshiva, with perhaps the largest endowment of any nonprofit he managed, he did report a relationship with Bernie, though it appears not to have been the real one.

Ezra had served as chairman of Yeshiva’s investment committee since about 1994. Not long after that, the committee directed $14.5 million of Yeshiva’s endowment to Ascot, which Ezra passed along to Madoff, collecting his usual fee, initially one percent and later 1.5 percent, standard for all of Yeshiva’s money managers.