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The Monster Mensch

And yet one of the strangest aspects of Bernie Madoff’s story is his unflinching pride in his success. In May 2008, Bernie celebrated his 70th birthday on a beach in Cabo San Lucas, Mexico, where he’d traveled for a golf tournament. Bernie’s crew included his brother, Peter, and their wives and close friends. One evening, they gathered at a quiet hotel, which had set up tables on the beach. Candles provided much of the light. One by one, the guests rose and toasted Bernie. Ed Blumenfeld’s was typical. Blumenfeld, a real-estate developer and a considerable investor, said, as one guest recalls, “Our lives have been enriched by knowing Bernie. It’s been a privilege to know him and have him part of our lives.”

By then, Bernie must have sensed the end approaching. But if he was anxious, he didn’t show it. Bernie golfed and relaxed, basking in the sun and the praise. On the beach, one guest recalls, Bernie crooned a Neil Diamond song, “Sweet Caroline.” “Where it began, I can’t begin to know.”

On December 10, his sons, Andy and Mark, talked to their father about bonuses, which Bernie suddenly insisted on paying early. Bernie sputtered something about the business having made profits. “Now [is] a good time to distribute [bonuses],” he told them. It didn’t make sense. They pressed him. Bernie seemed to be cracking. “He wasn’t sure he would be able to hold it together,” they later told the SEC. Bernie insisted they talk at his apartment that evening.

Facing his sons, Bernie came out with it quickly, brutally.

“[I’m] finished,” he said. “It’s all just one big lie … ” Andy and Mark called the SEC, Bernie’s enemy, as he’d once put it. The SEC contacted the FBI, which showed up at Bernie’s apartment on December 11. Bernie came to the door in a pale-blue bathrobe and slippers.

“We’re here to find out if there’s an innocent explanation,” said one of the agents.

Bernie must have rehearsed this moment for years. “There’s no innocent explanation,” he said, sounding almost relieved.

Ezra Merkin is ruined. “His life as he knew it is over and not coming back,” says brother Sol, adding, “he doesn’t deserve this.” Ezra is winding down his funds. He’s been all but exiled from many of the communities he cared about. Andrew Cuomo, the New York State attorney general, is investigating whether Ezra misled the charities whose endowments he managed in order to enrich himself. He resigned as chairman of GMAC at the insistence of the U.S. government, one condition for bailing out the lender with $5 billion. For the moment, observant Ezra still sits on the bema every Saturday, in the spot designated for the synagogue president. Some in the congregation are scandalized, and some will sue him, it is almost certain. It’s not practical to sue Madoff. There are no assets left. And so they will take their turns with Ezra—who, as general partner, is personally liable. “He will spend the rest of his life in court,” says one attorney. Ironically, the sage will plead ignorance for the remainder of his days.

And yet, in another way, it’s not over. It’s just beginning. Ezra Merkin is fascinated—“extremely fascinated,” he sometimes tells friends—to know what will happen next in his life.

About Madoff’s victims, the ones whose funds Merkin was supposed to be safeguarding, he is matter-of-fact. He tells friends, “I lost a lot of people a lot of money.” There’s something slightly obtuse in this. Nearly every day brings accounts of shuttered charities, of retirements ruined, of houses suddenly put up for sale. Shouldn’t he be rending himself? But he was tricked like everyone else, he says, and tells himself he’s got to be resilient, show fortitude. And so he talks to himself about what he has. A loving wife, four devoted children—he is a much better father than Hermann. “I have to get through this,” he tells people, if one can. As for the future, he doesn’t know what the outcome is going to be. Ezra has lately been proclaiming himself free of the need for money and prestige, those things that shaped his life. He can start anew, reinvent himself. We’ll be all right, he thinks. Ezra understands as well as anyone the role his financial success played. Money has been central to his life. It put those breathtaking Rothkos on the wall and elevated him to society’s loftiest ranks. Things will change now. He’s begun to think along other lines. He says he might pursue something more on the contemplative side, reading or writing. Whatever this evolves into, “it doesn’t have to be a wealthy lifestyle for us to be happy,” Ezra tells friends, then adds, “I don’t think.”

Research assistance by Ross Kenneth Urken.