So far, prosecutors have not indicated plans to indict Ruth—she has not even been questioned in association with the fraud. But that could change at any time. The government and victims could also come after what money Ruth has left. Just before Bernie’s sentencing, prosecutors announced a settlement that leaves Ruth far too well off to satisfy most people but with only a fraction of what she was hoping for: She gets to keep $2.5 million, a number that corresponds to a portion of Ruth’s share of the couple’s older real-estate holdings. She must give up all the houses, including the Manhattan penthouse where she’s been living—and the $39,000 Steinway piano, the $1.6 million art collection, and her $36,000 Russian sable-fur coat. Now that Ruth has given up most of her assets, the government will try to retrieve some of the money taken out of the company by Bernie’s brother, Peter, and sons, Mark and Andy—Bernie made millions of dollars in loans to them in recent years, according to court documents.
Ruth was desperate to put an end to the financial limbo she’s been living in. For the last six months, the U.S. Attorney’s office has controlled every cent she could spend, rejecting her New York Times subscription as too extravagant, along with TV service above basic cable. Meanwhile, the only money Ruth had coming in each month was a Social Security check. Her $2.5 million nest egg could throw off a more-than-comfortable $150,000 in interest each year. It will save her from taking a greeter job at a Palm Beach Wal-Mart, but it’s still a big adjustment for a woman who once spent $29,887.94 in one month on her husband’s Platinum American Express card.
The house where Ruth Alpern lived as a child with her parents, Saul and Sara Alpern, and her older sister, Joan, is a little yellow clapboard on 224th Street in Laurelton. The neighborhood was tiny, primarily Jewish, industrious, and middle class. “It was more like growing up in a sort of rural upstate New York town than Queens,” says one schoolmate of Ruth’s. Ruth and her sister went to Far Rockaway High, where the style was saddle shoes and poodle skirts, and Ruth was voted “Josie College,” a sort of all-around yearbook good-girl honor.
Perhaps not surprisingly, the most common recollection of Ruth from that time is of her devotion to Bernie, who was two years ahead in school. They started going together during her freshman year, and he came to dominate her life. “Ruth spent an inordinate amount of time with him,” says a former neighbor and schoolmate who took Ruth on a few early dates and later invested in Bernie’s fund. “She was taken by him, and they had a very, very close relationship. She was over at his house most of the time. She gave up many of her friends to be his friend.” When they got engaged in high school, says Far Rockaway student Millie Beck, “I remember thinking, ‘Boy, he traded up.’ ” Ruth and Bernie married in 1959.
From then on, the Alpern and Madoff families, and business interests, became intertwined. Bernie graduated from Hofstra in 1960 and was casting about for moneymaking opportunities. Ruth’s father, a certified public accountant whose firm, Alpern & Heller, had been in business since 1948, provided the umbrella for Bernie to launch his market-making operation, buying and selling securities for other companies. Bernie quietly began an investment fund on the side, and two of Saul Alpern’s employees—the accountants Frank Avellino and Michael Bienes—started to work for him, funneling investors who wanted to get in on what were known even back then as Bernie’s guaranteed returns of 13.5 to 20 percent a year.
His earliest investors were friends of Ruth’s parents, retired teachers, accountants, and lawyers who’d sold their houses in Queens, moved down south, and had some extra money to put away. Many of them spent their summers in the bungalow colonies of the Catskills in upstate New York. “My hotel catered to retired people from Florida, my parents’ friends,” says Cynthia Arenson, a classmate of Ruth’s who ran the Sunny Oaks resort near Woodridge and whose parents were best friends with Ruth’s parents. “Thirty percent of my hotel invested in Bernie Madoff.”
At some point in the sixties, Saul and his wife retired to a condo in Florida, near Miami Beach, leaving Avellino and Bienes as the primary feeders to Bernie’s investment fund (until the SEC shut them down in 1993 for failing to register their clients’ investments). While some have suggested that the Ponzi scheme can be traced back to Bernie’s earliest days in business, friends from that time don’t believe that Ruth’s father was aware of it. “Saul was not the kind of guy who would steal money,” Arenson says. He and Ruth’s mother were steeped in Depression-era values: “My parents chipped in with his friends and bought [him] a suit for his 80th birthday.”