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The Madoff Tapes



Butner is good for Madoff, “as good a place as I could possibly be,” he said. Other inmates respect him. “My notoriety impresses them. It shouldn’t, but it does.”

Harder for him is what is happening in the outside world. He reads the newspapers, following his case. “What’s most upsetting is the way the media blasted my wife and family,” he said. Also, he insisted, he had been mischaracterized. He wanted to clarify his criminality, to separate it from what he saw as his legitimate career. “We made a very nice living,” he said. “I didn’t need the investment-advisory business. I took it on and got myself involved in it, but if you think I woke up one morning and said, ‘Well, listen, I need to be able to buy a boat and a plane, and this is what I’m going to do,’ that’s wrong. I had more than enough money to support my lifestyle and my family’s lifestyle. I allowed myself to be talked into something, and that’s my fault. I thought I could extricate myself after a short period of time. But I just couldn’t.

“Does anybody want to hear that I had a successful business and did all these wonderful things for the industry?” he continued. “And got all these awards? And so did my family? I did all of this during the legitimate years. No. You don’t read any of that.”

This kind of moral parsing was not going to make anyone happy.

“No one is going to feel sympathetic for Bernie Madoff,” I said.

“I agree,” he said with a swallowed laugh.

The current chapter in Bernard L. Madoff’s story began on the morning of December 11, 2010, when the prison chaplain came to his cell at Butner to tell him about Mark’s suicide. “Ruth called the chaplain, and the chaplain came in to get me,” Madoff said. “As soon as the chaplain came to get me, I knew something happened. That’s how they notify you when someone dies. Ruth was hysterical. The chaplain was in tears speaking to Ruth.”

“It was a nightmare. Imagine going home every night not being able to tell your wife, living with this ax over your head, not telling your sons, my brother, seeing them every day.”

I asked him what Ruth thought. Ruth was in the middle, the monster’s only ally. “She’s angry at me,” Madoff says. “She tries not to be, but it’s hard not to be. I mean, you know, I destroyed our family.”

The pain that Madoff visited upon those closest to him has certain echoes in his own background, part of what drove him to succeed. “I had a father who was very successful in business,” he told me, a sporting-goods-manufacturing business. “He invented the punching-bag stand,” Madoff said. “The Joe Palooka punching-bag stand.” But the business failed when Madoff was in college. “You watch that happen,” said Madoff, “you see a father whom you idolize all of a sudden lose everything, and you’re frightened about something like that happening.”

His father’s collapse also affected Madoff in an immediate and practical way. He headed to Wall Street without the pedigree, connections, or capital that ease a young man’s way. “Of course my father was not in a position to offer me that,” Madoff told me. To the young Bernie Madoff, Wall Street was an exclusive club that barred the door against the likes of him. “I was upset with the whole idea of not being in the club. I was this little Jewish guy from Brooklyn,” he said.

From the beginning, Madoff, who’d moved to Queens at age 7, had a chip on his shoulder, along with a certain contempt for the industry he’d chosen. “It was always a business where you had to have an edge, and the little guy never got a break. The institutions controlled everything,” he said in a voice surprisingly thick with emotion. “I realized from a very early stage that the market is a whole rigged job. There’s no chance that investors have in this market.”

In 1960, borrowing office space from Ruth’s father’s accounting firm and investing his savings—a meager $500, he told me—he launched Bernard L. Madoff Investment Securities. “The SEC had never even heard of anybody going into business with $500,” he explained. “They had to have a special interview with me to make sure I wasn’t out of my mind.” At first, Madoff ground out a modest but steady income on the scraps of business tossed his way by Goldman Sachs and Bear Stearns, action that was too much trouble and too little profit for them. “I was perfectly happy to take the crumbs,” he said. Madoff was a market-maker, a middleman between those who wanted to buy and sell small quantities of mostly bonds—odd lots. “It was a riskless business,” he said. “You made the spread,” buying at one price and selling at a higher one, and in those days the spreads could be substantial, 50 or 75 cents or even a dollar a share. Madoff increased his profits by trading on the side. “And I had my niche.” By most accounts, Madoff had a trader’s instinctive understanding of the market. He was an “unbelievable trader,” said a person who watched him in the eighties.


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