He may be behind bars serving a 150-year sentence in federal prison for the $65 billion Ponzi scheme that destroyed the financial lives of thousands of people – but Bernie Madoff hasn’t changed his wily ways.
Diana B. Henriques, author of The Wizard of Lies: Bernie Madoff and the Death of Trust (Times Books/Henry Holt, $30), told The Fiscal Times in an interview this week that Madoff still has the “magic” that enabled him to create what has been called the largest Ponzi scheme in history. Just a few months ago, he promised Henriques the moon – or the journalistic equivalent of it – and then conned her.
“He told me, ‘Don’t worry, Diana, I’m not talking to other reporters. I won’t let any other interviews get ahead of your book,’” Henriques says. She was the first reporter to interview him in prison – and did so twice, in August 2010 and in February 2011 – and she’s also maintained contact with him through letters, emails, and phone calls.
They had an agreement. Then – wham. “In February 2011, as I’m interviewing him – as I’m holding a printed email in my lap that says, ‘Don’t worry, Diana, I won’t let anything come out before your book’ – I learn that he’s broken the embargo. Of course he’d been talking to other reporters.” He was negotiating with New York Magazine and with The Financial Times, she learned. Henriques quickly recovered, determined not to be scooped, and her interview with Madoff ran in The New York Times the next day.
The Fiscal Times (TFT): What surprised you most about meeting Madoff?
Diana B. Henriques (DBH): I’ve covered other Ponzi schemers in my career, and typically they’re very charismatic – the most charming person in the room. Madoff was not. He’s very calm, very quiet. He makes you feel like you’re the most charming person. And since you’re so bright and wonderful, why would you ever doubt your wisdom in trusting him?
TFT: Yet even when people were suspicious about the returns they were seeing on their investments, time and again he was able to reassure them. How?
I lost all your money,’ Madoff bought
their investments back at the price
they’d paid. That was in 1962.”
DBH: He had a gift for inspiring confidence. It served him well in his legitimate business, I must say. It’s what made him a trusted advisor to the SEC for many years; it’s what gave him stature in industry circles and organizations.
TFT: He first turned to deceit as far back as 1962, you say.
DBH: In 1962 he invested a small group of clients’ money in newly issued, over-the-counter stocks, a very reckless category. The market hit an air pocket and the stocks went to almost nothing. The clients, mostly family and friends, lost everything. But rather than say, ‘Listen, I did a foolish thing, I lost all your money,’ he bought their investments back at the price they’d paid.
TFT: So they came through it.
DBH: And he got away with it. Everyone else was losing money. But they said, ‘Wow, Madoff is a genius.’ It laid the foundation for all that came later in his life of crime. I can’t say that it was the start of the Ponzi scheme, though.
TFT: But you say the Ponzi scheme started far earlier than Madoff admits.
DBH: The best evidence suggests that the Ponzi scheme was probably in place in the mid 1980s on a large scale. He says it didn’t begin until 1992. But I asked him about the year 1987. His legitimate firm came through the crash of 1987 pretty well, but his big investors were frightened by the market’s volatility and wanted to take substantial amounts of money out of their accounts. Madoff had trouble meeting the withdrawals. He was upset. At just that moment a huge wave of hedge fund money came into his hands from offshore accounts. I said, ‘Bernie, wasn’t it just the tiniest bit tempting to take some of that money and give it the old-time investors to cover their withdrawals?’ ‘Oh, no,’ he said. ‘No.’ He flatly denied the Ponzi scheme started then. But you can see why I’m suspicious.
TFT: Has he read your book?
DBH: A copy has been sent to him. I have no idea if he’s gotten it or seen it. I do know he didn’t like the title. He sent me an email saying he was very disappointed, that it was too sensational I replied, ‘Bernie, you must have known that any book about your crime was going to have the word lies in the title somewhere.’