Bernie Madoff never told his wife, Ruth, or his two sons, Andrew Madoff and Mark Madoff, that he was running a $65 billion Ponzi scheme that destroyed the financial lives of thousands of people and resulted in the suicide of his first-born son, says Diana B. Henriques, the first reporter to interview Bernie Madoff in prison. Henriques, who wrote The Wizard of Lies, an analysis of the Madoff case, says it’s time once and for all to believe the family's emphatic denials.
“Ask any dumped spouse: Every family has secrets,” Henriques told The Fiscal Times. “There are tons of examples of people who have kept remarkable secrets from their nearest and dearest, out of shame, out of embarrassment, out of conventionality. This was a guy who was staring down the barrel of a prison sentence. He had every reason in the world to keep [his financial scam] a secret. And who would be easier to fool than the people who trusted you most?”
Ruth Madoff and her surviving son Andrew are telling their side of the story through a new book, which they promoted on "60 Minutes" last Sunday. The book contains detailed interviews with family members. Bernie Madoff himself did a recent high-profile interview with Barbara Walters, all of which has reignited public interest – and anger – in the case.
Madoff, 73, a former chairman of Nasdaq, is serving a 150-year prison term after pleading guilty to securities fraud in 2009. He has always maintained that his wife and sons were completely in the dark about the fraud that wiped out the life savings of thousands of investors – the largest Ponzi scheme in history.
Still, Henriques – who for years has maintained contact with Madoff through letters, emails and phone calls – says she can’t believe the continued public fascination with “this soap opera.”
The Fiscal Times (TFT): So why do we care so much, even in the fall of 2011 – what’s at work here?
Diana B. Henriques (DBH): The family has finally entered the conversation. I tried repeatedly to get on-the-record interviews with the Madoff family for my book and struck out every time. Madoff himself has been driving the narrative. He’s been giving interviews; he’s been opining about this and chatting with Barbara Walters about it – so he’s been out there.
TFT: The family has been kept under wraps until now, you believe.
DBH: Yes, from the beginning, by their lawyer, and then by their own estrangements. These are people about whom the public had become increasingly curious, people they knew next to nothing about – and finally they’re speaking up. So it’s the novelty of that.
TFT: You’ve said from the beginning that you believed Ruth and the Madoff sons were innocent and did not know about the Ponzi scheme – that they were taken by surprise by it as much as anybody else was. Why do you believe that?
DBH: When her husband confessed in [the family’s] study [in December 2008], ‘I’m running a Ponzi scheme,’ Ruth’s stunned reaction was, ‘What’s a Ponzi scheme?’ According to her son, Andrew, neither Andrew nor Mark ever believed their mother knew anything about it. It’s inconceivable that Madoff would have relied on them. The emotional logic did not make sense to me from the beginning. The circumstantial evidence never added up to guilty knowledge on their part. And what we’ve learned both about their personalities and about their memories of those days bears that out. They did not learn about this fraud until Bernie Madoff told them about it.
TFT: So you find their new denials completely credible?
DBH: They’re facing a very difficult task: The public expects them to prove a negative – prove you didn’t know then something that you do know now. Not one of us could do that! It’s not even possible to measure the truthfulness of a statement like that on a polygraph. So, I don’t know that they’ll ever win the public’s agreement with that. But certainly it’s not so much that their denials are credible – it’s that there still isn’t any evidence that they knew.
TFT: So at some point you want to say to the skeptics –
DBH: I want to say, If you think they’re guilty, prove it.
TFT: What surprised you the most when you first met Madoff?
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?
foolish thing, 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: You say in your book that he first turned to deceit as far back as 1962.