Still Trying to Figure Out Bernie Madoff

With disgraced Ponzi schemer Bernard Madoff safely behind bars to serve his 150- year prison sentence, the business of figuring out how he pulled off one of the greatest financial swindles of all time is in full swing. The Washington Post looks at three new books out on Madoff, none of which seem to offer a definitive answer, according to The Post’s review. But there are enough details in all three to shed a little bit more light on who Madoff was, and how he accomplished what he did.

The three books are “Too Good to Be True: The Rise and Fall of Bernie Madoff” by Erin Arvedlund, “Betrayal: The Life and Lies of Bernie Madoff” by Andrew Kirtzman, and “Madoff With the Money,” by Jerry Openheimer.

Among the highlights, according to reviewer Carlos Lozada:

Madoff’s heartlessness was breathtaking.

On the day of Madoff’s sentencing, Judge Denny Chin described a letter he received from a widow who went to see Madoff after her husband died of a heart attack. Bernie put his arms around her and said, “Don’t worry, your money is safe with me.” She lost everything and had to sell her home. It was such personal betrayals, as much as the financial losses, that transformed Madoff into one of the most vilified men in America.

The warnings from Madoff competitor Harry Markopolos to the feds regarding his scheme were detailed, complete, and totally on the mark.

Markopolos’ November 2005 memo to the SEC, a 21-page document titled “The World’s Largest Hedge Fund is a Fraud,” belongs in the Unheeded Warnings Hall of Fame, the financial world’s answer to “Bin Laden Determined to Strike in U.S.”

In the end, Madoff’s swindle wasn’t all that hard to figure out. It was just an ordinary, run of the mill Ponzi scheme:

Maybe there is just not much to say about Bernie Madoff, no great depths to plumb. He may simply be a heartless man of middling intellect who felt no compunction in defrauding strangers and loved ones. His scam was not some devious piece of financial engineering and technical know-how; for years, he simply deposited investors’ cash in a bank account, taking vast amounts for himself and hoping to pull enough in to keep the scheme going. Madoff does not embody the perils of a turbulent marketplace; in fact, the market did him in.

As Lozada points out, it’s too early to comprehend Madoff’s legacy just yet, but undoubtedly as more details leak out regarding his operation, we’ll know and understand more. In the meantime, the books about him so far don’t add up to a portrait of an evil genius. As Lozada puts it, Madoff certainly may have been evil. But a genius he was not. Which makes his swindle all the more fascinating, for those of us still trying to figure out how so many rich and powerful people got totally taken in by it.

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