Bernard Madoff, who for decades masqueraded as a successful and trustworthy Wall Street kingpin before admitting to running the largest known Ponzi scheme in history, died on Wednesday in prison where he was serving a 150-year sentence. He was 82.
A spokeswoman for the Federal Bureau of Prisons said Madoff died at the Federal Medical Center in Butner, North Carolina, about 3:30 a.m. EDT (0730 GMT).
His death was believed to be from natural causes. Madoff had suffered from terminal kidney disease and several other medical ailments.
Madoff was imprisoned for engineering a fraud estimated as high as $64.8 billion. The judge who sentenced him in June 2009 condemned his crimes as “extraordinarily evil.”
In February 2020, Madoff had sought “compassionate release” from prison so he could die at home, but the same judge denied that request.
“Bernie, up until his death, lived with guilt and remorse for his crimes,” Madoff’s lawyer Brandon Sample said in a statement.
“Although the crimes Bernie was convicted of have come to define who he was – he was also a father and a husband. He was soft-spoken and an intellectual. Bernie was by no means perfect. But no man is.”
Madoff concealed his fraud through multiple recessions and the Sept. 11, 2001, attacks, but the 2008 financial crisis proved his undoing, as investors demanded he redeem $7 billion he did not have.
His Ponzi scheme made him a poster child for Wall Street greed, shining a harsh light on both his accomplices and on regulators who seemed on the cusp of exposing him, but failed.
In a typical Ponzi scheme, money from newer investors is used to pay sums owed to earlier investors.
Madoff was arrested on Dec. 11, 2008, after confessing to sons Mark and Andrew that his investment advisory business had been “one big lie.” They revealed the scheme to authorities.
Marc Litt, who led the prosecution of Madoff, said: “His passing closes a dark chapter of deception and greed that irretrievably damaged the lives of tens of thousands of victims. It is unfortunately fitting that he died in jail.”
Madoff’s thousands of victims, large and small, included individuals, charities, pension funds and hedge funds.
Among those he betrayed were the actors Kevin Bacon, Kyra Sedgwick and John Malkovich; baseball Hall of Fame pitcher Sandy Koufax; and a charity associated with director Steven Spielberg.
The former owners of the New York Mets, long-time Madoff clients, struggled for years to field a good baseball team because of losses they suffered. Many victims came from the Jewish community, where Madoff had been a major philanthropist.
“We thought he was God. We trusted everything in his hands,” Nobel Peace Prize winner Elie Wiesel, whose foundation lost $15.2 million, said in 2009.
Some victims lost everything.
“Bernie Madoff left my life December 11, 2008, when I found out that he stole all my money,” said Ronnie Sue Ambrosino, a Surprise, Arizona, resident whose family lost $1.6 million.
“THEY GOT ME”
Madoff’s fraud exposed holes at the U.S. Securities and Exchange Commission, which through incompetence or neglect botched a half-dozen examinations.
“There were several times that I met with the SEC and thought, ‘They got me,’” Madoff told lawyers in a prison interview, according to ABC News.
Madoff had been the largest market-maker on the Nasdaq, once serving as its non-executive chairman.
His brokerage firm was located in a Midtown Manhattan tower known as the Lipstick Building.
Employees there said they felt like part of Madoff’s family. They did not know he was running his fraud on a different floor. Only a trusted few did.
Madoff said his fraud began in the early 1990s, but prosecutors and many victims believe it started earlier.
Investors were entranced by the steady, double-digit annual gains that Madoff seemed to generate, and which others found impossible to explain or duplicate.
The money helped Madoff and his wife, Ruth, enjoy luxuries such as a Manhattan penthouse, a French villa and expensive cars and yachts, with a combined net worth of about $825 million.
But no one from Madoff’s immediate family was in the Manhattan courtroom when U.S. District Judge Denny Chin sentenced him.
And no family, friends or supporters submitted letters attesting to his good character or deeds in support of leniency.
“I believed when I started this problem, this crime, that it would be something I would be able to work my way out of, but that became impossible,” Madoff told the court. “As hard as I tried, the deeper I dug myself into a hole.”
Madoff also addressed victims in attendance, saying, “I am sorry. I know that doesn’t help you.”
Ira Lee Sorkin, a lawyer who had represented Madoff, said they last spoke 1-1/2 months ago.
He said that Madoff reported receiving good medical care and that he believed Madoff was remorseful.
“All I can say is it was a great tragedy,” he said. “There are no winners in this case, none whatsoever.”
KEEPING UP APPEARANCES
Bernard Lawrence Madoff was born on April 29, 1938, in the New York City borough of Queens and grew up there as the son of European immigrants who ran a brokerage out of their house.
Madoff graduated from Hofstra University in 1960 and briefly attended Brooklyn Law School before quitting.
That same year, he started Bernard L. Madoff Investment Securities, using his $500 in savings and office space borrowed from his father-in-law, Madoff told New York magazine in 2011.
Madoff started small, selling penny stocks in the over-the-counter market. By the early 1970s, he had become one of the five original broker-dealers in the Nasdaq trading system.
He advocated for greater market competition, at a time the New York Stock Exchange still dominated trading, and became an early force in electronic trading.
At times friendly and charming, and at others aloof, Madoff had a penchant for neatness that some viewed as an obsession.
Madoff’s offices were decorated in black and shades of grey, with little paperwork or objects visible on employee desks, and he co-ordinated several wedding rings with his wristwatches.
Market-making served Madoff well in the 1980s and 1990s, when he and his rivals could profit from buying a stock at $5 and selling it for $5.125, for example.
Profitability declined once decimalization became standard, but Madoff’s brokerage operation provided financial support for his fraud.
Clients were told they would make money through a “split-strike conversion strategy,” in which Madoff would buy a basket of large stocks to mirror the Standard & Poor’s 100 index, and reduce risk by purchasing and selling options on that index.
It wasn’t real.
Prosecutors said Madoff and his staff sent clients fake confirmations for trades he never executed, and fake account statements to document gains he never made.
Madoff admitted to sometimes dipping into his account at JPMorgan Chase to pay customers who wanted their money back.
Suspicions began surfacing in the early 1990s, when Madoff’s name came up in an SEC probe of a now-defunct Florida accounting firm, Avellino & Bienes.
In 2001, a Barron’s article noted skepticism on Wall Street about Madoff, including that he might be using his market-making operation to “smooth” returns for investors.
Madoff demurred. “It’s a proprietary strategy. I can’t go into it in great detail,” he said, while dismissing the Barron’s theory as ridiculous.
More questions were raised as a whistleblower, financial analyst Harry Markopolos, began pressing the SEC to stop Madoff.
From 1992 to 2008, the SEC received six complaints raising “significant red flags” about Madoff and whether he was trading anything, but never took even basic steps to figure out what he was doing, its inspector general David Kotz later said.
Madoff was arrested one day after his company’s annual Christmas party. In March 2009, he pleaded guilty to 11 criminal counts including fraud, money laundering and perjury.
Madoff initially maintained that the fraud was his alone, but prosecutors ended up winning 15 convictions or guilty pleas.
These included a guilty plea from Madoff’s younger brother Peter, the firm’s chief compliance officer, who received 10 years in prison. The only trial ended with convictions and prison terms for five former Madoff employees.
Prosecutors got a major boost after winning the co-operation of Frank DiPascali, Madoff’s long-time financial chief, who died in 2015 of lung cancer.
Ruth Madoff was not charged. She said she felt her husband had betrayed her after nearly a half-century of marriage. Many were skeptical of her claim she knew nothing about the fraud.
Prosecutors let Ruth Madoff keep $2.5 million.
Within days of Madoff’s arrest, efforts began to recoup money for people who invested with him and for third parties that sent their money to his firm.
Irving Picard, a court-appointed trustee, has recouped more than $14.4 billion by targeting “net winners” who took more money out of Madoff’s firm than they put in.
“The pain experienced by the victims of Mr. Madoff’s fraud is not diminished by his death, nor is our work on behalf of his victims finished,” Picard said in a statement.
Nearly $3.2 billion has been distributed from a separate U.S. government fund overseen by former SEC Chairman Richard Breeden.
“This is certainly the largest single crime against individual investors in world history,” Breeden said in an interview. “You can put them back in the financial position they were in, but you can’t eliminate the suffering.”
The pain for Madoff’s family did not end with the patriarch’s imprisonment.
Tormented by his father’s actions and by lawsuits, Mark Madoff, the older son, hanged himself with a dog leash at age 46 on Dec. 11, 2010, the second anniversary of his father’s arrest.
Andrew Madoff died of cancer in September 2014, at age 48.
When rejecting Madoff’s request for compassionate release in June 2020, Judge Chin agreed with prosecutors that prison interviews where Madoff played down his crimes showed he “never fully accepted responsibility” for them.
Madoff told New York magazine he believed the record should show he had changed Wall Street, and that many victims might have lost more money in the markets had they not heard of him.
But he said he would not make excuses for his fraud and had come to terms with his crimes and pariah status.
“It is what it is,” he said.
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