The Wizard of Lies: Bernie Madoff and the Death of Trust

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The Wizard of Lies: Bernie Madoff and the Death of Trust

3.79 of 5 stars 3.79 · rating details · 330 ratings · 87 reviews

The inside story of Bernie Madoff and his $65 billion Ponzi scheme, with surprising and shocking new details from Madoff himself.

Who is Bernie Madoff, and how did he pull off the biggest Ponzi scheme in history?

These questions have fascinated people ever since the news broke about the respected New York financier who swindled his friends, relatives, and other investors out...more

Hardcover, 448 pages

Published April 26th 2011 by Times Books

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Jun 30, 2012 Jonny99 rated it 5 of 5 stars

A fascinating view into the ultimate confidence man. Diana Henriques delves into exactly the correct questions about Bernie Madoff and his epic $64 billion (with a "b") ponzi scheme. First, how does someone live with such a complete betrayal? Madoff raised two boys, sent them to good American schools, has them return to his Wall Street brokerage and money management business and leads them to believe they would inherit the operations on his retirement. He does all this knowing full well the sche...more A fascinating view into the ultimate confidence man. Diana Henriques delves into exactly the correct questions about Bernie Madoff and his epic $64 billion (with a "b") ponzi scheme. First, how does someone live with such a complete betrayal? Madoff raised two boys, sent them to good American schools, has them return to his Wall Street brokerage and money management business and leads them to believe they would inherit the operations on his retirement. He does all this knowing full well the scheme will be discovered and they will all eventually go to prison. He also steals not just from wealthy strangers but members of his Jewish community, friends, family, children and even his grandchildren. Again he does this knowing fully well some of these people will be destitute when his scheme eventually collapses. How does he live with this? After a few years in prison working with a counselor Bernie eventually faces the question himself although he lacks a good answer.

She also extensively delves into the question of how a crime this big is kept going over more than 20 years although Madoff's initial foray into duping investors turns out to be in the early 1960's. Rightly so, the Securities and Exchange Commission is played as the Keystone Kops as they launch one ineffective investigation after another. Henriques is a smart enough writer to realize when their bungling makes Madoff seem like the rebellious anti-hero. To keep Madoff in perspective for the reader, she inserts stories about how he indulges his boys' whims for multi-million dollar Manhattan and Long Island real estate by digging into the money investors gave him to manage.

The author also does a thorough job of answering the question "who knew". She makes a convincing case that only Madoff, his lieutenant and a small number of operations personnel knew of the fraud. It seems clear that his wife, brother and boys were fooled along with some of the most powerful and wealthy people. Henriques fully covers the pain they are subjected to - in Bernie's brother Peter's case a lengthy prison sentence and his son his suicide - because of the assumption that they knew about the scam. She also looks into whether any of his wealthy client collaborated on it concluding, along with Bernie, that one figured it out and took advantage of it to the tune of $7.2 billion (with a "b").

Henriques also does a nice job over laying out the mechanics of the fraud. Madoff and the small group of operations people who assisted with the deception built false computer systems that mimicked real trading systems well enough to fool government investigators and others. The scenes of the SEC watching his fraudulent handiwork would make for compelling movie scene.

While Henriques's is not a great storyteller, her prose represents the clean, crisp word choice and vocabulary of a seasoned journalist. She brings an objective and savvy perspective on this most slippery of subjects.

In short, pick up this fascinating and amazing epic story is well worth your time.

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Jun 11, 2012 Chris Bauer rated it 3 of 5 stars

Less a book about Bernie Madoff as it is a condemnation of bungling bureaucrats, greed and intrinsic flaws in financial oversight. I'm not a financial guy - just look at my bank account for proof - but there were some fascinating components of investigation in the book. The author was extremely diligent and as "fair" as possible. I recall thinking when the scandal broke "Big deal. So some billionaires are a little less wealthy now." But the author puts a human toll of the everyman affected by th...more

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Jan 18, 2012 Victoria_Grossack Grossack rated it 4 of 5 stars

As if I could not get enough of the Madoff scandal, I read this book right after the one by Markopolos, No One Would Listen. You can tell immediately that this writer, actually a reporter, is far more professional. The writing itself is much better. She also presents a much more complete picture of what happened. Of course, Markopolos is narrating a different story: what it is like to be a frustrated whistleblower, and so perhaps the comparison is unfair.

Henrqiues warns that Madoff is obviously...more As if I could not get enough of the Madoff scandal, I read this book right after the one by Markopolos, No One Would Listen. You can tell immediately that this writer, actually a reporter, is far more professional. The writing itself is much better. She also presents a much more complete picture of what happened. Of course, Markopolos is narrating a different story: what it is like to be a frustrated whistleblower, and so perhaps the comparison is unfair.

Henrqiues warns that Madoff is obviously an accomplished liar, and so that anything he tells her, and through her, us, may not be true. Some of his statements are likely false. First, he denies that others knew anything. He may be trying to keep them out of prison. Second, he states that the Ponzi scheme did not begin until 1992. Many think it began earlier – he certainly was guilty of borrowing his clients’ money back in the early 60s, although it was paid back - but there’s no proof. Why would he insist on the later date of 1992? To protect what his family owned before then.

Henriques also gives a more nuanced view of some of the people and organizations that were vilified after the scandal. The behavior of Madoff’s wife and sons has been consistent with complete innocence, so it seems likely that they really had no idea. The SEC, which certainly screwed up royally, was an organization whose budget and hence staff had been gutted by Congress. In fact Henriques is rather hard on Markopolos, who certainly has flaws but at least was trying to do the right thing. She mocks him for being afraid for his life. Well, it was a lot of money. People, including those in our government, have killed for far less.

It was also interesting to read about the attempts to get the money back. The fellow in charge of the process, Picard, was not loved by anyone but he has apparently done a terrific job. One thing that must be done is to convince the defrauded that they could not put any faith in the statements provided by Madoff, which of course were completely fictitious. The most they could hope for was to get their money back. In most cases you get ten cents on the dollar but Picard was able to clawback considerably. This is an incredible achievement.

This book ends up being a worthwhile read, giving some interesting perspectives. It does feel rather too much like an apology for the establishment at times.
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Sep 28, 2011 David rated it 2 of 5 stars

There's some interest value in the underlying story of course, and it is somewhat interesting for a while to contemplate how many savvy, competent people were taken in by what seems in retrospect an obviously untrustworthy scam. I like to think that even if my best lifelong friends were involved I would still want some basic legal assurances, contracts, etc. before handing over all my money, but clearly Madoff had a lot of skill in duplicity.

Beyond the obvious, and maybe some additional understa...more

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Sep 05, 2011 LA Carlson rated it 5 of 5 stars Recommends it for: anyone

Recommended to LA by: read a review

Shelves: historial-memoir

Bernie Madoff could have made a comfortable living working as a broker on wall street. He certainly had the knowledge and initiative. As a financial writer for the NY Times Diana Henriques begins this tale at the end at a North Carolina jailhouse where Madoff will spend the rest of his life under lock and key. It then explains to the lay reader how Madoff began his career, his associates-often friends who contributed to his early impressions. Surprisingly, his father-in-law is one of the people....more

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Aug 31, 2011 Kathleen rated it 3 of 5 stars

Of course, I'm fascinated with the Madoff Ponzi scheme. Unbelievable how many people he fooled. Okay the imposter, "Clark Rockefeller" fooled a lot of people, but he did not steal from thousands of people. This book was more financial than biography - learned more about the SEC (Securities and Exchange Commission) - inept, but maybe the problem was being understaffed. Obviously, many people losing all of their money is sad, but sadder were the loss of lives - people committing suicide - even his...more Of course, I'm fascinated with the Madoff Ponzi scheme. Unbelievable how many people he fooled. Okay the imposter, "Clark Rockefeller" fooled a lot of people, but he did not steal from thousands of people. This book was more financial than biography - learned more about the SEC (Securities and Exchange Commission) - inept, but maybe the problem was being understaffed. Obviously, many people losing all of their money is sad, but sadder were the loss of lives - people committing suicide - even his son, two years after his father disclosed his Ponzi scheme. This book also helped me to understand the complexities of the claims/lawsuits to recoup some of the money lost. Of course, some people had withdrawn lots of money before the collapse and made lots and lots of money because of the bogus gains Madoff was claiming on their paper statements. Others never withdrew any money and they lost all their money. I believe the resolution to recoup money was the money they put in, was the money they got back. Not exactly sure. Those who made BIG BUCKS from Madoff - Picower (Jeffrey - he died of a heart attack in Oct. 2009 - a year after Madoff was arrested). His widow, Barbara Picower agreed to return $7.2 billion....to help those who have suffered most....(p. 329). The numbers are staggering. The interesting twist is that many who did make BIG money with Madoff investments, heavily invested in many, many charities. So, some of the bogus money helped many charities. I watched a Frontline Special on netflix. One of the investors spoke to PBS Frontline. The interviewer asked, "Didn't you think it was strange that you could not look at your statements online?' Well yes, she said, but didn't put too much thought into it as Madoff often communicated the exclusivity of the people who were investing with him. He didn't like to be advertised. There were a few people who knew something was WRONG, but Madoff was never charged with illegal activity. It was only the economic downfall of 2008 that finally toppled Madoff's Ponzi scheme. This book did make me think of MONEY - obviously. Of course, I think will I have enough to retire, money for a nursing home, etc. But, there seemed to be an attitude from some people (not all) - the American way - I deserve to live the American dream at retirement - travel, etc. And, I do like to travel. Glad I'm doing now and not waiting for retirement. But makes you think of valuing not the dollar sign. How do live simply and give generously? It's a question that haunts me. The criticism of this book is that it fails to unveil why Madoff chose to live this lie. Minor details - once he started, he couldn't stop, but the book really fails to describe in much detail the psyche of Bernie. She does warn us that one of the traits of a Ponzi scheme is TRUST. Many people just trusted Bernie. People want to trust. But, sometimes they are BURNED - big time. Even though Madoff's Ponzi scheme finally failed, there are others thinking of other Ponzi schemes. It will happen again. Hopefully laws/checks and balances in the investment firms/government have improved because of Bernie Madoff.(less)

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Jun 24, 2011 Jorge rated it 5 of 5 stars

Shelves: politics-economics

The Wizard of Lies: Bernie Madoff and the Death of Trust

"The Wizard of Lies" is the fascinating story of Bernie Madoff and his infamous $65 billion Ponzi scheme. Acclaimed author Diana B. Henriques masterfully narrates one of the most absorbing accounts of fraud in the history of our country. This engrossing 448-page book is composed of the following sixteen chapters: 1. An Earthquake on Wall Street, 2. Becoming Bernie, 3. The Hunger for Yield, 4. The Big Four, 5. The Cash Spigot, 6. What They...more

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Aug 13, 2012 Jay Hinman rated it 4 of 5 stars

This book on the massive, soul-destroying Ponzi scheme engineered by Bernard L. Madoff that tore the life savings away from thousands of trusting investors is likely to be the chief reference text for one of financial history's most sordid chapters. I'm always fascinated when otherwise smart people do really dumb things - like trust all of their money to one man, a man who was able to conjure mystically steady quarterly profits over and over again, even during times when the rest of the market w...more This book on the massive, soul-destroying Ponzi scheme engineered by Bernard L. Madoff that tore the life savings away from thousands of trusting investors is likely to be the chief reference text for one of financial history's most sordid chapters. I'm always fascinated when otherwise smart people do really dumb things - like trust all of their money to one man, a man who was able to conjure mystically steady quarterly profits over and over again, even during times when the rest of the market was plunging. There's no schadenfreude here on my part. Wall Street is deliberately non-transparent, and derives much of its power by remaining so. When good people are cheated out of their long-held earnings by one man's greed and lies, it's sad, frustrating and ugly - as well as being a great morality tale for how the human psyche gets itself into Ponzi scheme-like messes such as this over and over again.

"THE WIZARD OF LIES" opens with a day-by-day, blow-by-blow account of the days leading up to Bernie Madoff's 2008 surrender and arrest, as the fallout from that year's Wall Street meltdown had finally forced a reckoning for him. No longer able to rob the proverbial Peter to pay the proverbial Paul, Madoff finally had to give up and turn himself in. It's riveting stuff, frankly - how a lie that had been maintained for nearly 20 years (the exact dates are fuzzy) came toppling down in a matter of days - ruining the lives of thousands of people, including Madoff's own family. The book then shifts back to look at how Madoff came to build his mystique on Wall Street, and takes us through the 1950s, 60s, 70s and 80s - decades in which there was definitely some financial chicanery on his part, but nothing quite like the billion-dollar ponzi scheme that he got running in what looks like about 1992.

Bernard L. Madoff Investment Securities had a "legit" trading business that was fairly well-run and profitable. Much of this was eventually managed by Madoff's brother Peter and later by his sons Andrew and Mark. Then there was the far larger hedge fund racket he was running, which included Enron-like phony trading desks on another highly-secure floor. This is the one into which billions of dollars flowed, from wealthy Jewish donors that Madoff hobnobbed with on the charity circuit, as well as from Hollywood celebrities like Kevin Bacon and "feeder funds" set up around the world to funnel money into Madoff's scheme, likely not knowing that it was 100% bogus.The genius of this crook is that he was an exceptionally smart man who used innate Wall Street knowledge, advanced technology, reputation, exclusivity, charisma and an alarmingly strong use of deception and cunning to get people to give him their money to manage.

Madoff would then send his clients and feeder funds quarterly statements - on paper only, with no ability for online research - showing modest gains. For wealthy, risk-averse clients, watching their money grow solidly and predictably was like catnip, and they would shovel more and more his way. He'd then use this new money to cover withdrawals of old money, and statements would reference "trades" that were being made in their accounts, even though not so much as one real trade was ever executed during the entire life of the ponzi scheme.

The Securities & Exchange Commission (SEC) gets absolutely raked in this book. They had multiple skeptics and intelligent folks petitioning them to investigate Madoff, whose returns were simply too good to be true. They did investigate him, several times, and the book recounts how Madoff lied, goaded and bluffed his way into not being caught several times. The SEC investigations were unmitigated disasters, and their failure led to even more people getting burned in the 2008 unraveling of the scheme.

Author Diana Henriques then takes us up again to Madoff's arrest, and spends the last third of the book in a way I was initially unsure of yet then later was very glad she spent her time documenting. Henriques walks us through the various lawsuits that flowed like waterfalls in the wake of Madoff's arrest, and the herculean efforts made by the victims' trustee to ensure that victims got as much of their lost money back as possible. Since most of the profits were phantom profits, there was many, many angry people who still believed they deserved this bogus money. She also talks about the media crucifixion of Madoff's innocent and shocked wife Ruth and children Andrew and Mark, the latter of whom committed suicide after wallowing in his new life as a tarred-and-feathered, disgraced Madoff. Other ruined investors committed suicide as well, leaving the lying, thieving Bernie Madoff on the hook for much more than lost life savings.

I said earlier that the book, which is excellent, is a morality tale, and it is. It exposes several aspects of humanity. There's the willingness to trust, and its flip side - the willingness to deceive: both deceive others, and deceive ourselves. Many people blew past the warning signs surrounding Bernie Madoff and decided to trust him while deceiving themselves - including government regulators, investment professionals and ordinary retirees. While the book tackles some Wall Street arcana, it never becomes bogged down in it and is quite thrilling in parts. Subplots are still unraveling in this tale since this book was published in 2011, and I look forward to the postscript and newly-updated chapters that will shed more light on how this happened and what Madoff was hiding as he dodged the SEC, his customers and his conscience.(less)

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Aug 07, 2011 Jack rated it 5 of 5 stars

Very good description of Madoff and his Ponzi scheme.

The first section starts a few days before his arrest and runs through the arrest.

The second section begins very early in his life and goes to the beginning of the first section.

The third section begins with the arrest and goes for about 3 years, mostly dealing with the various legal proceedings, mostly centering on the bankruptcy trustee and his attempts to get back as much money as possible for distribution to the victims. This was the most...more

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Jun 16, 2011 Nancy rated it 4 of 5 stars · review of another edition

Shelves: finance, non-fiction, history

Even if you've been following the Madoff story in the news and and think you know what happened, this is a book worth reading. Ms. Henriques presents the story in an interesting and accessible fashion.

I knew from newspaper articles that regulatory agencies had missed discovering this Ponzi scheme, but I did not realize that the investigators were such incompetent bunglers. Madoff was investigated several times without the regulators taking effective steps to verify that he actually had the mone...more

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Dec 19, 2012 Alexandria Baca rated it 3 of 5 stars

Recommended to Alexandria by: martha steffens

I read this book as part of my business and economic reporting class, and several weeks prior, I heard Diana Henriques discuss her work at a SABEW conference. She's inspiring and passionate about her reporting, to say the least.

I wasn't sure I'd like this book, but I did. Henriques pays special mind to keep focus on Madoff's victims —his family, his investors, his firm. I found the chapters detailing Madoff's 20-plus-year frauds a little tedious, but the pace picked up when she gets to the poin...more

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May 10, 2011 David rated it 4 of 5 stars

Shelves: book

Combine trust, lies, greed, bungling regulators and you get a Ponzi scheme of epic proportions. Madoff fell short of cash and starting his scheme hoping he'd get himself out of it in short order. He kept digging, the hole got deeper. Beneficiaries of his lies were making money, so why ask questions? The SEC was overmatched, understaffed, underfunded and maybe not even serious about their role. Industry watchdogs were asleep. Meanwhile people kept investing, either directly with Madoff or blindly...more

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Jun 10, 2012 A. rated it 4 of 5 stars

I was hesitant to read this book because I was afraid it would be full of financial information and terminology. There was a bit but it was always explained well. Instead, I can say that this biography reads like a John Grisham thriller. This book is a page turner. The sad thing is that it is a true account of greed and dishonesty. A good book and interesting read. It made me sad though. It is difficult to consider all the harm caused by the evil, crazy man named Bernie Madoff. There are so many...more

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Apr 04, 2013 Erik Simon rated it 4 of 5 stars

I have read a fair number of these Wall Street books now, and as for the financial shenanigans behind the scandal, this one was pretty easy: a Ponzi scheme is so much more understandable than derivatives and credit default swaps.

I am just amazed by his ability to pull this scheme off for twenty years or more--we still don't know when it started. How does one execute that level of fraud and function on a day-to-day basis without snapping? I was also very moved by the victims--not the millionaires...more

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Jun 17, 2011 Lily rated it 3 of 5 stars

Enjoyable non-fiction read...

The book follows the entire chronology of Madoff's career, starting with his brokerage firm in the 1960s, previous SEC investigations, the 2008 financial crisis, ending with the various legal battles of the victims.

I thought Henriques made the financial concepts accessible and fairly understandable for laymen. However, if you have no interest, comprehension of his financial strategies (subterfuge) is not required to enjoy the book, so feel free to skim those explan...more

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Sep 26, 2012 Rachelle Urist rated it 4 of 5 stars

Exquisite piece of investigative journalism, laced with financial savvy, psychological acuity and philosophical depth. While I couldn't follow all the ins and outs of financial trading, I could see quite clearly the author's mastery of this world. She's a meticulous guide through the blizzard of lies, subpeonas,legal proceedings, financial investigations - by both the Securities and Exchange Commission (SEC), and the Securities Investor Protection Corporation (SIPC) - and through endless intervi...more

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Apr 13, 2012 Florence Millo rated it 5 of 5 stars

For years I have been fascinated by the Madoff ponzi scheme. Kind of like not being able to look away from the train wreck. I have read several books and many newspaper articles about it but this is by far the best.

Diana Henriques is a senior financial writer for the New York Times and has covered the story from the very beginning. What I appreciate most in this book is that it puts this the biggest and longest running Ponzi scheme in history in context of the times and gives insight as to how s...more

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May 15, 2012 Donna rated it 4 of 5 stars

Wish I could rate it four-and-a-half stars because it is an excellent book. Thoroughly readable and informative regarding how such a catastrophe could occur undetected for so long. It even helps the reader understand the mind of a person like Madoff and how our human frailties can draw us to those minds like a moth to a flame.

That said, the book became weighty for me with never-ending details on the cast of characters with whom Madoff interacted. Maybe there was no way to trim that and be concis...more

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Aug 24, 2011 Mark rated it 3 of 5 stars

"Wizard of Lies" is a long, interesting book about the Madoff scandal. For anyone who knows of a victim of Madoff, the book will tell the story about the deception, greed, blind trust, and betrayal by Madoff and his victims. This is a well written book that lays out the Ponzi scheme, its players, the victims, and the fruitless efforts of the regulatory agencies to discover the fraud. The future for the "victims" is also described through the efforts of the bankruptcy trustee and his "clawback" l...more

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Oct 15, 2011 Alexis rated it 3 of 5 stars

Author Diana Henriques is a senior financial writer for the New York Times and deftly covers the ongoing saga of Bernie Madoff. The Ponzi scheme he was able to keep going over many years is astounding. He fooled savvy investors and fended off numerous half-hearted and inept SEC queries. I suspect that if the financical crash of 2008 hadn't happened he'd still be going strong. The early part of the book describes the still murky story of how and when he began stealing his clients' money. It's a b...more

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Nov 15, 2011 Ellen Tveit rated it 3 of 5 stars

Diana Henriques is an award-winning financial journalist at the New York Times who takes great pains to explain Wall Street financial instruments in lay person's terms. And I still didn't understand much of it (derivatives?), which helps explain why so many people like me were and are ready to turn investment management over to someone who does understand. A few people who invested with Madoff should've known better, but far too many didn't even know that their money -- for example, volunteer fi...more

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Jun 12, 2011 Susan O'brien rated it 4 of 5 stars

Just by the luck of the draw of the holds shelf, I read two rather serious NF books in a row! I liked this book because it was able to educate a financially-challenged brain like mine in the workings of the stock market and Ponzi schemes in general, and of course of this Ponzi scheme in particular. You do get a good idea of what made Bernie Madoff tick and how he did what he did. The last third of the book describes in detail how the appointed Trustee and his team were able to gather and distrib...more

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Sep 26, 2012 Ann rated it 3 of 5 stars

Well written - I could understand her descriptions of arcane investment lingo ("split/strike conversion strategy, etc)and the complex web of feeder funds, foreign banks etc, that fed into the Ponzi scheme. But it's clearly a work of journalism - just the facts. Yes - the SEC bungled the investigations - but wasn't the SEC gutted by the same Reagan/Bush anti-regulatory fervor that made it possible for Wall St to essentially run amok? I would have been interested in the author's opinions - as a lo...more

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Jun 25, 2011 Rick rated it 3 of 5 stars

Solidly informative, but a little confusing with all the names. Then it got like weirdly, hugely philosophical for like 90 pages at the end, which I mean, I guess, yeah, there's a lot to be philosophical about Bernie Madoff, but I don't think you need to read a book about that. Incredibly well researched, though, and the first 80% of it is really really informative. I kind of wish she could add a chapter every month or quarter to keep up to date on Picard's collection progress (which is SUPER in...more

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Aug 15, 2011 Laura Lorek rated it 5 of 5 stars

When something sounds too good to be true, it is.
That’s the age old saying when it comes to fraud. And yet people still don’t believe it.
That’s evident in Diana B. Henriques’ book “The Wizard of Lies: Bernie Madoff and the Death of Trust,” a masterfully told tale of greed and deceit.
New York Times Senior Financial Writer Henriques details how Madoff pulled off the largest Ponzi scheme ever with paper losses of $65 billion and cash losses of $20 billion.
Henriques’ true-life financial thriller def...more When something sounds too good to be true, it is.
That’s the age old saying when it comes to fraud. And yet people still don’t believe it.
That’s evident in Diana B. Henriques’ book “The Wizard of Lies: Bernie Madoff and the Death of Trust,” a masterfully told tale of greed and deceit.
New York Times Senior Financial Writer Henriques details how Madoff pulled off the largest Ponzi scheme ever with paper losses of $65 billion and cash losses of $20 billion.
Henriques’ true-life financial thriller definitely entertains and informs and is well worth reading. She spent more than two years researching and writing the book and it shows. She lists more than 300 footnotes referencing court documents, letters, interviews, lawsuits and government records.
The Wizard of Lies gives a glimpse into a criminal’s mind. But many questions are left unanswered like did Madoff’s wife, Ruth, and the rest of his family know of his fraud? It appears they did not. Also, when exactly did Madoff begin his crime? How many people knew of the Ponzi scheme?
Henriques also shows how the Securities and Exchange Commission, the chief regulator of U.S. investments, bungled investigations into Madoff’s operations after repeated allegations of fraud.
Henriques also explains how the U.S. bankruptcy trustee did an amazing job of reclaiming funds from some of Madoff’s largest investors and beneficiaries of the scam. Madoff’s “net loser” victims (those people who didn’t reap any profits from the scam and only paid into it) received more than 50 cents on the dollar in their claims. That’s practically unheard of in bankruptcy court where most people only receive pennies on the dollar.
How could Madoff pull off such a massive fraud undetected? Henriques shows that he didn’t. Some big investors and feeder funds knew of the fraud but they benefited from it so they didn’t report it. Even some executives at banks like JP Morgan Chase suspected fraud. Plenty of other investors suspected that he produced unrealistic returns, which consistently outperformed the market. Some people simply withdrew their money. Others like Harry Markopolos, a portfolio manager at Rampart Investment Management in Boston, repeatedly told the SEC, starting in May of 2000, that Madoff was running a Ponzi scheme.
“Since 1992, Madoff had survived each SEC examination and due-diligence visit unscathed. He had fooled regulators, hedge fund administrators, and auditors for years, conjuring up counterfeit records and bogus computer data that seemed to satisfy them,” Henriques writes.
In the end, the regulators didn’t uncover his fraud. The markets undid him. Then Madoff reportedly told his sons and they turned him in. The massive financial meltdown of 2008 left Madoff with little money in the bank to cover the withdrawal requests from clients.
The Madoff case highlights the fact that something is very wrong with the U.S. markets. Regulation is lax or nonexistent. Madoff’s fraud followed on the heels of the implosion of Enron, and the $11 billion accounting scandal in 2002 at WorldCom and the Adelphia fraud which resulted in losses of $60 billion to its shareholders.
And the Madoff case also overshadowed Allen Stanford of Texas, who ran Stanford Investments, and allegedly bilked investors out of $8 billion in a Ponzi scheme. The SEC brought charges against Stanford in June of 2009. He’s in jail in Houston awaiting trial set to begin in September. At least Madoff pled guilty to his crime and did not demand a lengthy and expensive trial. The judge gave him the maximum sentence – 150 years in jail. He will never leave prison except in a coffin.
Henriques doesn’t mention the other fraud cases. She focuses strictly on Madoff and his scheme. But the book does point out a fundamental flaw in humans that allows these scams to continue throughout the ages and that is greed.
Madoff’s crime “certainly began as an “affinity fraud,” the pleasant-sounding term criminologists use when one member of a close-knit trusting community exploits that trust to steal from others in the group.” Madoff’s crime “had its roots where his Jewish friends and relatives had originally gathered: in the synagogues, at the Jewish clubs and resorts, on the boards of Jewish charities, hospitals, and schools.
“At the beginning, Madoff exploited the trust and respect he had earned in a close-knit Jewish community,” Henriques reports. “His reputation in those circles was his original passport to financial credibility in the wider world.”
Henriques, who landed the first jailhouse interview with Madoff, was not able to determine when the fraud began. But she garnered enough information from Madoff to show the crime may have started as early as 1962. Madoff “has drifted across the border between truth and lies since his earliest days,” Henriques writes.
Henriques also reports on the toll Madoff’s fraud took on his family, friends and investors. A few committed suicide including Madoff’s own 46-old-son Mark. Madoff’s crime resulted in tragedies of epic proportions. Retirees lost their entire life’s savings, charitable foundations saw their endowments extinguished and had to shut down and many people simply lost their ability to trust anyone.
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Aug 08, 2011 Jennifer March rated it 3 of 5 stars

Shelves: non-fiction

I am fascinated by Bernie Madoff and financial crime (okay, crime in general), and all through the book, I loved to contemplate along with Henriques when Madoff's lies began and when they stopped, or did they stop at all? Who knew? Who didn't? How did he get away with it for so long? Is his crime all that different from other financiers who push the boundaries of investing (insider trading, hedging against one's own investments, encouraging others to buy, while betting on their failure) to the g...more

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Jul 31, 2011 Alan rated it 4 of 5 stars

Shelves: non-fiction

A non-fiction page turner. Well-written financial journalism on a suitable level for my understanding of the financial markets. By the author's own admission, some of what's reported, i.e. Madoff's own interview accounts, might still be part of the lies, but Henriques is quick to point out those un-verified allegations. All other facts that weren't expressly noted as being suspect were thoroughly vetted. Madoff supposedly agreed to work with Henriques because of his respect for her abilities as...more

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Jan 12, 2012 Jayne rated it 4 of 5 stars

Might at first seem like this would be quite a dry read but it is excellent. Provides a very good build up to the eventual discovery of the fraud and really interesting points of view about how the victims should be compensated, the role of the regulators and the involvement of others. Doesn't just focus on the technical aspects of what happened (although those are very well explained) but also the moral and ethical sides to the story. Looks at both the crime committed by Madoff and also the way...more

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Aug 09, 2012 Eileen rated it 4 of 5 stars

Great book that really helped me to understand the mind of someone like Madoff who runs a Ponzi scheme. It also reinforced my already strong belief that greed on Wall Street may be this country's real undoing. I've also read the Markopolos book but this one was better written and seemed less self serving than Markopolos's book. I'm sure, however, that his frustration that no one would listen must have been a driving force for writing his book. Just imagine how many people might have been saved f...more

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Mar 11, 2012 Laura rated it 3 of 5 stars

My book group had a really great discussion based on this book - but I enjoyed the discussion more than I did the book. I know it's not fiction - but nonfiction does not have to be dry and slow, and i found this book to be both of those things. Perhaps it's just that all things financial don't fascinate me - but I thought there were a number of opportunities to inject more dynamics into the presentation of what could be a very gripping story.

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About Diana B. Henriques

Diana B. Henriques is the author of The White Sharks of Wall Street and Fidelitys World. She is a senior financial writer for The New York Times, having joined the Times staff in 1989. A Polk Award winner and Pulitzer Prize finalist, she has won several awards for her work on the Timess coverage of the Madoff scandal and was part of the team recognized as a Pulitzer finalist for its coverage of th...more

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Fidelity's World: The Secret Life and Public Power of the Mutual Fund Giant

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