Madoff with the Money (6 page)

Because Portnoy was smaller than the other boys, he was selected to be scorekeeper, and sometimes served as referee and linesman. He used chalk to outline the boundaries of the field, but there were no marked yard lines. Portnoy had poor eyesight, and his parents had not gotten him eyeglasses to correct his myopia; so he was not the best judge of where the pigskin should be placed, which ignited Ralph Madoff 's fury.

“In one game Bernie's father started screaming at me for costing the team several downs,” recalled Portnoy. “I finally assessed an ‘unsportsmanlike behavior' [penalty] against the Spartans, for his outbursts. My actions were instrumental in the Spartans losing that game.” Instantly, Portnoy regretted what he had done, because he was depending on Bernie's father to drive him home. On the ride back, Ralph Madoff “cooled off, and was not too nasty to me.” But he did bluntly suggest that Portnoy have his eyes examined posthaste.

Looking back, Portnoy's complaint against the senior Madoff was that “he was a rather aggressive, intense individual who put a premium on winning. He was fairly intense, at least during the football games, and he definitely wanted to win. He seemed mildly authoritative—maybe that would be the best word. I don't know if Bernie was intense, because he tended not to seem that way. But it may be a case where he felt he could accomplish more of what his father accomplished in a different way. They both were very obviously success oriented.”

Bernie's mother, Sylvia, was a tough cookie herself. As with her husband, Ralph, she always thought about money—how to make it and how to spend it, even when it came down to the least expensive items of apparel for her children.

The popular athletic shoe for boys when Bernie was a kid were sneakers called Keds with black canvas tops and white soles. But for a man who one day would proudly boast of dozens of expensive pairs of imported dress and sports shoes that he compulsively lined up in his luxuriously designed walk-in closet in his penthouse, Bernie was the only kid in his Laurelton crowd who didn't have Keds on his feet. And it embarrassed him no end. As a close friend notes, “His mother would buy his sneakers from a pile at a department store because they were priced cheaper, as opposed to buying him the more expensive Keds, the name brand that everyone wore.”

Through the years certain friends who were aware of the Keds story would tease Bernie about it, especially as he became rich and powerful, and displayed the symptoms of what his friends and employees believed to be an obsessive-compulsive disorder.

“Bernie liked things to be done right,” observes the close friend. “He liked to look nice. He liked expensive shoes and suits, cars and boats and houses. He liked his home to look just right; he wanted his office to look perfect—everything had to be perfect and in its place. And we used to kid around that he became compulsive about those things because his mother wouldn't buy him Keds when he was a kid like everyone else.”

Later on, though, Bernie was determined to show everyone that he could have all the Keds he ever wanted, and lots more.

Bernie was clearly embarrassed by the way his parents lived and acted. Therefore, few of his friends were ever invited into the Madoff home. The place was off-limits and the household had an air of secrecy about it. Social gatherings and parties in which Bernie was involved—and he was thought of by most as a popular, friendly, good-looking kid—were always at the homes of others.

According to Sheila Olin, Elliott's widow, the mother of Bernie's best school friend distrusted and therefore disliked the Madoffs. Sheila Olin, a popular and cute girl who was the president of the social and cliquey sorority Phi Delta Gamma during her junior year of high school, asserts,“My husband's mother never wanted Elliott to be friends with Bernie, because she thought his parents weren't honest people. She did not want them to be friends, and she was not happy about it. She thought Bernie's parents were not owning up to a lot of things they were doing.”

In fact, there were a lot of things about the Madoffs that didn't add up. One such source of constant neighborhood speculation was Ralph's and Sylvia's occupations. “It was always a mystery what Ralph and Sylvia did,” says longtime Bernie friend Joe Kavanau. “That's absolutely a fact and it's kind of weird.”

Ralph told some people he was a plumber, but no one remembers him ever doing any actual plumbing as a way to make a living. Years later he described himself to Bernie's personal messenger, Bill Nasi, as “a plumber in a pin-striped suit.”

Moreover, on the Madoffs' 1932 certificate of marriage, the groom mysteriously listed “credit” as his occupation, while his bride put down “none.”

Even Ralph Madoff 's middle initial—the letter
Z
—was a fabrication of sorts. He decided it would be classier to have a middle initial, so he just chose to use the last letter of the alphabet.

Elliott Olin's mother especially disliked Ralph Madoff. “She used to say she liked Ralph less than Sylvia,” recalls Sheila Olin, whose husband, a lawyer who specialized in workers' compensation, died of leukemia in his mid-50s. “Elliott's mother told him many times, ‘I don't want you being in the Madoff house.' Bernie was at Elliott's house much more than Elliott was over at Bernie's. She didn't want Elliott to be friends with Bernie.”

But Elliott, whose father was a lawyer, ignored his mother's entreaties, and he and Bernie would remain close friends for a number of years.

To add insult to injury, Bernie and Elliott introduced Sondra Madoff, Bernie's slender and attractive older sister, to Elliott's cousin, Marvin Wiener, a good-looking young man whose family owned a drugstore in Springfield Gardens, a community next to Laurelton.

Sondra and Marvin Wiener, who became a dentist, fell in love and got married.

“Elliott's mother wasn't too happy that her nephew married Sondra, because she didn't like the Madoff family,” says Sheila Olin.

Over the years Sondra and Marvin Wiener, like thousands of others, invested their money with Bernie—Sondra having full trust in her brother's financial acumen, and faith that he would never injure her and her family financially. After all, Bernie was blood, a sibling, and a genius in their eyes when it came to making money for people. One of the Wieners' sons, Charles, even went to work at Bernard L. Madoff Investment Securities (BLMIS) in the 1970s, and became the firm's director of administration.

Apparently this mattered little to Bernie, because all of the Wieners would be among the victims in his monstrous Ponzi scheme.

But all of that was still to come.

While Sheila Olin notes that Elliott's mother, who died in the late 1960s, never went into detail regarding her ill will and suspicions about Ralph and Sylvia Madoff—“she never said why, how, where”—she believes it had to do with, among other possibilities, a shady stock brokerage operation that the Madoffs were running out of their home, which was located across the street and around the corner from the Olins.

It wasn't until later, in August 1963—with her son already running Bernard L. Madoff Investment Securities, then an over-the-counter and penny stock trading business, and doing quite well for himself at the age of 25—that Bernie's mother tangled with the SEC—a precursor of the problems Bernie would have later. The agency forced the closing of a broker-dealer operation called Gibralter Securities, which was registered to Sylvia Madoff and operated out of the Madoff home. She was one of 48 broker-dealers who, according to SEC records, had “failed to file reports of their financial condition.”

The violation resulted in a September 1963 hearing for Sylvia Madoff and the other firms under investigation. In January 1964, the administrative proceeding against Bernie's mother was suddenly dropped. It is believed that she agreed to a deal to get out of the stock business as long as no penalties were leveled against her.

An SEC litigation release stated that the Madoff firm and the others “conceded the violation, but requested withdrawal of their registrations, and in this connection they represented that they are no longer engaged in the securities business and do not owe any cash or securities to customers. The Commission concluded that the public interest would be served by permitting withdrawal, and discontinued its proceedings.”

However, suspicions about the Madoff operation lingered. There were those who thought she might have been fronting for her husband in Gibralter Securities—using her name instead of his because Ralph Madoff appeared to have ongoing financial problems and tax troubles. One of Bernie's Far Rockaway High School friends, Edwin Heiberger, who had met Ralph Madoff on a couple of occasions, had gotten the distinct impression from him that he “was a stockbroker.” And another high school friend, Peter Zaphiris, clearly remembers Ralph Madoff working alongside Bernie in 1963, several years after Bernie started his firm.

(Years later, the other most important woman in Bernie's life besides his mother—his wife Ruth—would have her name on homes and other assets that sparked suspicion after Bernie was arrested.)

In addition, the Madoff house where Bernie grew up had liens against it for unpaid federal income taxes amounting to $13,245.28—equal to about $100,000 in 2009 dollars. Once again Sylvia Madoff's name, rather than Ralph's, was on all the official paperwork. She was listed as the “grantor/mortgager” for the property, according to Queens borough property records. The taxes were assessed in 1956, the year Bernie graduated from high school, and it wasn't until 1965, when Bernard L. Madoff Investment Securities celebrated its fifth anniversary in business, that the lien was finally paid off and the Madoff house was sold, with Ralph and Sylvia moving to the town of Lynbrook (an anagram for Brooklyn) on Long Island, a short distance from Laurelton.

It was in that sort of troubled and seemingly ethically and morally bankrupt household that Bernie's values, principles, behavior, sense of right and wrong, ideals, and standards were established.

Bernie bonded with Elliott Olin—and fell head over heels for Ruthie Alpern—at Public School 156 in Laurelton, where he got his elementary and middle school education.

Located about five blocks from the Madoff home on 228th Street, P.S. 156 was typical of the New York City public schools that were built around the time of the Great Depression—a three-story brick building with a high chain-link-style fence surrounding a playground. Inside the classrooms were too hot in the summer, and too cold in the winter. Mostly everyone wanted to walk home for lunch because of the yucky food served in the cafeteria.

The school, which went from kindergarten through the eighth grade, was located between the Long Island Railroad station and Merrick Road, Laurelton's main drag and commercial center.

Even though it was part of the urban landscape of New York and less than 30 minutes from bustling Times Square, there was a simple, small-town feel to Laurelton in those days—the wartime 1940s and the postwar Ozzie and Harriet 1950s when Bernie Madoff was coming of age. The kids called the local movie theater “the itch” and paid 25 cents on Saturday afternoons for a show of 25 cartoons. They went for ice cream at Raab's, a drugstore with a genuine soda fountain, browsed for yo-yos and gliders and rubber balls for stickball games at Woolworth's, and gathered with their families for Sunday dinners of chow mein and egg rolls at Chung's Chinese restaurant.

Because it was on the train line, Laurelton was a commuter town. Women were homemakers, and most husbands took the train into the city every day. The breadwinners ranged from small, struggling businessmen and New York City cops to accountants and doctors. Like the city itself, Laurelton was a melting pot.

“It was a magical place to grow up,” as one former Laureletonian observed a half-century later.