Madoff with the Money (11 page)

While Bernie was raking in money making suburbanites' lawns wet and pretty, and using questionable tactics to do it, he also was starting to hawk stock tips, and even went so far as to boast to gullible classmates that he had actually bought a seat on the New York Stock Exchange, according to friends from that time.

“I don't think there was any doubt that Bernie was headed for Wall Street,” asserts Gordon Ondis. “I don't think there was any doubt that becoming a stockbroker was his focus. I never heard him say, ‘That's my life ambition,' but there's no doubt in my mind, or anyone else's mind, that that's where his interest lay at that time. He was
always
talking securities and stocks.”

During a sprinkler installation job, Ondis remembers Bernie pitching a stock to co-worker Mike Gandin, who agreed to buy 100 shares. Years later Gandin doesn't actually recall the purchase, but notes, “My whole life I bought crummy stocks, so it's not impossible that I would have spent $300 on a stock tip from Bernie.” Ondis recalls that when Gandin agreed on the spot to buy the stock, “Bernie right away went off to make a phone call and place the order.”

On another occasion, according to Ondis, they were working on a lawn sprinkler job with a third laborer who was in some way part of the Madoff family. “Bernie was pushing a stock and the guy says ‘I'll buy it' right then and there. So Bernie jumped in his car and took off and placed the order. He was selling stock to students at Hofstra because there were a lot of kids there who had money.”

Bernie was certainly earning commissions on those trades, or he wouldn't have bothered.

Yet, the question remains with whom Bernie was placing those trades. He never revealed that to anyone taking him up on his tips, but those who knew him well back then believe he was doing business with either his father's Laurelton home-based Gibralter Securities that came under SEC scrutiny, or with the company of his friends' father, Lou Lieberbaum. In any case, Bernie was proving that he had the chutzpah, the drive, the ambition, and the talent to successfully snag investors and make money doing it.

With his business enterprises taking up much of his time, Bernie had little interest in his studies and had a reputation for skipping and missing classes.

To his college pals like Gordon Ondis, Bernie was an enigma.

Sharp at business, Bernie couldn't have cared less about being Joe College.

“He was just there at Hofstra to get through it somehow,” asserts Ondis. “He was always hustling.
Always
. When he saw me he used to say, ‘Hey,
macher
, come to
macher
.'We used to call each other
macher
.”

In Yiddish, the word has a number of connotations but essentially the same meaning: A
macher
is a big shot, a mover and shaker, an ambitious schemer.

Mike Gandin had lost personal touch with Bernie over the years, but he was aware that friends on Long Island, including “a whole crowd” from the posh Cold Springs Country Club in the North Shore community of Glen Head, had been investing with him.

“I used to joke,” says Gandin, “that Bernie was running a scheme.”

But when Gandin, a successful lawyer, was struggling and getting nowhere in the stock market of the early to mid-2000s, he decided to give Bernie a shot. Gandin figured it was a no-brainer since his law partner, Arnold Schotsky, was getting returns from Madoff “of 9 percent, 10 percent, 11 percent.”

Gandin recalls,

Gandin gladly sent him a check with seven numbers on it for deposit.

A while later he called Bernie again and told him he had another $500,000 or so, and Bernie told him, “Just send it.”

Gandin was thrilled that Bernie had let his old high school and college pal who had installed sprinklers for him into his very exclusive money club.

Gandin notes that before he turned over his money to Bernie he had done some due diligence in his own “modest way”—talking to friends who had gotten nice returns and who reported getting all their money back when they requested it. “Bernie was,” he concluded, “a respected part of the Establishment.”

Gandin himself was able without any problem to withdraw $250,000 of his investment in order to purchase a Florida condominium some years before Bernie went bust.

“I felt fortunate. I felt on top of the world. I was gleeful. Every month I'd get 8 percent, 9 percent, sometimes 11 percent on my money, and it was terrific, and other people were struggling with the market.”

And then the sky fell in.

A friend called Mike Gandin and told him to turn on CNBC, “and there it was—it was all a Ponzi scheme. My wife and I were shattered, absolutely in shock. Fortunately, we didn't have everything with him, but we've been forced to regroup. From what would have been a very nice retirement, we're hunkering down. All of a sudden I had to come down from this reality where I thought I had $3 million to where it's worth nothing. It's mind-boggling what Bernie got away with.

“The only thing that really bothered me was that I promised my son I would help buy him a house, and then I had to say I couldn't do it, and that hurt. He said to me, ‘Dad, if things get tough, come live with me,' and that meant a lot.”

Bernie Madoff took Ruth Alpern to be his lawfully wedded wife on the eve of a new decade—the Swinging Sixties, one of the most turbulent and radical eras in contemporary American history. But for Bernie the 1960s would be a time of growing success, little turbulence, and no radicalism. It would all be about making money, and whatever it took to make it.

On the Saturday after Thanksgiving 1959—just a few weeks after the Russians sent an unmanned rocket on mankind's first trip to the moon, and a few weeks before John F. Kennedy announced his run for the Democratic presidential nomination—21-year-old Bernie, a senior at Hofstra College, and 19-year-old Ruth, a sophomore at Queens College, were married at the Laurelton Jewish Center.

While it was a Conservative Judaism synagogue, Bernie and Ruth considered themselves “lox and bagel Jews”—neither was religious or observant.

It was a small, quietly elegant, traditional service with the two marrying under a chuppah, and with Bernie smashing a wine glass with the sole of his rented patent leather shoe that went with his rented tuxedo. Ruth wore a simple white wedding dress. There were no special vows. It was Ruth's idea, though, to serve the guests wine and champagne placed on a table in the synagogue's foyer before the ceremony. That night there was a wedding dinner—brisket and all the trimmings—at the Jewish Center.

“There were no special trappings,” recalls Jane Kavanau, a guest along with her future husband, Joe, except for the champagne and wine when everyone was mingling before the service. “That was gracious and maybe a little fancier.”

There had never been another man, or any serious romance other than Bernie, in Ruth's life. However, Bernie would later seek out female companionship in and out of the office, and Ruth would have to keep him on a tight leash. But that was all still to come.

“From the time they started dating when they were in high school, Ruth's life revolved around Bernie,” maintains Kavanau, who was a senior at Vassar College at the time of the Madoff-Alpern nuptials. “Ruth would probably have gone away to college as I did [having attended the University of Michigan before Vassar], but she was involved with Bernie, so she wanted to stay close to him. They were definitely head over heels in love.”

Ruth was a whiz at mathematics, probably genetically inherited from her numbers-crunching accountant father—the kind of nebbishappearing but shrewd CPA whose breast pocket was filled with pens and pencils. She had decided to go to Queens College, which was far superior academically to Bernie's Hofstra. Her intention was to major in math. But she ran into problems with physics, and ended up going for a degree in psychology. Later she went back to school to study nutrition “after spending some years in the family business” and earned a master's degree from New York University. (She'd later become embroiled in a brouhaha of her own involving her role in co-authoring a self-promoted, self-published cookbook called
Great Chefs of America Cook Kosher
.)

A couple of days after Bernie and Ruth tied the knot, he went to the SEC office in downtown Manhattan and registered a broker-dealer firm in his name. A financial statement that was added later to the application noted: “Assets: Cash on hand $200. Liabilities: None.”

After a short honeymoon, the Madoffs got their first apartment, a one-bedroom in a mid-rise complex called Windsor Park, in Bayside, Queens. The rent was $87.50 a month. They had chosen the building because a girlfriend of Ruth's from Laurelton also lived there.

“They didn't have a lot of money by any means,” recalls Kavanau. “They took a very moderately priced apartment, and we would go to visit them. Ruth knew exactly what she wanted decor-wise, and she made it look very nice on a real budget. It was early American. She was always very definite about what she liked, and it always turned out nicely.”