Madoff with the Money (16 page)

He recalled Mrs. Portnoy telling him:

The Madoff home on Diana's Trail, on the southern border of Roslyn Estates, was typical of the type of suburban development-style houses that were being built at the time on Long Island: It was a raised ranch with four bedrooms, two and a half baths, and an above-ground finished basement. Nothing was extraordinary about the architecture or construction or curb appeal, but Ruth decorated it to the nines and visitors were impressed. Not long after she and Bernie moved in they had their second son and last child, Andy.

The Madoff house was far different from the 480-acre estate once owned by Roslyn philanthropist Clarence Mackey, who inherited a silver mining fortune, and entertained the likes of the Duke of Windsor and the aviator Charles Lindbergh after he returned from his solo Long Island-to-Paris flight.

“The Madoff house was definitely
not
a mansion,” observes Jane Kavanau. “They stayed in that house for many, many years and raised Mark and Andrew there. They could probably have afforded a mansion after a while, but they just stayed in that house.” They'd later move on up: the stylish East Side penthouse, the chic Hamptons beach house, the gated Palm Beach mansion, and the luxurious getaway in the south of France.

Charles Lubitz, Bernie's Brooklyn Law School classmate, who would later represent Palm Beach clients ripped off by Bernie, also moved into a home nearby, in an area known as Roslyn Heights. He and his wife saw the Madoffs on and off back in those days, and were part of a circle of young couples that included the Kavanaus—Lubitz's wife had gone to Vassar with Jane Kavanau. Lubitz remembers Bernie and Ruth back then as “a lovely couple. Bernie was a nice guy. We spent social evenings together. Bernie was, of course, much more successful early on than most people of our age.” But he recalls that the Madoff house was nothing fancy, “although it was a step above that which others of us had.”

In that same time frame, Bernie and Ruth joined the first of many fancy country clubs with well-to-do, predominately Jewish members who would put their money in Madoff, and subsequently get Ponzied by Bernie—clubs from Long Island's Gold Coast to the platinum links of Palm Beach.

Chuck Lubitz recalls how Bernie boasted about being one of the youngest members of the prestigious Fresh Meadow Country Club in Great Neck, which had rich members and a spectacular golf course designed in the early 1920s by A. W. Tillinghast. “From the beginning, Fresh Meadow traveled first class,” according to its history. “The members wanted their course to be one of the country's great examinations of golf.”

Now, in the early 1960s, its membership included the hustler from Queens.

“He was basically a kid like I was, and he told me that one time at Fresh Meadow he was standing outside waiting for his car and he had on a pair of jeans and a leather jacket, and one of the ladies from the club came up to him and handed him her ticket to retrieve her car, and asked him would he please hurry,” says Lubitz, recalling Bernie's glib recitation of the event. “Bernie said, ‘Oh, absolutely, Madam.' And he went through the whole routine—went running for her car and got it. He even pocketed her tip.

“He was so young to be a member that she thought he was the valet. He was very amused by it and got a good chuckle out of telling the story. Most of the members were wealthy, graying, Jewish overachievers of a senior age. Bernie would have stuck out like a sore thumb.”

Bernie and Ruth remained members of Fresh Meadow for years. Some people have long referred to it as “the Madoff country club” because they had such close ties to the club. Major family events took place there such as the “small, understated, not particularly religious” wedding of son Mark Madoff and the first of his two wives.

Later, Fresh Meadow's membership, like so many other elite clubs to which Bernie belonged, was hit by the nuclear blast of his fraud. One such member and victim was a longtime Madoff acquaintance, Sherry Fabrikant, and her son, Andrew. From a wealthy family in the New York City diamond trade, Sherry, who became a noted collector of contemporary art, had gotten to know Bernie and Ruth when they lived in Roslyn Estates and she in Great Neck, and as members of the club. Beyond that, her niece was friendly with Mark and Andy, whom Fabrikant considered “morons.” In any case, the two families had a comfortable comradeship.

Looking back, Fabrikant found the Madoffs an interesting study.

Despite how he looked and how he and Ruth acted, or at least as she perceived it, one thing was clear to Fabrikant: Bernie was making money for her friends. A doctor and his wife whom she'd known for more than four decades had invested millions with Madoff. “Year in and year out she always said to me, ‘You'd better invest with Bernie.' For all of those years they talked about him and how they had done very, very, very well with him.”

Finally, Fabrikant decided around 2004—when the Ponzi operation was going full blast—to join the ecstatic and beholden. “My guys in the stock market were doing lousy,” she says, “and I thought, okay, go with Madoff.”

Recounts Fabrikant:

She did, handing over $3 million to $4 million.

 

We did not give him all our money, thank God.

 

She says she began getting a return of 8 to 9 percent—on paper, because whenever she did need money she usually took it out of her stock brokerage account, but periodically took some out of Madoff.

She says that some other members of Fresh Meadow lost so much money in the Ponzi scheme that they “went bankrupt” and other members were going to support them financially. “It's an older club with people who are much more like family, much more into each other.”

Not only did Bernie cheat his friends, family members, and other investors by offering questionably high and steady returns in good economic times and bad, but he also scammed in another way by possibly misrepresenting himself on the golf course.

Bernie had started playing golf when he was in high school, driving balls down the median strips of highways, and then playing at public courses. Later, when he belonged to clubs like Fresh Meadow and the Palm Beach Country Club, whose members were also ravaged by him, his golf scores were suspiciously and eerily as consistent as the returns he was promising.

For instance, he never went below 80 or above 89 in 20 rounds during the period 1998 to 2000, scores that surfaced after his arrest.

As golf pro Michael Hebron observed, “Consistency this high is very unusual. And that's even before I knew who they [the scores] belonged to.”

“
I
've known of Bernie my whole life in a messiah kind of way,” states Jonny Lieberbaum. “My family regarded Bernie like as a messiah. He was spoken of as if godlike.”

All of those intense and respectful feelings evaporated in anger and hate after Jonny Lieberbaum's mother, Carol Ann Lieberbaum, lost most if not all of the millions she and her late husband, Shelley, had invested through the years in Bernard L. Madoff Investment Securities.

Other family victims in Madoff, according to the list made publicly available after Bernie was arrested, included Shelley's brother and sister-in-law, Mike and Cynthia Greenberger Lieberbaum, and her two brothers, John Maccabee, the writer of the
New York
magazine piece about Bernie, and Robert Greenberger, the former
Wall Street Journal
reporter. Greenberger's wife, the former Phyllis Eileen Morel, a Brooklyn girl and the first president and CEO of the Society for Women's Health Research, was named one of “The 100 Most Powerful Women” alongside then Senator Hillary Clinton and then Secretary of State Condoleezza Rice in 2006 by
Washington
magazine. One of their sons and a daughter-in-law had been on the staff of the
Boston Globe
.

As related earlier, Bernie's lifelong close relationship with Mike and Cynthia Lieberbaum started when they became friends at Far Rockaway High School and graduated together. Mike Lieberbaum also was a student at Hofstra. And Shelley Lieberbaum helped finance Bernie's lawn sprinkler business when he was at Hofstra.

After Bernie was arrested, maintains Carol Lieberbaum, “I was wiped out, basically. I lost 90 to 95 percent of what we had in Madoff ”—investments that began around the time Bernie started his now-infamous company.

“We all helped Bernie get off the ground by investing with him,” she says regretfully.

However, in exchange, she and her husband (and some other family members) had many, many years of what Lieberbaum describes as spectacular returns. She says the Lieberbaum and Greenberger families “definitely believed” that Bernie had given them “special consideration” with higher returns because of their long friendship, and what family members had done for him in the early years.

Lieberbaum asserts:

When the news broke of the Madoff Ponzi scheme and Bernie's arrest, Lieberbaum couldn't believe it. She had last talked to Bernie several months before he was arrested to “just say hi” and to say she was getting ready to take a trip to Mexico.