Madoff with the Money (20 page)

In the early days when those employees were hired they were literally sleeping in the office because Bernie was trying to get his business off the ground, and everyone liked him, and he told them, “I promise if you take care of me now, I'll take care of you later.” People worked all night, slept in the office, and went home to shower and get clothes, and came back. For a while that's how he treated them.

No one intimately familiar with the way Bernie operated believes for a second, however, that he was the patron saint of hiring the underprivileged.

As one veteran Madoff insider asserts, “Bernie made it a point to hire people who weren't that smart so they wouldn't trip over anything incriminating. You could have a great job at Madoff even if you were a semimoron, because you were well-trained on the job and paid far better than anyone on Wall Street, and didn't ask too many questions.”

Bernie's father, Ralph, was in the 39 Broadway office on a day-to-day basis, says Nasi, who had bonded with him.

“Ralph would just show up, come in, and talk and listen. He was a real outgoing guy. He was a blustery, tough Brooklyn type who sounded like he grew up next to the Brooklyn Navy Yard. He was street-smart, the type of guy who feels Brooklyn's the center of the universe—‘I can get anything accomplished even if I have to fix broken toilets for 30 years.'”

Ralph Madoff took a liking to Nasi, and the two together would ride the R train, the subway that rumbled between Brooklyn and Queens. On one of those jaunts, the Madoff patriarch turned to Nasi with a bit of startling advice.

He told him: “Whatever you do, kid, never invest a penny in the stock market, because it's run by crooks and sons of bitches.”

Nasi was dumbfounded. Here was the father of a young man whose entire life revolved around Wall Street every waking hour warning him to stay away from his son's world, one that the patriarch himself had had a questionable role in.

Years later, not long before Bernie's crooked world came apart, Nasi mentioned the conversation to his boss, who, at the time, was “up to his neck in this goddamn fucking Ponzi scheme,” unbeknownst to Nasi.

“Bernie starts laughing and says, ‘My, God, if everyone thought like my father, where would I be today?'”

One of Bernie's young colleagues on Wall Street back then was a fellow by the name of Andy Monness, who had a small boutique firm at 120 Broadway called Monness, Williams & Sidel. Monness lived out on Long Island, too, near Bernie's home in Roslyn Estates, and he often picked him up at the house and the two drove into the city together.

On one sunny spring morning as Monness was thinking how great it was to be young and that both of them had money-making businesses, Bernie got in the car and the first thing he said was, “The best fucking thing about today is that I have one less day to live.”

Many years later, after Bernie's arrest, Monness clearly remembers the moment as if it had just happened.

“Bernie was sort of joking,” Monness believes, looking back, “but I think there was a note of something in what he said. I think it was more insightful than what I thought it was at the time.”

Through the years Monness would run into Bernie at United Jewish Appeal dinners and later at the Palm Beach Country Club. While Monness watched him become “almost a living legend” on Wall Street, “we [the Monness firm] were in the camp that were really suspicious about Bernie's record. No one's performance was ever like that. I never saw anyone remove the unpredictability of the market. I've seen guys not have good months, and I've seen guys have very few bad months, but never like Bernie. It's almost comical. I thought, ‘How could this be that no one's skeptical?' That's a little beyond my beliefs.”

But, the question remains: How did Bernie garner all of the business of all these wealthy investors? As his victims have said, they trusted him. They trusted him because they had no reason to distrust him. He was making money for them. His returns were extraordinary. His credentials got better and better, such as becoming chairman of Nasdaq. If there were red flags, few knew about them. As Carol Ann Lieberbaum observed, why question a good thing? Even investors in Madoff with real financial acumen kept putting money in without doing any real due diligence. The promise of good returns (or greed, it appears) took many forms when it came to investing with Bernie Madoff.

Yet, Monness suggests otherwise. He believes that a good part of Bernie's success in pulling off the biggest Ponzi scam in history was the fact that “he was not
so
conspicuous. He was not
so
flamboyant. He didn't have the nicest house. He didn't have the nicest car. He didn't have the biggest plane. He had
all
the trappings, but none of them crossed the line. I think that was his skill.”

Still, he was shocked like everyone else when the news broke and the details of the fraud emerged. Months after Bernie's arrest, Monness wonders what the thief 's “end game” was. The problem, he fears, is that it will never be discovered because “I don't think anyone can possibly get into his mind. I think it's so distorted. I'm not a religious man. I don't believe in an afterlife. But I wouldn't want to die and leave my family or my reputation in such shambles.”

While he feels sorry for the little old ladies who lost their money in the feeder funds, people who had never heard of Bernard Madoff, he questions the big institutions and especially charities that got taken for hundreds of millions, if not billions.

“They were investing
so
aggressively. I didn't realize they were in the business of
making
money,” he observes wryly. “I thought they were in the business of
giving out
money.”

Nonprofits, however, needed to raise money, too. Most if not all of those that got taken in the Madoff mess had invested in feeder funds, so they were completely unaware of Bernie's name until it was too late. At the same time, Bernie connected socially with people. As documented, he was even named to the board of Yeshiva University, and was prominent in other organizations. Again, he was a trusted friend, and a philanthropist (with other people's money, as it later turned out). “The nonprofits weren't going out and buying houses in Palm Beach, but using the money made in Madoff for good causes,” says a developmental executive with one such organization. “Through [these investments] all the nonprofits probably did more good for their causes than through routine fund-raising. That is, until the roof caved in. Now many charities don't have a dime to spare.”

Back when Monness's firm and Bernie's firm were young upstarts, Monness was a bit of a wild man himself. His partner, Kenny Sidel, once boasted to the author, “We were kicking the shit out of the staid, white-shoe, alcohol-drinking jackasses on Wall Street. The competition had become fat and stupid, and we went in and took the business away from them.”

Monness liked to hire brokers who were a bit offbeat. As detailed in the author's biography of Martha Stewart,
Just Desserts
, one of his firm's crackerjack salesmen back then was a big, good-looking Irishman from Brooklyn who had been driving a meat truck by day and acting in amateur theatrical productions on Long Island by night. His name was Brian Dennehy.

Monness started bright, aggressive, and leggy former model Martha Kostyra Stewart, a Jersey girl, at a salary of $100 a week, plus her share of a commission pool. Before long she was making as much as $250,000 a year, according to Monness, and was running in a circle that included the likes of Ross Perot and financier Saul Steinberg.

Years later, as the world knows, the domestic diva, like Bernie Madoff, wound up behind bars, in her case for conspiring to cover up a government insider-trading investigation of a personal stock sale. Unlike Bernie, who presumably will die in prison, Stewart spent five months in the slammer, served five months of home detention in her mansion, and paid a fine—the lightest possible sentence under federal guidelines.

“If Martha did five months,” says her onetime boss, Monness, “then Bernie should get 140 years. There's no similarity. I felt what they got Martha on was so silly when you think of things done not only by Bernie, but by others in Wall Street in the last decade.”

In the mid-1960s, Bernie began sharing office space at 39 Broadway with another broker also relatively new to the business—Marty Joel Jr. A dozen years Bernie's senior, Marty was the founder of Martin J. Joel & Company and was determined to make a bundle selling stocks rather than working a slide rule as an engineer. Like Bernie, Joel started with over-the-counter and penny stocks, and the two did business together and apart, but were never formal partners back then.

Socially, the Madoffs and the Joels became close friends. One of Joel's daughters, Patty, babysat for Mark and Andy Madoff; and her sister, Amy, would spend some 20 years in management at Madoff. After the death of his first wife, Marty Joel went to work for Bernie as what his daughter, Amy, calls a “star broker.” He put all of his trust and faith in Bernie, and millions in Madoff.

Looking back now, that was a big—and costly—mistake.

Like so many other cases where Bernie had close family ties, virtually every member of the late Marty Joel's family would be financially ruined in the Ponzi operation.

In total, they lost a whopping $23 million, according to Amy Joel.

Among the family victims was Patty and Amy's 82-year-old step-mother “who's left with nothing,” says Patty Joel Samuels.

Her husband's elderly mother also was wiped out, and had to revert to driving other old folks around in Florida to supplement her Social Security.

But all of that was far down the road, long after Marty Joel himself had big-time legal problems when he was sharing office space with Bernie at 39 Broadway.

In October 1967, Martin J. Joel & Company was sued in federal court in New York City along with two other brokerages, two officers of one of the firms, and the president of Liquidonix Industries, Inc., for allegedly manipulating the price of Liquidonix stock, an over-the-counter offering, which rose from $34 a share in January 1967 to a high of $157 in September 1967. The suit, which charged that Joel and the others had pumped up the stock by “manipulative and deceptive schemes,” was dropped a month later when the plaintiff suspiciously failed to appear for pretrial questioning, claiming he had a cold and had to stay in bed.