Madoff with the Money (21 page)

Then, in August 1970, the SEC temporarily suspended Marty Joel from doing business after an investigation found that between January 1966 and January 1968—when he was sharing office space with Bernie—Joel had at various times violated the antifraud record-keeping and credit provisions of securities law.

He was banned from associating with any broker-dealer for 75 days, and his firm was suspended from doing business from mid-August 1970 to just after Labor Day. At the time, Joel claimed that the agency's proceedings did not involve his market-making or over-the-counter business, and that his retail business was being phased out. In November 1971, another securities company acquired Martin J. Joel & Company for undisclosed terms and Marty Joel reportedly became a general partner.

After Joel came to work for Bernie as a trader and market maker years later, Bernie lauded him publicly but told nasty stories about him behind his back.

Bernie claimed that the reason he brought Joel on board at Madoff was because he “felt sorry for him, and no one on Wall Street would give him a job.” According to a Madoff insider, Bernie claimed he told his longtime friend and colleague, whose family was invested to the hilt in Madoff, “Here's a desk; here's a phone. Do your thing. Don't talk to anyone in the office or in the trading area. You're on your own. If you do anything crooked, I don't want to know about it. You're a separate entity.”

Bernie claimed that the reason Joel “was blacklisted” and had problems getting work on Wall Street was because “he taught Ivan Boesky everything he knew—how to work the system legally, and how to manipulate it.”

Bernie was the epitome of the pot calling the kettle black.

Some two decades before Bernie Madoff became known as the evil mastermind of the biggest and worst of all financial crimes, Ivan Boesky had held that title. The son of a Jewish immigrant, Boesky had made hundreds of millions of dollars using insider information to take big positions in companies that were about to be taken over. Mergers and acquisitions were then the rage in the early to mid-1980s, and Boesky became the expert in how to cash in—illegally.

It took a long time for the SEC to catch on, just like the agency missed the boat with Bernie. In 1986, however, Boesky was charged with stock manipulation and insider trading, was fined $100 million (half of which he later deducted as a business expense from his income tax), and spent two years in a minimum-security, country club prison in California. This was around the same time Bernie was activating his Ponzi scheme. The
Time
magazine cover of December 1, 1986, had a photo of a tanned and smiling Boesky with the headline: “Wall St. Scam—Making Millions with Your Money.” Like Bernie, Boesky became an overnight popular culture figure. The character Gordon Gekko in the film
Wall Street
is said to be based loosely on Boesky.

As time would tell, Bernie shared Boesky's philosophy, which the king of the insider trade had espoused:

“I think greed is healthy,” Boesky once declared. “You can be greedy and still feel good about yourself.” Family members of Marty Joel—his daughter Patty and her Long Island criminal attorney husband, Howard Samuels—call Bernie's character assassination of him “completely untrue.” At the same time, neither had heard about or had knowledge of any association between Joel and Boesky. “Martin Joel was recognized on Wall Street,” says Samuels. “He brought companies public. He did underwriting. He was brilliant with the money he made, investing in homes, jewelry, even Wedgwood china.”

(In late May 2009, as Bernie was awaiting formal sentencing, he met with Herbert J. Hoelter, considered the crème de la crème of prison consultants, in hopes of lessening his time in the Big House or getting placed in a better Big House. Bernie was in good company. Among Hoelter's past headline-making clients who were sent up the river were Boesky, Martha Stewart, Michael Milken, and Alfred Taubman. Hoelter's Baltimore firm, the National Center on Institutions and Alternatives, had a reputation for so-called sentencing advocacy and arguing for pro-felon use of federal sentencing guidelines by judges.)

While Bernie made it seem as if Joel was a tragic figure for whom he showed his sympathy by allowing him to work at Madoff, there are those who contend otherwise.

“He was on Bernie's trading desk. He was a market maker,” says Samuels.

Others say Joel was a force at Madoff because of his many years in the business, and Bernie depended on him to keep things running smoothly, especially to help younger traders when problems arose.

“My father was
instrumental
in the trading room,” declares Amy Joel. “He wouldn't be working in any scammo situation. He lived a great life because he made tons of money for himself and Bernie. He traded the most elite stocks. The last time he traded for Madoff was around 2001 when he became ill. He had 24-hour care, but he elected to come into the office some days just to be in an office environment. He would hire a car and with his aide he came to Madoff and walked around and talked to everyone.”

The two men—along with another multimillionaire crony, Stanley Shapiro, who made his fortune in the garment business, later had a desk at Madoff, and lost “substantial” millions in Bernie's Ponzi scheme—often spent vacation time together, sharing cabanas at the fancy Breakers Hotel in Palm Beach, schmoozing and smoking cigars, expensive Davidoff stogies that were Bernie's favorite.

Bernie was also with Joel in times of need. For instance, when Joel's first wife died in 1973, Bernie and Ruth were the first ones at the house to help him grieve, and it was Ruth who compassionately told his daughter, Amy, then a college junior, that her mother had passed away.

Joel was so trusted by Bernie and such a part of his inner circle that when Bernie's mother, Sylvia, died sometime in the late 1970s he declined to claim her body and had Joel and Bernie's brother, Peter, handle the matter. “Bernie tracked down my father to go with Peter to claim the body,” says Amy Joel.“She died on a cruise in Jamaica, and Bernie was such a wimp he couldn't handle it himself. My father and Peter had to make the arrangements to fly the body home.”

Later, after both of the Madoffs had passed away, Bernie confided to Amy Joel that he was saddened because “My parents didn't live long enough to see how successful I became.”

Marty Joel savored jokingly goading Bernie, because he was aware of his obsessive-compulsive disorder (OCD) issues.

“Bernie had OCD to the umpth degree,” observes Amy Joel, who began working at Madoff in 1989, initially for two years in the money-management area—later Ponzi Central—after a long stint at Bear Stearns.

Bernie once seriously lectured Amy Joel about the dangers of entering her apartment wearing the shoes she wore on the streets of New York City, because of the dog and human urine and defecation she might have trod on. He figured she then probably took off her shoes and walked around barefoot in her apartment where she had just walked in her unsanitary shoes. Even worse, he guessed, she probably got into bed with bare feet that were sullied from what she had tracked in. The concept sickened him. “He was like over the top,” she recalls. “To stop him I said, ‘All right,
all right
, I'll never do it again!'”

At one point during her two decades at Madoff she had worked in accounts payable. “Within three days of a bill coming in,” she says, “he made you pay it. If it had 30 days net or 60 days net, he'd say to pay it right away—whether it was a $42 Xerox bill, or a cell phone bill for ten grand, or a bill for rental of line feeds that was $500,000 a month.”

The reason? “He didn't want any trouble with creditors.”

Every morning, the first thing he obsessively did was check his Dun & Bradstreet rating. Then he'd make his inspection rounds of the office to make certain everything was neat and orderly, that all desk items were in either black or gray, and if by chance he found someone using a desk calculator in another shade, even white, he'd toss it in the trash. He'd be spotted polishing the glass doors to the office, or on his hands and knees on the carpet in front of the elevator bank picking up litter, and making sure the carpet was perfectly straight.

Despite his OCD issues, Amy Joel thought of him as a “stand-up guy,” a “very generous” boss who helped his employees when they needed money or time off. “He was so honorable,” she believed for years before his thievery came to light and she and her family and her co-workers who had invested in Madoff were left with nothing.

In his early 70s Marty Joel died on May 6, 2003, of lung cancer, at his home in Palm Beach. The services were held at a funeral home in White Plains, New York, and Bernie was there with Ruth to eulogize his close friend and longtime associate. “He had the highest words of praise for him,” recalls Joel's son-in-law, Howard Samuels, who was present.

Bernie gave the family the use of his private plane during that difficult time and helped make the funeral arrangements. “He couldn't have been nicer,” says daughter Patty Samuels. “Little did I know it was probably our money that he was using, so he could afford to be generous. Right before he died, my father said to me, ‘I gave all the money to Bernie, and he's going to take good care of you.' I paid a fortune in taxes—a
fortune
—on the profits, which weren't real.”

Adds her husband, Howard:

Worry, indeed. After all, Bernie was the trustee of Joel's multimillion-dollar account at Madoff.

By the winter of 2007, Amy Joel saw that Bernie was distracted, that he was often gone from the office for long stretches of time. She believed he was enjoying himself but later came to the conclusion that “he was sucking in the very wealthy, going to where the elite went, where he attracted investors” for his Ponzi operation. Mostly, though, she was increasingly concerned that he wasn't giving careful and proper attention to her late father's sizable investment.

Says Joel: