Madoff with the Money (24 page)

It wasn't, of course.

“According to Jennifer,” says Krakauer, “the check was being written and they were going to send it out before the year's end, but then the whole thing fell apart [with Bernie's arrest]. So we never got the check, and so maybe that was a good thing because I think it would have bounced.”

Krakauer, an alumnus of Bernie and Ruth's Far Rockaway High School, had been “social friends” with Peter and Marion Madoff for a quarter-century, having met in the early 1980s. When she married her husband, Seth, the Madoffs were among the guests. Over the years they'd get together at seders and Thanksgiving gatherings. “Peter and Marion were a lot of fun—the two of them, with a great sense of humor. Shana and Roger were like big brother-sister to my kids, and then my daughter and my kids were kind of like big brother-sister to Shana's daughter, Rebecca. Our kids intermingled. We shared that.”

Krakauer viewed Peter as “an alpha male” who was domineering and “
had
to cut the turkey” at holiday get-togethers. She also noted the kind of obsessive-compulsive problem in Peter that possessed Bernie, whom she did not know.

She says:

Marion Madoff, a large-size woman with a sweet smile, according to photographs, was a jock of sorts who played golf and loved football. The Madoffs and the Krakauers went to a few Super Bowl parties together. “Marion was right in there with the guys, so I thought they were not a perfectly matched couple in the same sense as what I knew of Bernie and Ruth, whom I didn't know. Marion had a
personality
. That's all I can say. I could see Peter and Marion bickering. If you have two strong people in a marriage like they were, you're gonna have a lively marriage.”

In all the years the Peter Madoffs and the Krakauers were friends, Bernie and Ruth never joined in the circle.

“Maybe it was a blessing,” observes Krakauer after the Ponzi scandal broke. She says that in their social circle with Peter and Marion was another couple “who lost a significant amount of money” in Peter's brother's scheme.

There was also a big difference in terms of lifestyle between the two couples. While the Krakauers lived in middle-class Rockaway, Peter and Marion Madoff had spectacular homes at 975 Park Avenue and in a ritzy section of Long Island with the odd name of Muttontown. Years earlier, when Bernie and Peter were installing sprinkler systems, both had discovered Muttontown on the Gold Coast of Queens on Oyster Bay, and thought it would be the most wonderful place in the world to live—a regal out-of-the-way town with stately mansions. Eventually, Peter, working side by side with Bernie, would own one of those palaces

But Krakauer stresses that Peter and Marion “were not ostentatious people. They never threw things in your face. We were never made aware of major shifts of wealth. We knew they were flying down to Florida in their plane, but he never said, ‘I'm flying down in a bigger plane to a bigger house in Palm Beach.' They had a lot of money and lot of affluence, but they never gloated about it. Maybe every single time we saw them they had a new car—and they had great cars, different Mercedes-Benzes all the time. When they bought the house in Muttontown, Marion was telling me, ‘Oh, it's great. But it's not
me
. I have to do this, I have to do that.' I thought, ‘Oh, my God, you have to do all this stuff to all these rooms. That's a
lot
of money.'” They later sold the place for and an even more spectacular home in Old Westbury.

Yet it wasn't all peaches and cream. Krakauer saw Peter Madoff 's tough business side when she and the family began talking about the Roger Madoff fellowship. She recalls:

After the Madoff scandal became public and the $10,000 check for Peter's son's fellowship was never sent as promised, the Madoffs had no contact whatsoever with Krakauer or the arts council. “I've been in touch with Jennifer, but even she has said to me that it's been very difficult for her with Peter and Marion. I wasn't surprised, because that was a project I really worked on very closely with Jennifer, and Jennifer is also going through a very difficult time, and Peter and Marion are going through hell, and the elephant in the room is Bernie.

Bernie, the elder, and Peter, the younger, had a brotherly love-hate relationship.

Their sibling rivalry had started when Bernie realized his baby brother, seven years his junior, was so much smarter than he was. He was envious when Peter got admitted to prestigious Brooklyn Tech High School whereas Bernie never could have made the grade there.

Peter, however, wasn't anywhere near the top of his class, either. His transcript, according to a knowledgeable source, showed that he was 484th out of a June 27, 1963, graduating class of 941. His final average was 81.7, and he was a B student in the subject in which he was seen as superior, math.

Nevertheless, he had gone on to a better college than Bernie, Queens College, where he met his future wife, Marion. While Bernie was hawking penny and over-the-counter stocks listed on what were called the Pink Sheets, and making a nice buck at it, along with building his private investment advisory business, Peter was earning a law degree at Fordham Law School (graduating in 1967)—the degree Bernie never got because he left law school after one year. Moreover, women thought Peter was better looking than Bernie, which always bruised the older brother's macho ego.

From day one, Bernie lorded it over Peter, who had begun working with him around 1965 at the 39 Broadway offices of Bernard L. Madoff Investment Securities, and Bernie would continue to be the dominant one through the years.

Bill Nasi recalls how Bernie started Peter at the very bottom in the business. “Basically,” he says, “Bernie had him licking stamps and doing the mail room.”

It was the start of a more than four-decades-long partnership, or at least that's how many personally, or socially, connected with the brothers perceived the arrangement. On the surface, as the years passed it appeared to be a 50-50 collaboration—one, though, that was ultimately doomed.

In fact, it clearly wasn't an even deal.

The Madoff firm had moved from 39 Broadway to 110 Wall Street in the 1970s, when Bernie's firm first started trading New York Stock Exchange (NYSE)-listed stocks. The trading floor was a giant rectangular wooden platform with all the workstations surrounding it. “Bernie was a workaholic,” says Bill Nasi, who helped with the move. “Bernie loved to keep the place spotlessly clean, and he was on his knees hammering nails into the platform to make sure it was upright.”

In the late 1980s, Bernie moved uptown to the new and futuristic 34-story skyscraper on Third Avenue between 53rd and 54th Streets designed by John Burgee and Philip Johnson known as the Lipstick Building—so named because it looked like an enormous tube of lipstick. A part owner in the flashy building was Bernie's chum, investor, and eventual victim, Fred Wilpon. By moving to midtown and out of the financial district, Bernie felt he could operate his trading and money management operations in greater secrecy; Wall Street had always been a hotbed of financial gossip-mongering and spying on the competition. Bernie liked to keep his investment strategies and business operations close to his vest.

One morning Bill Nasi had gotten into the Lipstick Building offices of Madoff very early. Thinking he was the first to arrive at work, he entered the reception area only to be startled by Bernie's voice, usually low, but at the moment loud and frightening. Nasi recalls:

Bernie's secretary, Eleanor Squillari, overheard a similar outburst aimed at Peter, known as the “Energizer Bunny” because he never seemed relaxed, though he didn't have his brother's facial ticks and squints. She recalled to
Vanity Fair
how the two had once checked in with her on separate phone lines from an airport to see if there were any messages. When she told Bernie that Peter was calling in on another line, she overheard him blast his brother.

“Hang up the fucking phone. She's
my
secretary!”

Bernie was the ultimate control freak, even with his closest partner, Ruth.

A Madoff intimate was in the process of having her fancy Sutton Place apartment renovated and was telling Ruth about her plans. As they were discussing architects Ruth made it a point to say, “I hope you can make your apartment livable.” Surprised, the friend responded,“Of course, Ruth. Why wouldn't I make it livable and comfortable?” Ruth's shrill answer floored her. “Because I can't sit on most of the furniture in our place. They're rare antiques, and Bernie doesn't want me to sit on them.”

Bernie governed Peter in the same way he exercised control over Ruth, despite the fact that it was the younger brother who was the technology and computer expert and multitasker.

Whenever it came time to claim credit for pioneering the use of electronic trading and bringing high-tech capabilities to the Madoff business, it was Bernie who took the bows while Peter waited in the wings applauding like a stand-in.

As one observer notes of the relationship between the brothers:

And that assessment appeared to be on the mark.

Traders Magazine
, which had covered Bernard L. Madoff Investment Securities (BLMIS) over the years, observed that by the 1990s,