Madoff with the Money (30 page)

While the assets seized in Florida and France came off without a hitch, or a fight from the Madoff side, Ruth was reported “ready to rumble” if attempts were made to take her New York penthouse and Hamptons abode, along with more than $60 million in what she claimed were her own private funds—a $17 million bank account and $45 million in municipal bonds. Moreover, she intended to fight for the money from the sale of the Florida boats and home when that happened.

The Madoff attorney, Ira Sorkin, asserted in court papers that the tens of millions in cash and bonds, and the two remaining homes, weren't linked to Bernie's fraud.

But a lawyer representing victims was furious when he heard that claim.

“She wouldn't have it but for her husband's acts and activities,” he declared.

Ruth would eventually lose most of it.

A skirmish over assets also pitted British authorities against those in the United States. The first round was fired in early June 2009 when Grant Thornton, who was responsible for liquidating Madoff Securities International Limited (MSI) in London, faced off with Irving Picard and victims of Bernie's fraud.

In particular, the American side was seeing red because the Brits had made a sneak attack and seized one of Peter Madoff's toys in Florida, a vintage Aston Martin DB2/4—the James Bond car—valued at $235,000. Wire transfers from the London office to the New York office were used to purchase the classic in the nine months preceding Bernie's arrest. Grant Thornton wanted court approval to take U.S. assets without any hindrance.

If there ever was a Madoff piggy bank, it appeared to be MSI, which was founded in 1983. It was owned outright by the Madoffs—88 percent by Bernie and the remainder by family members. MSI didn't handle private investor money as did BLMIS, and it once did have a legitimate trading business. But it reportedly stopped such activity in the early 2000s and became a “proprietary trading house” that only invested Madoff money. At the same time it was seen by investigators as an entity to pay for the family's extravagant lifestyle, such as Peter's 007 car.

In the month before Bernie's arrest, MSI transferred a reported $164 million to the New York headquarters. British investigators—the government's Serious Fraud Office—were probing the possibility that the London unit was involved in alleged money laundering.

Headquartered on two floors of a Georgian-style townhouse in what was known as “hedge fund alley”—Berkeley Street—in the posh Mayfair district of London, it had more than two dozen employees before the roof fell in. This shocked the UK workers, because in 2008 Bernie was planning for the future; a decade-long lease was renegotiated, and almost $1 million was spent on a new information technology (IT) system and custom office furniture.

Life at MSI had Bernie's signature touch all over it.

The $90,000-a-year manager of the London office, pretty 38-year-old Julia Fenwick, said that Bernie demanded that the facility be the mirror image of the New York office—“everything black and gray.”

Fenwick, who had a close friendship with Shana Madoff, was quite aware of Bernie's obsessive-compulsive nature. She told a British reporter:

Fenwick had flown on Bernie's private jet, and like his offices it was painted black and gray. Passengers weren't permitted any carry-on luggage with metal edges or feet so as not to scratch surfaces or tear seats. She recalls Peter Madoff “freaking out and yelling, ‘You can't put that there. You might mark something. Bernie would kill me.'”

Bernie and Ruth came to the London operation two to three times a year.

They often traveled with their interior decorator, Susan Blumenfeld, who did his offices, his plane, and even “approved” Ruth's outfits, Fenwick claimed in an interview with the
Daily Mail
in London.

Though Bernie and Ruth dined at fancy Manhattan restaurants, Fenwick noted that in London the Madoffs enjoyed noshing at greasy-spoon eateries, and Bernie wasn't eating kosher, either—she says he savored pork sausages.

For breakfast Bernie always ordered the same sandwich—cream cheese, smoked salmon, and cucumber on brown bread—and both he and Ruth enjoyed the music of Neil Diamond. His expensively cut suits were purchased from exclusive Kilgour in Savile Row near the Madoff offices, and he'd have the tailors come to his office for fittings. Bernie never bothered to buy property in London, but stayed at the Lanesborough, considered one of the world's most expensive and luxurious hotels, where guests had private butlers assigned to them; the hotel's Royal Suite cost more than $14,000 a night. Bernie always kept a wardrobe of clothing at the hotel, and it would be cleaned and pressed and waiting for him on his arrival.

While Fenwick had a friendly relationship with the Madoffs, Bernie wasn't all that nice to other employees, often using the
F
word. Fenwick recalled him shouting when he got angry, “It's my bat and my ball!”

She says, “He was a bit of a cheeky chappie in some respects” and “a terrible flirt. All the girls in the London office thought so.”

One of the office manager's odder experiences with the Madoffs, though, involved Ruth, who demanded that Fenwick handle her purchases of a $35 face cream that claimed to reverse the signs of aging.

Miles Goslett, the
Mail
reporter who interviewed Fenwick—who sought and was given money for her story because she received no compensation when Bernie was arrested and the office closed—quoted her as saying, “I had to buy tubs and tubes of Boots No7 Protect & Perfect Beauty Serum. I was buying five or six tubes at a time. We sent them over to Ruth in America. She'd heard about the cream because it had been discussed on television over there, but of course she could not get hold of it in New York, so I bought it for her. It was a key part of her beauty regime.”

Fenwick's close friendship with Shana Madoff was the key to earning Bernie's trust. Because of Shana, Fenwick was invited to the 2002 Madoff annual beach party in Montauk, where she noted a rather bizarre scene. After Mark and Andy Madoff put out the beach chairs, everyone had to be seated in a specific circular arrangement dictated by Bernie. In the center were the top traders, and on the far outside was the mailman.

Shana also invited Fenwick to her wedding ceremony—the marriage to former SEC lawyer Eric Swanson.

When one of the other guests asked Fenwick why she was there, she jokingly responded, “Oh, I sold my soul to Bernie.” Her boss, who was standing nearby, overheard the remark and told her he intended to punish her—by making her “sit next to him for the whole evening.”

If Bernie's world in merry old England seemed strange, life at the Manhattan headquarters was even more bizarre. To begin with, the boss had a big say in how the facility was designed, a scheme that appeared to stem from his obsessive-compulsive issues.

Although he had moved his firm to the Lipstick Building in the go-go 1980s because it was so high-tech, the roundness of the structure made him incomprehensibly nervous and uncomfortable. So what did he do? He had the interior and everything in the offices squared off. For whatever reason, he couldn't live with round or elliptical. When the firm moved in, Bernie initially leased only one floor, the 18th, but as business boomed (and more suckers were conned into his investment scheme) he expanded—to the 19th floor and then to a portion of the 17th floor, his Ponzi hideaway.

Madoff's office on 17 wasn't alone. Also on that same floor, but not a part of Madoff, was the headquarters of another major trading firm, Muriel Siebert & Company. Known to Bernie and others in the business as Mickie, she was considered “the first woman of finance” and the first female to own a seat on the New York Stock Exchange. A pal of Bernie's for years, her offices were only paces away from the site of history's biggest fraud, but like so many others, Siebert had no suspicions about his criminal activities.

Besides being a crook, Bernie was a bit of a perv.

Uncle Bernie, as niece Shana Madoff Skoller Swanson affectionately called him, had a thing about coming out of the restroom half unzipped, apparently hoping that his dirty old man act would be a turn-on to his married secretary, Eleanor Squillari, described by co-workers as “once a babe.” Bernie, tucking it in, would say to her, “Oh, you know it excites you,” she claimed to
Vanity Fair
. He'd sometimes pat her on the behind, and once asked her to hang a head shot of him taken by a celebrity photographer above her bed.

Madoff employees say those kinds of sophomoric sexual shenanigans were not untypical of Bernie.

Bill Nasi, for one, often had to deliver documents to Bernie and usually handed them to Squillari, who he felt was “hot, so to speak.” On one occasion, as he stood in front of her desk, Bernie strolled out of his office and “made this really sleazy, sexual comment, and I was embarrassed and shocked. He looked at Eleanor and said, ‘Bill Nasi has a massive hard-on for you today.' Eleanor starts laughing and says to me, ‘Oh, just ignore him—don't listen to Bernie.' He was probably making those comments to her on and off for years.”

A lot of the time it seemed Bernie's actions were dictated by what was below his Gucci belt.

After Bernie's arrest, FBI agents found some interesting and amusing data in his address book that he had left in his briefcase in his private office.

Under the letter
M
, for instance, were the names of women he would often see in the middle of the workday, according to Squillari. The
M
stood for masseuses who presumably offered Bernie a happy ending with his rubdown. His secretary, who had spotted him scouring salacious escort ads in a magazine, had warned him that someone might think he was a “pervert” if they ever saw the notations. She told him, “Keep it up and it's going to fall off.” The full-body massages presumably were paid for with the money of investors who would get a very unhappy ending.

But Bernie's massages were the most innocent and least costly of his philandering, Madoff sources reveal.

“Bernie wasn't so faithful to Ruth,” says a veteran female Madoff employee with close ties to the family. Some years back when he was in his 50s he had started having affairs in and out of the office, cheating on Ruth like he would cheat his investment clients. The veteran employee continues, “He had affairs in the office. There were two women I know of. They were gorgeous. They were blonde. They were young. They were like baby Ruths—the same type as Ruth with the same hair color and eye color. Ruth found out and told him to stop, and to get rid of them. He had to buy a few women off—things got a little too crazy. One of them told me she got bought off. ”

Another longtime Madoff employee supports the claim. “Some of these young girls that worked there for a year left with big hush money checks in their purses. Bernie was screwing some of those secretaries. The guy who signed the checks told me one of them left with $250,000 in her purse.”

Having had his office romances nailed by Ruth and others at Madoff, where everyone kept their eye on everyone else there, especially Bernie, and gossip and rumors flew faster than an electronic stock quotation on the trading desk, Bernie consequently was forced to seek female companionship on the outside. According to a Madoff insider, Bernie had begun still another serious flirtation with a young executive secretary at another brokerage firm that BLMIS did business with. Says the person:

After Bernie's arrest, a woman who had claimed an office affair with him approached the
National Enquirer
through a publicist offering a tell-all in exchange for $100,000. An editor says he felt her fee was too high and didn't further pursue her story.

In late March 2009, the
New York Daily News
, in a story headlined “Was Ponzi Man Bernie Madoff a Philanderer, Too?,” quoted two sources as saying that he had “carried on at least one affair” during his marriage. The straphanger tabloid reported that Bernie “once had a thing” with a woman at a “major media corporation” who was “attractive and Jewish. He was quite generous with her. He used to fly her around.” The paper quoted another source stating, “When Ruth found out about it, Bernie agreed to end the affair.”