1 00:00:08,176 --> 00:00:09,469 It has been a week 2 00:00:09,552 --> 00:00:12,263 since Bernie Madoff turned himself in to the FBI. 3 00:00:13,973 --> 00:00:15,516 This guy had enormous credibility. 4 00:00:15,600 --> 00:00:18,394 - One of the biggest market makers. -If you can't trust him… 5 00:00:18,478 --> 00:00:20,897 -One of the founders of the NASDAQ. -…who do you trust? 6 00:00:22,106 --> 00:00:24,108 How could he pull this off by himself? 7 00:00:24,192 --> 00:00:27,737 It seems almost impossible. It has to be that people were included. 8 00:00:27,820 --> 00:00:29,739 Whether they knew what they were doing 9 00:00:29,822 --> 00:00:32,033 -becomes a larger question. -Or not. Right. 10 00:00:34,869 --> 00:00:39,457 One of the unique things about the Madoff investigation 11 00:00:39,540 --> 00:00:44,462 was the fact that it started with a confession and an arrest, 12 00:00:45,046 --> 00:00:47,381 but we knew we had to get more. 13 00:00:48,341 --> 00:00:51,260 So as we were doing our investigation, 14 00:00:51,803 --> 00:00:54,097 we went to the 17th floor, 15 00:00:54,180 --> 00:00:55,556 and we were like… 16 00:00:57,725 --> 00:00:58,851 "Holy shit." 17 00:01:01,062 --> 00:01:06,359 It was almost like walking into a time warp. 18 00:01:07,777 --> 00:01:10,655 It looked like the mid-1980s. 19 00:01:11,864 --> 00:01:16,536 You had these old, big mainframe computers. 20 00:01:17,787 --> 00:01:20,456 There's reams of paper everywhere. 21 00:01:20,540 --> 00:01:23,292 There are file cabinets, boxes. 22 00:01:24,460 --> 00:01:29,173 There are faxes that have come in requesting redemptions. 23 00:01:29,841 --> 00:01:32,343 There are documents laying everywhere. 24 00:01:32,844 --> 00:01:34,137 Very messy, 25 00:01:34,762 --> 00:01:40,560 which is a stark comparison to the 19th floor, which was pristine. 26 00:01:43,020 --> 00:01:47,733 The thing that always struck me was the dot matrix printer. 27 00:01:48,234 --> 00:01:53,531 He had this old-school paper, you know, where you tore off the sides of it. 28 00:01:54,031 --> 00:01:57,952 If you invest with any large brokerage firm, 29 00:01:58,035 --> 00:02:02,039 nobody gets a statement on dot matrix paper. 30 00:02:03,249 --> 00:02:08,296 On one desk I found a stack of 5x8 index cards 31 00:02:08,379 --> 00:02:12,466 with handwritten columns depicting cash activity. 32 00:02:12,550 --> 00:02:15,136 Withdrawal, deposit, ending balance. 33 00:02:15,219 --> 00:02:16,637 And the ending balances, 34 00:02:16,721 --> 00:02:20,975 I see four and a half million, and I'm thinking, "Gee, that's a big number." 35 00:02:21,058 --> 00:02:25,438 When I looked at it closer, I realized it was four and a half billion. 36 00:02:27,481 --> 00:02:29,192 And that's when I realized 37 00:02:29,275 --> 00:02:32,320 this is not an ordinary white-collar crime. 38 00:02:52,924 --> 00:02:57,720 I started working for Madoff around 1992, in computer operations. 39 00:02:57,803 --> 00:03:00,806 When I first went for the interview at the office, 40 00:03:00,890 --> 00:03:02,725 it was a good conversation, 41 00:03:02,808 --> 00:03:06,729 and the salary that they offered me, I was very happy with the salary. 42 00:03:06,812 --> 00:03:10,650 It was like, double the amount that I made at Federal Express, 43 00:03:10,733 --> 00:03:12,985 and um, I wasn't working out in the rain. 44 00:03:13,069 --> 00:03:15,529 I was working in a nice office building, 45 00:03:16,155 --> 00:03:18,074 and I was more than excited. 46 00:03:18,157 --> 00:03:21,786 But also I was very nervous because it was just something that 47 00:03:22,495 --> 00:03:23,996 I wasn't used to. 48 00:03:24,538 --> 00:03:27,041 When I first started, I worked on the 19th floor. 49 00:03:27,124 --> 00:03:29,877 Everything was on the 19th floor at that time. 50 00:03:29,961 --> 00:03:31,629 The 19th floor was beautiful. 51 00:03:31,712 --> 00:03:35,800 It was all glass, all black and silver decor. 52 00:03:35,883 --> 00:03:38,219 Then we moved to the 17th floor. 53 00:03:44,267 --> 00:03:46,686 The 17th floor was totally different. 54 00:03:48,729 --> 00:03:50,523 When you started doing the, 55 00:03:50,606 --> 00:03:53,943 we'll call it the fraudulent investment advisory business, 56 00:03:54,026 --> 00:03:56,445 you moved the people who did that to a separate floor? 57 00:03:56,529 --> 00:03:57,738 That's correct. 58 00:03:57,822 --> 00:04:01,826 We moved the whole advisory side down to the 17th floor. 59 00:04:01,909 --> 00:04:03,995 That was in the, uh, '90s. 60 00:04:06,330 --> 00:04:10,710 I worked nights, so I saw a lot of the grimy stuff that was going on. 61 00:04:10,793 --> 00:04:15,339 I could see where there was some things that were kind of sketchy. 62 00:04:15,923 --> 00:04:18,009 They had an area called the cage. 63 00:04:18,092 --> 00:04:21,387 And the cage is where everything was going down. 64 00:04:21,470 --> 00:04:25,141 You go in there and you'll see them got, like, six-packs in there, 65 00:04:25,224 --> 00:04:27,310 and at that time, you could smoke inside. 66 00:04:27,393 --> 00:04:32,148 Now I see people coming in smashed and go in the back with their mistresses, 67 00:04:32,231 --> 00:04:36,027 or some guys who did coke in there, or whatever. 68 00:04:36,110 --> 00:04:40,281 And I thought that was really crazy, you know? I was like, "Wow." 69 00:04:41,198 --> 00:04:44,577 I was real naive to a lot of this stuff because of the fact that 70 00:04:44,660 --> 00:04:48,706 we still had very heavy hitters in the company who are working down there, 71 00:04:49,373 --> 00:04:52,835 like Bernie Madoff and Frank. 72 00:04:55,046 --> 00:04:57,757 The investment advisory side, 73 00:04:57,840 --> 00:05:00,801 or the 17th floor, as it's referred to, 74 00:05:00,885 --> 00:05:04,096 was basically supervised by Frank DiPascali. 75 00:05:04,180 --> 00:05:07,475 He just ran pretty much everything down on that floor. 76 00:05:07,558 --> 00:05:11,395 Is it fair to say that Frank was in charge of the 17th floor? 77 00:05:11,479 --> 00:05:18,235 Yes. He was very talented when it came to, uh, helping to build the system. 78 00:05:18,319 --> 00:05:20,237 He did pretty much everything. 79 00:05:25,618 --> 00:05:28,954 Frank DiPascali was a guy that you would expect to run numbers 80 00:05:29,038 --> 00:05:30,790 or be shooting craps in the street. 81 00:05:31,457 --> 00:05:38,297 He was definitely, you know, a smart guy, but, you know, like, a streetwise guy. 82 00:05:40,549 --> 00:05:42,593 If Frank had been a mobster, 83 00:05:42,676 --> 00:05:45,346 he would have been the one telling people who to hit. 84 00:05:46,722 --> 00:05:49,225 Frank was Italian, he came from Queens. 85 00:05:49,308 --> 00:05:51,685 I was Italian, I came from Brooklyn. 86 00:05:52,645 --> 00:05:54,105 I couldn't relate to him. 87 00:05:54,980 --> 00:05:57,149 And I should have, I should have. 88 00:05:58,109 --> 00:05:59,443 But we were different. 89 00:06:01,529 --> 00:06:05,282 I remember hearing that Frank was working in a gas station 90 00:06:05,366 --> 00:06:09,954 before working at Madoff, and that he didn't complete college. 91 00:06:10,663 --> 00:06:15,251 If you were going to have somebody run your investment advisory business, 92 00:06:15,334 --> 00:06:19,046 I would certainly think it would be somebody who was educated. 93 00:06:19,797 --> 00:06:21,757 I could just never understand it. 94 00:06:23,134 --> 00:06:27,304 It was very clear that Bernie respected Frank a lot. 95 00:06:27,805 --> 00:06:34,770 And for Frank, this was an opportunity to make more money than he ever imagined, 96 00:06:35,271 --> 00:06:39,233 and live the lifestyle he always wanted. 97 00:06:40,234 --> 00:06:44,905 I'm not sure a kid from Howard Beach could have had the kind of yacht he had 98 00:06:45,948 --> 00:06:48,617 and the house in Jersey the way he had, 99 00:06:49,577 --> 00:06:51,954 doing anything else but working for Bernie Madoff. 100 00:06:56,041 --> 00:06:58,461 Then there was Annette Bongiorno. 101 00:06:58,961 --> 00:07:03,048 Annette… I don't really know what she did. 102 00:07:03,132 --> 00:07:06,469 I knew that she was a heavy hitter and she was a snazzy woman. 103 00:07:06,552 --> 00:07:07,970 Yeah, she dressed nice. 104 00:07:08,053 --> 00:07:10,139 I know Annette was making very good money. 105 00:07:10,222 --> 00:07:13,809 I know she used to have a little drawer with cash in it. 106 00:07:14,685 --> 00:07:17,521 And she would be like, "Go in the drawer and get such-and-such 107 00:07:17,605 --> 00:07:19,940 and order you and such-and-such dinner." 108 00:07:20,024 --> 00:07:23,360 And it was a nice little stack of money she had in there. 109 00:07:26,071 --> 00:07:32,578 Annette was a working-class woman from Queens, and not a lot of education. 110 00:07:33,787 --> 00:07:36,916 A lot of the people that were on the 17th floor, 111 00:07:36,999 --> 00:07:41,795 Bernie got them in when they were very young, very impressionable. 112 00:07:42,463 --> 00:07:44,924 So they would be incredibly loyal 113 00:07:45,007 --> 00:07:47,885 and deferential to him and do whatever he asked. 114 00:07:49,178 --> 00:07:51,639 Annette worshipped Bernie. 115 00:07:51,722 --> 00:07:56,477 And I think she would have taken a bullet for him. 116 00:07:57,478 --> 00:08:00,606 She had her little team downstairs that she controlled, 117 00:08:00,689 --> 00:08:03,776 and Bernie seemed to rely on her quite heavily, 118 00:08:03,859 --> 00:08:06,111 particularly with his biggest clients. 119 00:08:07,988 --> 00:08:10,616 Let's turn to Annette. That's Annette Bongiorno? 120 00:08:10,699 --> 00:08:11,742 Yes. 121 00:08:11,825 --> 00:08:14,578 And what were Annette's day-to-day responsibilities? 122 00:08:14,662 --> 00:08:16,789 She handled the… 123 00:08:16,872 --> 00:08:19,583 uh… the big clients. 124 00:08:20,084 --> 00:08:22,711 And how long did Ms. Bongiorno work for you? 125 00:08:26,715 --> 00:08:28,634 Probably 30-some odd years. 126 00:08:32,888 --> 00:08:34,848 No matter what Bernie was doing, 127 00:08:34,932 --> 00:08:37,184 he would drop what he was doing to talk with her. 128 00:08:38,811 --> 00:08:42,731 And I remember thinking at the time, "Boy, Bernie really takes care of her." 129 00:08:43,440 --> 00:08:45,734 He's very loyal to his longtime employees. 130 00:08:46,986 --> 00:08:48,612 She was always going to Palm Beach. 131 00:08:49,530 --> 00:08:51,365 She was always getting some new car. 132 00:08:51,448 --> 00:08:54,076 She lived quite a life, we thought at the time, 133 00:08:54,159 --> 00:08:58,080 for somebody who was a secretary and a clerk, kind of, from Queens. 134 00:09:04,920 --> 00:09:10,551 The investment advisory down on the 17th floor was always very busy. 135 00:09:10,634 --> 00:09:12,928 There was always mailings going out. 136 00:09:13,012 --> 00:09:15,389 It was like a buzz of activity going on. 137 00:09:15,973 --> 00:09:18,267 And it was divided into two spaces. 138 00:09:18,350 --> 00:09:20,686 Annette had one side, Frank had another 139 00:09:20,769 --> 00:09:24,148 with the computer guys, Jerry O'Hara and George Perez. 140 00:09:25,399 --> 00:09:27,943 My supervisor was Jerry O'Hara. 141 00:09:28,027 --> 00:09:29,778 Yeah, he looked over my work. 142 00:09:31,071 --> 00:09:33,782 As a computer operator, I was to print out, like, 143 00:09:33,866 --> 00:09:38,120 these statements for certain stock or securities, 144 00:09:38,203 --> 00:09:40,581 but the printers were not fast. 145 00:09:40,664 --> 00:09:43,959 They were very slow, like, dot matrix printers and stuff. 146 00:09:45,044 --> 00:09:47,129 A typical day on the 17th floor, 147 00:09:47,212 --> 00:09:51,008 I would print out probably 700 statements at night. 148 00:09:52,176 --> 00:09:53,761 If I had issues with printing, 149 00:09:53,844 --> 00:09:56,096 I would call them, and they would troubleshoot it. 150 00:09:56,180 --> 00:09:58,474 They wouldn't be like, "Leave it till the morning." 151 00:09:58,557 --> 00:10:01,393 They would want to get it done right then. 152 00:10:01,477 --> 00:10:06,440 If it came out smudged or wasn't done the right way, they would print it over, 153 00:10:06,523 --> 00:10:09,735 and then we would mail them out to the different clients. 154 00:10:10,361 --> 00:10:13,989 They ran a tight ship with every little detail that went on. 155 00:10:19,453 --> 00:10:22,873 One of the reasons I chose to be in silhouette is because 156 00:10:22,956 --> 00:10:27,086 I don't want to be part of anything that's still going on with that case. 157 00:10:27,169 --> 00:10:31,006 I know the Madoffs did some very bad things to some people, 158 00:10:31,090 --> 00:10:33,175 and I feel bad for the people they did it to, 159 00:10:33,258 --> 00:10:35,761 but they were good people to me, 160 00:10:35,844 --> 00:10:38,639 and I can't say nothing bad about them. 161 00:10:40,516 --> 00:10:43,310 Bernie Madoff's fraud was not a complex fraud. 162 00:10:44,311 --> 00:10:46,563 It involved simply taking people's money, 163 00:10:46,647 --> 00:10:49,525 telling them he was going to invest it, and he never did. 164 00:10:51,235 --> 00:10:54,822 So, to continue the Ponzi and perpetrate this fraud, 165 00:10:54,905 --> 00:10:59,326 he had his handful of soldiers at the investment advisory side of the business, 166 00:10:59,410 --> 00:11:01,120 create fake trades. 167 00:11:02,037 --> 00:11:05,165 It was very easy to create a fictitious trade 168 00:11:05,249 --> 00:11:08,627 if you know what it traded for yesterday. 169 00:11:08,711 --> 00:11:13,048 It's like going to the horse races and betting on yesterday's horse race. 170 00:11:13,132 --> 00:11:15,175 It was just a key punch operation. 171 00:11:15,259 --> 00:11:20,264 People sat around and key-punched this historical information into the computer 172 00:11:20,347 --> 00:11:23,934 to make it look like they bought Amazon a month ago 173 00:11:24,017 --> 00:11:26,061 and sold it yesterday at a profit. 174 00:11:26,854 --> 00:11:31,150 George Perez and Jerry O'Hara had computer programs 175 00:11:31,233 --> 00:11:33,485 that took the information from the fake trades 176 00:11:33,569 --> 00:11:35,946 and put them on a customer statement, 177 00:11:36,029 --> 00:11:39,241 so when you, the customer, got it, it looked real. 178 00:11:43,495 --> 00:11:48,917 The complexity was how many clients he had to deal with in the '90s and 2000s. 179 00:11:49,001 --> 00:11:51,086 Almost 5,000 clients. 180 00:11:52,045 --> 00:11:53,464 It was a paper mill. 181 00:11:54,047 --> 00:11:57,885 It's an iterative process of punching in fake trades, 182 00:11:57,968 --> 00:12:00,053 seeing what the returns look like, 183 00:12:00,763 --> 00:12:02,806 shredding those statements, 184 00:12:02,890 --> 00:12:05,225 punching in new trades with different prices 185 00:12:05,309 --> 00:12:07,478 to make the returns even better, 186 00:12:08,061 --> 00:12:11,148 and then eventually mailing those to customers. 187 00:12:13,192 --> 00:12:17,613 Mr. Madoff, importantly, never provided electronic access 188 00:12:17,696 --> 00:12:20,240 for people to access their account statements. 189 00:12:20,324 --> 00:12:22,451 He didn't want people to have electronic access 190 00:12:22,534 --> 00:12:24,495 to see what was going on behind the curtain. 191 00:12:27,706 --> 00:12:32,211 The 17th floor really operated, in a sense, like a bookie operation, 192 00:12:32,961 --> 00:12:36,215 and somebody had to keep track of all the money in and out. 193 00:12:41,053 --> 00:12:47,976 Jodi Crupi was another one of these um, unsophisticated types 194 00:12:48,060 --> 00:12:52,272 that Bernie brought in to be an instrumental part of the scheme. 195 00:12:53,732 --> 00:12:58,904 Her job, towards the end, was to manage what was called "Jodi's pad." 196 00:12:58,987 --> 00:13:02,366 It was actually a tally done every day 197 00:13:02,449 --> 00:13:06,787 of the ins and outs of cashflow from the JP Morgan bank account, 198 00:13:06,870 --> 00:13:09,248 known as the infamous 703 account, 199 00:13:09,331 --> 00:13:12,876 which represents the last three digits of the account number, 200 00:13:12,960 --> 00:13:15,546 which we now know as the Ponzi account. 201 00:13:15,629 --> 00:13:19,758 And every day at the end of business, the tally would be delivered to Bernie, 202 00:13:19,842 --> 00:13:22,636 so Bernie knew exactly what came in and what went out. 203 00:13:23,679 --> 00:13:25,556 This was very important to Mr. Madoff, 204 00:13:25,639 --> 00:13:29,601 obviously, when you're running a Ponzi, to understand how much money you have 205 00:13:29,685 --> 00:13:33,814 to make sure you get enough cash on hand to meet some of these withdrawal requests. 206 00:13:35,274 --> 00:13:38,861 That's why the 17th floor was so important for Bernie Madoff. 207 00:13:38,944 --> 00:13:44,241 When you control a few people that you can keep quiet for a long time, 208 00:13:44,324 --> 00:13:48,328 that's how you can perpetrate this fraud for four decades or longer. 209 00:13:51,123 --> 00:13:53,458 The investment advisory business, 210 00:13:53,542 --> 00:13:55,502 down on the 17th floor, 211 00:13:55,586 --> 00:13:58,964 nobody had access to it except the employees who worked down there. 212 00:13:59,047 --> 00:14:02,885 I had a card key because I would have to go back and forth for Bernie. 213 00:14:02,968 --> 00:14:06,096 And even when I went down, nobody encouraged you to stay. 214 00:14:06,179 --> 00:14:08,557 Nobody wanted to have a conversation. 215 00:14:11,810 --> 00:14:14,646 The 17th floor was a real enigma. 216 00:14:15,397 --> 00:14:18,358 I don't know that we… The people that I knew on the trading floor, 217 00:14:18,442 --> 00:14:21,945 that we ever really knew what went on down there. 218 00:14:22,029 --> 00:14:24,156 We didn't talk about the trading side to them, 219 00:14:24,239 --> 00:14:27,284 and they didn't talk about whatever they were doing on their side. 220 00:14:30,037 --> 00:14:32,539 Madoff was a family-dominated firm, 221 00:14:32,623 --> 00:14:35,876 so Bernie was the top of everything. 222 00:14:35,959 --> 00:14:39,421 His family had all the key positions on the 19th floor. 223 00:14:39,504 --> 00:14:42,507 His younger brother, Peter, was the compliance officer, 224 00:14:42,591 --> 00:14:46,762 and Bernie gave his sons, Mark and Andy, both very young, a lot of responsibility. 225 00:14:46,845 --> 00:14:48,221 They ran the trading floor. 226 00:14:49,348 --> 00:14:53,435 His sons both worked for the firm since the day they graduated college. 227 00:14:53,518 --> 00:14:56,688 And because they were Madoffs, we had to listen to them. 228 00:14:56,772 --> 00:14:59,942 I thought I was a, you know, much better trader than Mark, 229 00:15:00,025 --> 00:15:03,987 but I couldn't beat him in an argument because he was Mark Madoff. 230 00:15:04,071 --> 00:15:06,698 Andy'd joke with me, he said, "This is nepotism central." 231 00:15:08,825 --> 00:15:10,452 Mark and Andy both felt 232 00:15:10,535 --> 00:15:13,372 that they needed to understand the whole business, 233 00:15:13,455 --> 00:15:17,125 including what Bernie was doing on the 17th floor 234 00:15:17,209 --> 00:15:18,961 with the investment advisory business, 235 00:15:19,044 --> 00:15:21,546 and Bernie wouldn't talk to them about it. 236 00:15:23,256 --> 00:15:27,344 There was this line that Bernie had drawn 237 00:15:27,427 --> 00:15:31,723 that separated the boys from what he was doing on 17. 238 00:15:33,517 --> 00:15:37,437 As far as I know, Mark and Andy weren't allowed on the 17th floor, 239 00:15:38,480 --> 00:15:40,148 and it really bothered them. 240 00:15:41,191 --> 00:15:45,320 I remember thinking how kind of strange it was 241 00:15:45,404 --> 00:15:49,658 that he would seem more interested in pulling Frank in 242 00:15:49,741 --> 00:15:51,702 than he was his own sons. 243 00:15:54,413 --> 00:15:56,081 Bernie basically told them, 244 00:15:56,164 --> 00:15:59,668 "I'll manage my side of the business. You manage yours. Mind your business." 245 00:16:00,377 --> 00:16:03,046 Even his own sons couldn't question him. 246 00:16:11,013 --> 00:16:13,056 Since at least the late 1800s, 247 00:16:13,140 --> 00:16:17,894 the sign of real success on Wall Street and in the world of finance in New York, 248 00:16:17,978 --> 00:16:20,939 was to be able to play golf all winter. 249 00:16:21,023 --> 00:16:23,358 To go somewhere where it was warm and sunny, 250 00:16:24,192 --> 00:16:26,820 to get away from the New York slush. 251 00:16:27,988 --> 00:16:31,825 Bernie and Ruth set their sights on Palm Beach, 252 00:16:31,908 --> 00:16:35,412 which was one of the most exclusive enclaves 253 00:16:35,495 --> 00:16:37,622 along the eastern coast of Florida. 254 00:16:38,707 --> 00:16:41,418 They purchased a home there 255 00:16:41,501 --> 00:16:46,631 and began to participate in the seasonal social life of Palm Beach. 256 00:16:46,715 --> 00:16:51,053 And Bernie and Ruth were accepted as members to the Palm Beach Country Club. 257 00:16:52,179 --> 00:16:57,809 The Palm Beach Country Club, unlike a few competing clubs of longer standing, 258 00:16:57,893 --> 00:17:00,270 was open to both Jews and non-Jews. 259 00:17:00,979 --> 00:17:05,025 Most of the Jewish families turned there for their country club membership. 260 00:17:06,359 --> 00:17:07,861 I had many congregants 261 00:17:07,944 --> 00:17:10,781 who were members of the Palm Beach Country Club. 262 00:17:12,032 --> 00:17:17,454 I came to America after being a dissident, or what we used to call refusenik. 263 00:17:18,246 --> 00:17:20,540 I'm originally from the former Soviet Union. 264 00:17:21,291 --> 00:17:24,920 When I applied for the position to be the rabbi of Temple Emanu-El, 265 00:17:25,003 --> 00:17:27,422 they said, "Rabbi, do you own a tuxedo?" 266 00:17:27,506 --> 00:17:31,718 I said, "What? I rented a tuxedo a couple of times in my life." 267 00:17:31,802 --> 00:17:34,971 They said "No, no, no, you will need at least one tuxedo, 268 00:17:35,055 --> 00:17:37,390 because you will go to a lot of fundraising events." 269 00:17:38,225 --> 00:17:44,898 Because Palm Beach is one of the major capitals of fundraising in the world, 270 00:17:44,981 --> 00:17:46,691 including Jewish causes. 271 00:17:47,901 --> 00:17:49,236 From what I understand, 272 00:17:49,319 --> 00:17:53,782 to join the club, you have to show your charitable contributions, 273 00:17:53,865 --> 00:17:57,536 in addition to the $300,000, which you will never see. 274 00:17:57,619 --> 00:18:00,997 This is just to join, to show, "Yes, I believe in this club." 275 00:18:01,081 --> 00:18:05,252 So, fundraising is a very important part of life in Palm Beach, 276 00:18:05,335 --> 00:18:09,131 and that probably is the reason why he ended up here. 277 00:18:09,923 --> 00:18:14,427 It is an interesting question. Why did Bernie Madoff pick Palm Beach? 278 00:18:14,511 --> 00:18:16,805 He did not go to Silicon Valley. 279 00:18:16,888 --> 00:18:19,975 He did not go to Bedford, New York or Scarsdale. 280 00:18:20,058 --> 00:18:23,937 Because in Palm Beach, Jews are allowed only in one club, 281 00:18:24,563 --> 00:18:26,523 and this is where Madoff discovered 282 00:18:26,606 --> 00:18:31,611 that this is a very easy way for him to get new investors. 283 00:18:31,695 --> 00:18:33,488 Make it very exclusive. 284 00:18:33,572 --> 00:18:37,659 And from what I remember, people said, "It's impossible to get in." 285 00:18:38,326 --> 00:18:41,288 Somebody would come and say, "I want to invest a million dollars." 286 00:18:41,371 --> 00:18:42,289 He says, "No." 287 00:18:42,372 --> 00:18:44,166 He would turn people down. 288 00:18:44,249 --> 00:18:46,251 He created this excitement 289 00:18:46,334 --> 00:18:49,713 that you had to go through somebody who knows somebody who knows somebody, 290 00:18:49,796 --> 00:18:51,798 maybe he will take your money. 291 00:18:51,882 --> 00:18:55,385 He did you a favor to take your five million dollars. 292 00:18:55,468 --> 00:18:56,511 He was brilliant. 293 00:18:59,431 --> 00:19:02,809 Did you solicit new investment advisory customers? 294 00:19:02,893 --> 00:19:05,020 -No.  Why not? 295 00:19:05,604 --> 00:19:07,814 Because the firm was in a position 296 00:19:07,898 --> 00:19:10,442 that we were always turning away investors. 297 00:19:10,525 --> 00:19:14,237 We never, uh, never solicited new monies coming in. 298 00:19:14,988 --> 00:19:18,575 As a matter of fact, we tried to return monies at times, 299 00:19:18,658 --> 00:19:21,244 but met resistance with clients. 300 00:19:28,001 --> 00:19:32,172 My father invested all of his money with Bernie Madoff. 301 00:19:32,923 --> 00:19:35,759 He was so impressed by Bernie Madoff. 302 00:19:35,842 --> 00:19:37,928 I mean, really, really impressed. 303 00:19:38,011 --> 00:19:43,099 The dream of Jewish people like my father 304 00:19:43,183 --> 00:19:48,605 was to earn money, invest it and live off the interest. 305 00:19:50,148 --> 00:19:54,194 Originally, it was just my father, my mother, sister and myself, 306 00:19:54,277 --> 00:19:56,112 put a certain amount of money in, 307 00:19:56,196 --> 00:19:57,906 got a return the next quarter. 308 00:19:59,157 --> 00:20:02,994 My father said, "Okay, let's put another investment in." 309 00:20:03,078 --> 00:20:06,748 And now we included my brother-in-law and my wife. 310 00:20:06,831 --> 00:20:10,710 And by the time 2008 rolled around, 311 00:20:10,794 --> 00:20:12,921 my kids were in it, 312 00:20:13,004 --> 00:20:14,714 my nieces and nephews were in it, 313 00:20:14,798 --> 00:20:16,049 and some of their kids. 314 00:20:16,132 --> 00:20:18,593 So this was my father's pride and joy. 315 00:20:18,677 --> 00:20:22,264 It was a legacy for him to provide to his family, 316 00:20:22,347 --> 00:20:24,975 and he was extremely proud of it. 317 00:20:27,560 --> 00:20:32,482 My father, he had a stack of statements 318 00:20:33,358 --> 00:20:36,820 from this Bernie Madoff company, 319 00:20:36,903 --> 00:20:39,781 and he says, "Look at this, look at how much you're making." 320 00:20:39,864 --> 00:20:42,325 He says, "This guy is brilliant." 321 00:20:43,827 --> 00:20:47,831 And I said, "Dad, I don't understand this." 322 00:20:47,914 --> 00:20:53,211 "How come everybody else is getting 8%, 7%, 323 00:20:53,295 --> 00:20:55,088 and you're getting 15?" 324 00:20:56,631 --> 00:20:57,924 And he said, 325 00:20:59,384 --> 00:21:00,677 the typical, 326 00:21:01,678 --> 00:21:04,389 "Don't worry your pretty little head." 327 00:21:06,016 --> 00:21:10,103 A lot of his procedures and methods struck me as odd. 328 00:21:11,479 --> 00:21:14,441 When he supposedly bought stock at all these companies, 329 00:21:14,524 --> 00:21:17,694 we wouldn't get confirmations for maybe two, three weeks afterwards. 330 00:21:18,361 --> 00:21:22,490 We didn't question it, but we certainly didn't get it in a timely fashion. 331 00:21:22,574 --> 00:21:25,452 And it was very difficult to communicate with them. 332 00:21:25,535 --> 00:21:29,664 Basically, one of the rules we learned early on was 333 00:21:29,748 --> 00:21:31,583 he was pretty much the Soup Nazi. 334 00:21:31,666 --> 00:21:33,918 Excuse me, I-I-I think you forgot my bread. 335 00:21:34,002 --> 00:21:35,879 -You want bread? -Yes, please. 336 00:21:35,962 --> 00:21:36,838 Three dollars! 337 00:21:38,340 --> 00:21:39,883 -What? -No soup for you! 338 00:21:42,969 --> 00:21:44,971 "You're asking too many questions? No soup for you." 339 00:21:45,055 --> 00:21:47,515 "I'm gonna send your check back." That's exactly the way it was. 340 00:21:49,100 --> 00:21:50,685 Customers would never call me 341 00:21:50,769 --> 00:21:52,979 and ask me to discuss their statement with them. 342 00:21:53,063 --> 00:21:56,691 It was not something that I would discuss with the customer. 343 00:21:56,775 --> 00:21:59,861 If they called me up and said to me, "I want my money back," 344 00:21:59,944 --> 00:22:03,698 I would say to them, "If you force me to sell it out, I'll sell it out." 345 00:22:03,782 --> 00:22:06,076 "I'm sending your money back, don't come back." 346 00:22:06,159 --> 00:22:07,786 People said, "Oh no, no, no, that's okay." 347 00:22:07,869 --> 00:22:10,663 "Whatever you're doing is fine. Just keep it going." 348 00:22:10,747 --> 00:22:15,502 So, they were buying into something that had a track record. 349 00:22:15,585 --> 00:22:19,547 It was five, 10, 15, 20 years going when they got involved. 350 00:22:19,631 --> 00:22:21,424 So what's there to doubt? 351 00:22:21,966 --> 00:22:25,595 Did people trust him more because he was Jewish? 352 00:22:25,678 --> 00:22:29,391 Yes. Perhaps there is an element of, "Oh, he's one of us." 353 00:22:29,474 --> 00:22:33,478 "He's a contributing member of the society, of the community." 354 00:22:36,648 --> 00:22:39,401 But we need to know Jewish history. 355 00:22:39,943 --> 00:22:43,905 Jewish people were not welcome in most places on Earth, 356 00:22:44,531 --> 00:22:46,574 and especially in Palm Beach. 357 00:22:47,367 --> 00:22:48,576 For many years, 358 00:22:48,660 --> 00:22:50,370 it was impossible to buy a house, 359 00:22:50,453 --> 00:22:53,206 it was impossible to get into any of the clubs, 360 00:22:53,289 --> 00:22:59,129 even famous hotels, until 1960s, '65, I think. 361 00:22:59,212 --> 00:23:03,258 There was a sign there, "No Jews, no dogs." 362 00:23:04,592 --> 00:23:07,512 It wasn't a religious thing, it was a social thing 363 00:23:07,595 --> 00:23:12,350 that the Jewish community learned to build a wall around themselves. 364 00:23:12,434 --> 00:23:14,894 They weren't against other people, 365 00:23:14,978 --> 00:23:17,689 they just didn't trust them that they'd be treated fairly. 366 00:23:22,068 --> 00:23:26,197 They trusted Bernie because everybody they knew trusted Bernie. 367 00:23:26,281 --> 00:23:31,995 And it was inconceivable to them that one of their own would defraud them. 368 00:23:37,333 --> 00:23:40,128 I remember one time the receptionist called me up. 369 00:23:40,211 --> 00:23:43,715 She says, "You're not gonna believe this." A couple of elderly women came in, 370 00:23:43,798 --> 00:23:46,676 and they wanted to meet Bernie, and he came out, 371 00:23:46,759 --> 00:23:49,095 and she says, "You'd think they met a movie star." 372 00:23:50,013 --> 00:23:52,682 Some of these elderly people could be very sweet. 373 00:23:52,765 --> 00:23:54,767 You know, I guess he was like… 374 00:23:55,685 --> 00:23:57,395 He could be their Jewish son. 375 00:23:57,479 --> 00:23:59,981 He was taking care of them, investing their money. 376 00:24:00,732 --> 00:24:02,025 They admired him. 377 00:24:02,901 --> 00:24:03,776 I did. 378 00:24:06,362 --> 00:24:08,823 You had people who were wealthy, 379 00:24:08,907 --> 00:24:11,534 and people who weren't and it was their life savings, 380 00:24:11,618 --> 00:24:15,413 but it wasn't necessarily just Jewish people, it was everybody. 381 00:24:17,749 --> 00:24:23,838 By this point, Bernie's investment advisory business has grown, 382 00:24:23,922 --> 00:24:27,759 word-of-mouth, largely, grown and grown and grown. 383 00:24:27,842 --> 00:24:31,888 So, Bernie is collecting names, 384 00:24:31,971 --> 00:24:34,974 moving in more significant circles. 385 00:24:35,058 --> 00:24:39,896 That allows him to really tap into this burgeoning world of hedge funds. 386 00:24:40,480 --> 00:24:45,652 Now, the original name for hedge funds was "hedged funds." 387 00:24:45,735 --> 00:24:47,946 And a fund that was hedged was simply a fund 388 00:24:48,029 --> 00:24:51,032 that wasn't betting on everything just going up. 389 00:24:51,115 --> 00:24:54,369 It had taken stakes in the market if prices went down. 390 00:24:54,452 --> 00:24:56,913 So, you've hedged your bets. 391 00:24:57,789 --> 00:25:00,333 Hedge funds had been around for a long time, 392 00:25:00,416 --> 00:25:03,795 but through the '80s and into the '90s, 393 00:25:03,878 --> 00:25:06,714 there's a sea change in the world of retail investors. 394 00:25:07,340 --> 00:25:12,053 This is when Silicon Valley startups are starting to be so attractive, 395 00:25:12,136 --> 00:25:14,847 when professional mutual fund managers are saying, 396 00:25:14,931 --> 00:25:17,976 "You know, I can make a lot more money running a hedge fund." 397 00:25:18,059 --> 00:25:20,979 However, as they became more popular, 398 00:25:21,062 --> 00:25:25,775 as every Tom, Dick, and Harry decided he could be a hedge fund manager too, 399 00:25:25,858 --> 00:25:29,529 this original, classic strategy of hedging your bets 400 00:25:29,612 --> 00:25:31,155 was thrown out the window. 401 00:25:31,239 --> 00:25:34,659 They were simply collecting money in a pool 402 00:25:35,410 --> 00:25:38,288 and investing it with somebody like Bernie Madoff. 403 00:25:44,627 --> 00:25:49,674 Jeffrey Tucker, who was a former SEC regulator, 404 00:25:50,258 --> 00:25:52,010 and Walter Noel, 405 00:25:52,093 --> 00:25:57,140 a classic prep-school-bred aristocrat on Wall Street, 406 00:25:57,223 --> 00:26:00,852 had teamed up to form Fairfield Greenwich, a hedge fund. 407 00:26:01,519 --> 00:26:06,232 And Jeffrey Tucker's, um, father-in-law, knew Madoff, 408 00:26:07,567 --> 00:26:09,360 and made the introduction. 409 00:26:09,444 --> 00:26:13,906 So, Walter Noel, Jeffrey Tucker, they go to visit Bernie, 410 00:26:15,033 --> 00:26:17,660 and Bernie's right-hand man, Frank DiPascali. 411 00:26:20,455 --> 00:26:25,918 Madoff explains his split-strike conversion strategy to them. 412 00:26:26,544 --> 00:26:31,257 But in the parlance of Wall Street, it was simply called a bull spread. 413 00:26:31,341 --> 00:26:35,386 It was a strategy that you use to ride a bull market up, 414 00:26:35,470 --> 00:26:38,931 but to put a floor under your losses 415 00:26:39,015 --> 00:26:41,726 so that you wouldn't lose too much. 416 00:26:42,769 --> 00:26:45,772 And that's what Bernie started to market. 417 00:26:47,273 --> 00:26:49,942 Bernie deliberately made it seem complex, 418 00:26:50,026 --> 00:26:54,364 but it seemed to give them what they wanted from Bernie: 419 00:26:55,114 --> 00:26:57,158 consistent returns. 420 00:26:59,285 --> 00:27:01,913 But what really appeals to them 421 00:27:02,789 --> 00:27:07,335 is something they'd never seen before in the burgeoning world of hedge funds: 422 00:27:07,418 --> 00:27:10,088 the fee structure was luscious. 423 00:27:10,171 --> 00:27:12,882 The rule was 2 and 20. 424 00:27:12,965 --> 00:27:15,259 The manager, that is, Fairfield Greenwich, 425 00:27:15,343 --> 00:27:20,014 would get 2% of all the assets invested, just right off the top. 426 00:27:20,098 --> 00:27:24,185 That's their annual fee for managing your money. 427 00:27:24,268 --> 00:27:29,107 And then, they would get 20% of the profits they made for you. 428 00:27:29,190 --> 00:27:32,402 In a normal world with a normal money manager, 429 00:27:32,485 --> 00:27:37,281 Walter Noel and Jeffrey Tucker would have to split their fee, 430 00:27:37,365 --> 00:27:41,244 the fee they collected from their investors, with Madoff. 431 00:27:42,286 --> 00:27:44,455 But Madoff doesn't require that. 432 00:27:45,039 --> 00:27:48,501 Madoff lets them keep the entire fee 433 00:27:48,584 --> 00:27:51,170 without paying him anything but commissions 434 00:27:51,254 --> 00:27:53,923 on the trades he's supposedly making for them. 435 00:27:54,507 --> 00:27:58,636 To call this unusual would be a vast understatement. 436 00:27:59,178 --> 00:28:01,013 It was unprecedented. 437 00:28:01,514 --> 00:28:04,809 It was the most attractive deal 438 00:28:04,892 --> 00:28:07,729 a hedge fund manager could find on the planet. 439 00:28:09,564 --> 00:28:14,068 Now, to give him credit, Jeffrey Tucker asks questions. 440 00:28:14,694 --> 00:28:16,446 He's the due diligence guy. 441 00:28:18,197 --> 00:28:24,996 But, at this point, Bernie firmly adopts the strategy that will serve him so well. 442 00:28:26,164 --> 00:28:30,084 "If you've got all those questions, maybe you should take your money out." 443 00:28:30,835 --> 00:28:32,837 "You know, I don't have time for this." 444 00:28:34,422 --> 00:28:38,718 And so, Fairfield Greenwich decided to invest with Bernie Madoff. 445 00:28:39,844 --> 00:28:45,433 Fairfield Greenwich was really Bernie's first big hedge fund client. 446 00:28:49,145 --> 00:28:53,566 I worked for Fairfield Greenwich Group founder Walter Noel 447 00:28:53,649 --> 00:28:56,277 from 1987 to 1998. 448 00:28:57,904 --> 00:29:02,533 I think that Walter Noel and his family were very pretentious. 449 00:29:03,034 --> 00:29:04,911 When Walter first started out, 450 00:29:04,994 --> 00:29:09,457 he tried to pretend that he was rich because they wanted to be in high society. 451 00:29:13,419 --> 00:29:16,339 I heard that he would refinance his mortgage constantly. 452 00:29:17,215 --> 00:29:22,220 He would rent out his house to help defray the expenses of a vacation in Europe. 453 00:29:22,303 --> 00:29:24,806 He did his own lawn for a while. 454 00:29:26,098 --> 00:29:30,228 And his mother-in-law was giving his wife some money to help her each month. 455 00:29:31,395 --> 00:29:34,148 But Walter was very good at selling himself. 456 00:29:34,732 --> 00:29:36,984 He lived an aspirational lifestyle. 457 00:29:37,819 --> 00:29:41,989 So, he made sure that he was at the right clubs and he was very gregarious 458 00:29:42,073 --> 00:29:44,742 and was very much into networking with people. 459 00:29:45,243 --> 00:29:49,664 I thought, "Well, okay, that's kind of harmless, because so what?" 460 00:29:50,456 --> 00:29:53,000 Then Bernie Madoff came on the scene, 461 00:29:53,084 --> 00:29:56,087 and that's when things just exploded. 462 00:29:56,170 --> 00:29:58,673 It was like finding the goose that laid the golden egg. 463 00:30:00,091 --> 00:30:05,304 The money started to really roll in very quickly, and a lot of it. 464 00:30:05,388 --> 00:30:09,016 And he stopped mowing his own lawn. He stopped renting his house out. 465 00:30:12,979 --> 00:30:18,109 Bernie experienced this avalanche of cash flowing in 466 00:30:18,192 --> 00:30:19,777 from the hedge fund world. 467 00:30:20,486 --> 00:30:23,531 Part of that was just the curious and glamorous structure 468 00:30:23,614 --> 00:30:25,074 of the Walter Noel family. 469 00:30:26,158 --> 00:30:28,494 He had five gorgeous daughters. 470 00:30:29,078 --> 00:30:32,498 Each of them seemed to marry into the moneyed aristocracy 471 00:30:32,582 --> 00:30:34,750 of a different part of the globe. 472 00:30:35,585 --> 00:30:38,754 One married a Latin American heir, 473 00:30:38,838 --> 00:30:41,465 another married a Swiss investor 474 00:30:41,549 --> 00:30:44,302 who had great ties in Latin America and the Middle East. 475 00:30:45,720 --> 00:30:50,308 So, with Fairfield Greenwich and all of these sons-in-law, 476 00:30:50,391 --> 00:30:53,686 Bernie had, like, instant global credibility 477 00:30:53,769 --> 00:30:57,607 and access to global cash. 478 00:30:59,817 --> 00:31:02,403 It took me a long time to understand 479 00:31:02,486 --> 00:31:05,615 what was so special about Bernie Madoff's trades. 480 00:31:07,617 --> 00:31:12,872 And then one of Walter's clients wanted to see what stocks were in that portfolio. 481 00:31:12,955 --> 00:31:15,374 So, he hands me seven pages 482 00:31:15,458 --> 00:31:18,419 that were printed on a dot matrix printer, 483 00:31:19,253 --> 00:31:23,007 on thin paper and in very poor quality ink. 484 00:31:23,090 --> 00:31:26,135 And I thought to myself, "What a schlock operation." 485 00:31:26,218 --> 00:31:29,055 I mean, it looked like he was working out of his basement 486 00:31:29,138 --> 00:31:31,515 with cinder block walls. 487 00:31:31,599 --> 00:31:33,601 This was not the way a statement looks, 488 00:31:33,684 --> 00:31:36,228 because every statement from a bank, 489 00:31:36,312 --> 00:31:38,981 from a brokerage house, from a credit union, 490 00:31:39,065 --> 00:31:42,944 is on premium paper, and it's got a nice, big, color logo, 491 00:31:43,027 --> 00:31:46,530 and it's got a lot of fine print, and it's got a phone number where to call 492 00:31:46,614 --> 00:31:49,450 if there's a problem or if you have a question. 493 00:31:49,533 --> 00:31:51,535 Bernie Madoff statements had none of that. 494 00:31:55,039 --> 00:31:57,375 Hedge funds are important to Madoff's Ponzi scheme 495 00:31:57,458 --> 00:31:59,669 because it was a way to funnel money in. 496 00:31:59,752 --> 00:32:02,797 So, the hedge funds were basically feeder funds, 497 00:32:02,880 --> 00:32:05,424 collecting money from other investors, 498 00:32:05,508 --> 00:32:09,512 and then they would put that money in, on behalf of those investors, into Madoff. 499 00:32:10,262 --> 00:32:14,517 And so the question then is how many of these feeder funds were complicit, 500 00:32:14,600 --> 00:32:16,477 or whether they turned a blind eye 501 00:32:16,560 --> 00:32:18,688 and just stuck their head in the sand and said, 502 00:32:18,771 --> 00:32:22,400 "Look, as long as I'm getting the returns, I'm not gonna ask any more questions." 503 00:32:22,483 --> 00:32:25,903 But you certainly have to question, you know, 504 00:32:25,987 --> 00:32:30,032 what was going through their mind at that point, uh, 505 00:32:30,116 --> 00:32:32,118 when they invested with Bernie Madoff. 506 00:32:35,246 --> 00:32:39,750 So, Mr. Madoff promised some of the larger individual clients 507 00:32:39,834 --> 00:32:41,460 a higher rate of return. 508 00:32:41,544 --> 00:32:44,588 Those were kind of the big four, so to speak. 509 00:32:45,297 --> 00:32:50,011 You had agreements with Norman Levy, Carl Shapiro… 510 00:32:50,094 --> 00:32:50,928 Right. 511 00:32:51,595 --> 00:32:53,931 With Jeffry Picower? -Yes. 512 00:32:54,015 --> 00:32:55,891 -And Stanley Chais? -Right. 513 00:32:55,975 --> 00:33:00,104 I had a very special relationship with the big four clients, all right? 514 00:33:00,187 --> 00:33:02,273 Picower was a little bit different. 515 00:33:03,065 --> 00:33:08,821 I asked Madoff whether he thought anybody among his big investors 516 00:33:08,904 --> 00:33:10,573 knew what he was doing. 517 00:33:10,656 --> 00:33:15,244 And the one name he came up with was Picower. 518 00:33:15,327 --> 00:33:17,538 He said, "I think he knew." 519 00:33:17,621 --> 00:33:20,916 "We never discussed it. Never confronted one another." 520 00:33:23,419 --> 00:33:27,048 Jeffry Picower was a longtime client of Mr. Madoff's, 521 00:33:27,798 --> 00:33:29,967 dating back over 30 years. 522 00:33:30,051 --> 00:33:32,303 He was a lawyer, he was an accountant, 523 00:33:32,386 --> 00:33:35,056 who started his career selling tax shelters. 524 00:33:35,639 --> 00:33:38,142 Picower is kind of this shadowy figure. 525 00:33:38,684 --> 00:33:43,230 He invested north of $600 million in his Madoff account, 526 00:33:43,856 --> 00:33:50,696 and then between 1998 and 2003, Picower begins drawing money out. 527 00:33:51,989 --> 00:33:57,828 And the amount of money that he was taking out was really quite staggering. 528 00:33:57,912 --> 00:34:00,664 Hundreds of millions of dollars at a time. 529 00:34:00,748 --> 00:34:03,501 A billion dollars in one particular year. 530 00:34:04,585 --> 00:34:08,297 It had to have been very difficult for Bernie to deal with. 531 00:34:08,380 --> 00:34:12,426 He had to raise the money to cover Picower's withdrawals. In fact, 532 00:34:12,510 --> 00:34:17,348 at one point, virtually all the money that Fairfield Greenwich, the feeder fund, 533 00:34:17,431 --> 00:34:19,100 was steering into Bernie's hands, 534 00:34:19,183 --> 00:34:22,770 Bernie was turning around and paying out to Jeffry Picower. 535 00:34:24,313 --> 00:34:27,483 If you look at the entire length of their relationship, 536 00:34:27,566 --> 00:34:33,364 Picower took out $7 billion from Bernie's investment advisory business. 537 00:34:33,906 --> 00:34:36,951 And yet Bernie becomes totally dependent on Picower, 538 00:34:37,034 --> 00:34:40,996 because while Picower was extracting billions of dollars, 539 00:34:41,080 --> 00:34:45,084 he also puts money in, even if it's just for a brief period of time, 540 00:34:45,167 --> 00:34:49,171 when the Ponzi's threatened by periodic cash crunches, 541 00:34:49,255 --> 00:34:52,049 bailing Madoff out when he needed to be bailed out. 542 00:34:52,883 --> 00:34:56,804 And as a result, Picower comes to have the power to extort Bernie. 543 00:34:58,305 --> 00:35:00,724 He's both Bernie's savior, if you will, 544 00:35:00,808 --> 00:35:03,978 and Bernie's deep, enraging enemy, 545 00:35:04,520 --> 00:35:07,148 because Bernie, as the ultimate control freak, 546 00:35:07,231 --> 00:35:10,109 has allowed somebody to basically control him. 547 00:35:11,193 --> 00:35:16,323 For instance, while Picower was taking real gains in cash out of the business, 548 00:35:17,116 --> 00:35:20,494 he would call in fake losses to Annette Bongiorno, 549 00:35:21,245 --> 00:35:23,497 and literally would say, "I need losses." 550 00:35:23,581 --> 00:35:26,208 "It's the end of the year. I don't want to report gains," 551 00:35:26,792 --> 00:35:29,628 and then have fictitious losses made 552 00:35:29,712 --> 00:35:33,382 so he didn't have to pay taxes on that money that he was taking out. 553 00:35:35,384 --> 00:35:36,427 I asked Bernie, 554 00:35:36,510 --> 00:35:40,431 "Why would you let yourself be at the mercy of this guy?" 555 00:35:41,515 --> 00:35:44,935 He basically said, "Jim, you've heard the expression, 556 00:35:45,019 --> 00:35:48,022 'keep your friends close and your enemies closer.'" 557 00:35:50,316 --> 00:35:52,693 Bernie's own suspicion was 558 00:35:52,776 --> 00:35:55,779 that Jeffry Picower had twigged to what he was doing, 559 00:35:55,863 --> 00:35:59,200 understood that Bernie couldn't say no to him, 560 00:35:59,283 --> 00:36:03,287 and was going to milk his Madoff account for everything he could. 561 00:36:03,370 --> 00:36:06,665 And indeed, no one made more money, 562 00:36:06,749 --> 00:36:10,461 no one got richer from the Madoff Ponzi scheme, 563 00:36:10,544 --> 00:36:13,130 than Jeffry Picower did, not even Madoff. 564 00:36:15,674 --> 00:36:20,888 I admitted to doing enough things that were totally embarrassing and wrong 565 00:36:20,971 --> 00:36:22,306 that I regret, 566 00:36:22,389 --> 00:36:24,808 but this was my own doing. 567 00:36:25,517 --> 00:36:27,269 No one had a gun to my head. 568 00:36:28,187 --> 00:36:31,190 You had to understand, unless you knew me 569 00:36:31,273 --> 00:36:33,901 and you know my relationship with these people, 570 00:36:33,984 --> 00:36:37,947 my four big clients, being the greedy people that they were, 571 00:36:38,030 --> 00:36:40,032 never wanted to close out the transaction. 572 00:36:46,247 --> 00:36:47,665 I'm a reporter. 573 00:36:47,748 --> 00:36:50,918 Been covering business since the 1990s, 574 00:36:51,001 --> 00:36:55,714 and I came to work at Barron's Magazine in 2000, 575 00:36:55,798 --> 00:36:59,385 and I wanted to start writing more about hedge funds, 576 00:36:59,468 --> 00:37:03,764 which were not as big of a deal as they are today. 577 00:37:04,807 --> 00:37:10,020 And one day, I got a phone call from a guy who was a very good source of mine. 578 00:37:10,104 --> 00:37:12,856 He said, "You should write about Bernie Madoff's hedge fund." 579 00:37:12,940 --> 00:37:14,275 "It never loses money." 580 00:37:14,984 --> 00:37:17,861 And that made me prick up my ears, 581 00:37:17,945 --> 00:37:21,156 because never in history had there been a hedge fund 582 00:37:21,240 --> 00:37:23,701 -that never lost money on Wall Street. 583 00:37:23,784 --> 00:37:25,035 Online companies 584 00:37:25,119 --> 00:37:27,663 were among the biggest losers on Wall Street this past week. 585 00:37:27,746 --> 00:37:30,165 And the carnage is just beginning. 586 00:37:30,249 --> 00:37:35,170 Former high-flyers that once fetched $30, $40, $50 a share 587 00:37:35,254 --> 00:37:36,964 can now be had for a few bucks. 588 00:37:37,798 --> 00:37:39,633 In the early 2000s, 589 00:37:39,717 --> 00:37:43,470 the dot-com bubble had just burst. 590 00:37:43,554 --> 00:37:46,724 So, the stock market was cratering. 591 00:37:47,266 --> 00:37:48,892 At the same time, 592 00:37:49,435 --> 00:37:53,856 Bernie Madoff's hedge fund was apparently consistently making money, 593 00:37:55,024 --> 00:37:56,650 which was also strange. 594 00:37:56,734 --> 00:38:01,613 Why would his particular hedge fund be the only one that was making money? 595 00:38:01,697 --> 00:38:05,659 So, I wanted to find out more about Madoff's hedge fund. 596 00:38:07,411 --> 00:38:09,246 As part of my research, 597 00:38:09,330 --> 00:38:14,084 we found an offering document for Fairfield Greenwich. 598 00:38:14,168 --> 00:38:16,211 An offering document is really just 599 00:38:16,295 --> 00:38:18,922 a prospectus or an investment pitch 600 00:38:19,006 --> 00:38:22,009 that a fund gives to potential clients 601 00:38:22,885 --> 00:38:25,012 that explains a trading strategy. 602 00:38:25,888 --> 00:38:29,266 So, in the spring of 2001, 603 00:38:29,350 --> 00:38:32,519 at that time you could actually go to the Exchange 604 00:38:32,603 --> 00:38:34,688 and go down onto the trading floor, 605 00:38:34,772 --> 00:38:38,525 and I would interview traders and say, "Have you heard of this guy?" 606 00:38:38,609 --> 00:38:41,570 "Has anyone done business with this billion-dollar hedge fund 607 00:38:41,653 --> 00:38:43,030 run by Bernie Madoff?" 608 00:38:43,113 --> 00:38:48,285 And the strange part was that nobody had done any trading with them. 609 00:38:49,078 --> 00:38:53,123 And I started asking private banks, 610 00:38:53,832 --> 00:38:57,795 "Hey, do you have any wealthy people who invest in this hedge fund?" 611 00:38:57,878 --> 00:38:59,505 And over the course of it, 612 00:39:00,047 --> 00:39:02,758 I started noticing some very strange things. 613 00:39:02,841 --> 00:39:09,807 So, for instance, when I interviewed some clients of a private bank, they said, 614 00:39:10,349 --> 00:39:13,602 "You know, we have been told we can invest in Bernie's hedge fund, 615 00:39:13,685 --> 00:39:15,896 but we can't tell anyone he's our money manager." 616 00:39:15,979 --> 00:39:19,858 It's a red flag when your money manager tells you, 617 00:39:19,942 --> 00:39:22,778 "Don't tell anyone I'm running your money," because 618 00:39:22,861 --> 00:39:26,073 most portfolio managers want to crow about their returns. 619 00:39:27,741 --> 00:39:32,788 I went to lunch with somebody who worked at Merrill Lynch, 620 00:39:33,288 --> 00:39:38,836 and he was kind of a banker to the wealthy, and he said, 621 00:39:38,919 --> 00:39:42,297 "I can't look at the books, I can't do any due diligence." 622 00:39:42,798 --> 00:39:46,009 "However, if I tell my clients 623 00:39:46,093 --> 00:39:49,930 that I want to pull them out of Madoff's fund, 624 00:39:50,013 --> 00:39:51,098 they're gonna fire me." 625 00:39:51,181 --> 00:39:54,268 This scenario was repeated over and over and over. 626 00:39:55,727 --> 00:40:00,149 As part of my reporting, I also called Fairfield Greenwich, 627 00:40:00,232 --> 00:40:02,151 and I spoke with Jeffrey Tucker. 628 00:40:02,860 --> 00:40:05,821 And he dismissed me and said, 629 00:40:05,904 --> 00:40:07,948 "There's no reason why you should be writing a story." 630 00:40:08,031 --> 00:40:09,283 "This is a private fund." 631 00:40:09,366 --> 00:40:13,120 "It's not open to retail or mom-and-pop investors." 632 00:40:13,203 --> 00:40:17,291 And Barron's is very much a magazine read by the public. 633 00:40:18,292 --> 00:40:22,504 But some investors avoided Madoff. 634 00:40:22,588 --> 00:40:24,298 For instance, Goldman Sachs, 635 00:40:24,381 --> 00:40:26,091 Salomon Brothers. 636 00:40:26,175 --> 00:40:28,677 They refused to do business with Madoff. 637 00:40:28,760 --> 00:40:32,347 They said, "We can't figure this out. There's something weird about this." 638 00:40:33,515 --> 00:40:39,021 So my expectation was that it would be easy to get an interview with Bernie 639 00:40:39,104 --> 00:40:43,192 because most money managers wanted to be interviewed. 640 00:40:43,275 --> 00:40:46,445 It was considered, you know, kind of a career win 641 00:40:46,528 --> 00:40:49,239 if you were profiled in Barron's Magazine. 642 00:40:53,410 --> 00:40:56,121 But I-- I could not get through to him. 643 00:41:02,294 --> 00:41:05,422 I tried the back door, I tried the front door, uh… 644 00:41:05,506 --> 00:41:08,842 I just could not get the guy to give me an interview. 645 00:41:10,886 --> 00:41:13,305 It was a couple days before publication… 646 00:41:16,308 --> 00:41:17,976 …and I left a message and said, 647 00:41:18,060 --> 00:41:20,979 "We're going to write this story whether you talk to me or not." 648 00:41:28,529 --> 00:41:29,446 And, 649 00:41:30,197 --> 00:41:31,865 bang, he was on the phone. 650 00:41:35,452 --> 00:41:40,165 As I remember it, Bernie Madoff was very smooth. 651 00:41:40,749 --> 00:41:45,754 Seemed surprised that I would be interested in writing about his fund. 652 00:41:46,880 --> 00:41:50,050 He pretty much gave me the brush-off and said, 653 00:41:50,133 --> 00:41:53,637 "I can't tell you about my strategy, it's proprietary." 654 00:41:53,720 --> 00:41:57,349 And kind of patted me on the head and sent me on my way. 655 00:41:58,058 --> 00:42:02,479 And, because I had, really, no answer from him, 656 00:42:02,563 --> 00:42:05,274 so all we could really do was raise questions. 657 00:42:05,774 --> 00:42:07,025 How did he do it? 658 00:42:07,109 --> 00:42:08,819 How did he make money? 659 00:42:08,902 --> 00:42:10,821 You know, what was the strategy? 660 00:42:11,655 --> 00:42:16,660 Why does he tell people not to tell anyone he has a hedge fund? 661 00:42:17,411 --> 00:42:20,289 Why does he give up all this money in fees? 662 00:42:21,790 --> 00:42:25,669 I knew in my gut that there was something not right, 663 00:42:26,962 --> 00:42:29,339 but that was all I had at that point. 664 00:42:44,813 --> 00:42:48,900 After the article came out, it was May of 2001, 665 00:42:48,984 --> 00:42:50,152 I thought, 666 00:42:50,235 --> 00:42:52,195 you know, "Yes! I've won the Pulitzer." 667 00:42:52,279 --> 00:42:55,282 Um, but I didn't get a single phone call. 668 00:42:55,365 --> 00:42:58,410 I thought maybe I'd get an angry, you know, response 669 00:42:58,493 --> 00:43:00,704 from Bernie or his lawyers, 670 00:43:01,705 --> 00:43:03,332 but it was total silence. 671 00:43:05,792 --> 00:43:07,628 What I didn't know was that 672 00:43:07,711 --> 00:43:10,213 Bernie went on to his trading floor 673 00:43:10,297 --> 00:43:12,883 with a copy of my story and said, 674 00:43:12,966 --> 00:43:14,801 "This woman's an idiot." 675 00:43:14,885 --> 00:43:18,639 "I don't want to hear anything about it. It's total baloney, let's move on." 676 00:43:20,932 --> 00:43:22,559 I said to Bernie, 677 00:43:22,643 --> 00:43:26,021 "But it's in the paper. People are going to mention it." 678 00:43:26,104 --> 00:43:28,649 He goes, "We're not discussing this." 679 00:43:29,232 --> 00:43:34,029 Bernie never liked to be associated with any bad publicity. 680 00:43:34,112 --> 00:43:40,911 Any time a reporter called or a piece was written about Bernie, 681 00:43:40,994 --> 00:43:42,579 he'd get very uptight. 682 00:43:47,042 --> 00:43:48,460 That's just the way he was. 683 00:43:48,543 --> 00:43:51,171 In his mind, if we don't discuss it, 684 00:43:52,381 --> 00:43:54,341 it's okay. It's not real. 685 00:43:54,424 --> 00:43:56,843 That's it. No mention of it. 686 00:44:01,890 --> 00:44:04,101 Up until the spring of 2001, 687 00:44:04,184 --> 00:44:09,189 Bernie Madoff had managed to keep his entire investment advisory business 688 00:44:09,272 --> 00:44:12,567 almost completely off the public radar. 689 00:44:12,651 --> 00:44:18,073 He was keeping everything very quiet, very shadowy, very hidden 690 00:44:18,865 --> 00:44:24,162 until the more formidable pages of Barron's Magazine comes out. 691 00:44:24,246 --> 00:44:26,248 Now, it's important to note 692 00:44:26,331 --> 00:44:31,253 that the story did not accuse Bernie Madoff of doing anything illegal, 693 00:44:31,336 --> 00:44:35,549 but it did produce questions among their investors. 694 00:44:38,260 --> 00:44:40,429 After my article came out, 695 00:44:40,512 --> 00:44:45,600 it really spooked Jeffrey Tucker from Fairfield Greenwich. 696 00:44:46,184 --> 00:44:47,728 He started to have doubts. 697 00:44:48,228 --> 00:44:50,230 So he demanded a meeting. 698 00:44:50,731 --> 00:44:54,985 This is a precarious moment for both Jeffrey Tucker and Bernie Madoff, 699 00:44:55,068 --> 00:44:57,863 because they have such a symbiotic relationship. 700 00:44:58,572 --> 00:45:01,950 Tucker and Fairfield Greenwich have invested billions of dollars, 701 00:45:02,033 --> 00:45:06,371 and Bernie is supposedly investing these billions of dollars. 702 00:45:07,414 --> 00:45:10,333 The meeting was an awkward encounter. 703 00:45:10,417 --> 00:45:13,962 "Bernie, I need to talk with you about what's been reported." 704 00:45:14,796 --> 00:45:17,924 It was imperative that he reassure Tucker, 705 00:45:18,884 --> 00:45:21,928 but it's classic Madoff 706 00:45:22,012 --> 00:45:25,056 that he reassured him by appearing not in the least bit worried. 707 00:45:26,224 --> 00:45:30,937 And Bernie has his right-hand man, Frank DiPascali, there with him, 708 00:45:31,021 --> 00:45:34,191 and they show him a paper trade ledger, 709 00:45:34,274 --> 00:45:38,236 showing the different trades that have been made in their account over time. 710 00:45:38,862 --> 00:45:42,240 Well, Jeffrey Tucker, this was not his first rodeo. 711 00:45:42,324 --> 00:45:45,494 He was a former regulator, he was a lawyer. 712 00:45:45,577 --> 00:45:50,832 Anybody can print out a stack of paper that says certain trades have been made. 713 00:45:50,916 --> 00:45:51,833 He needs more. 714 00:45:53,043 --> 00:45:58,381 At which point, Bernie and Frank fire up the computer 715 00:45:58,465 --> 00:46:03,678 and they show him that they have an account with a regulator called DTC, 716 00:46:03,762 --> 00:46:06,014 which is the Depository Trust Company. 717 00:46:06,097 --> 00:46:10,560 This is essentially a bank account for every broker on Wall Street. 718 00:46:10,644 --> 00:46:14,731 They say, "If you really, you know, are worried about where your money is, 719 00:46:14,815 --> 00:46:18,485 just know that we have this account and you can check your portfolio anytime." 720 00:46:19,361 --> 00:46:22,447 "So," Bernie says, "Pick a stock, 721 00:46:22,531 --> 00:46:24,074 pick any one of these trades." 722 00:46:24,157 --> 00:46:26,535 "Which one would you like to check on?" 723 00:46:27,035 --> 00:46:30,622 "Well, check on our trades in AOL." "Sure." 724 00:46:31,331 --> 00:46:33,834 Frank punches a few keys, 725 00:46:33,917 --> 00:46:39,422 up pops what looks like a page of Fairfield Greenwich's transactions in AOL. 726 00:46:40,674 --> 00:46:45,637 Showing exactly the number of shares Jeffrey Tucker expected to find there. 727 00:46:46,680 --> 00:46:51,142 I mean, you could have heard the sigh of relief around the world. 728 00:46:51,226 --> 00:46:52,477 It's all there. 729 00:46:52,561 --> 00:46:54,729 Nothing to worry about. 730 00:46:56,565 --> 00:47:01,069 And he goes away really placated and reassured. 731 00:47:02,571 --> 00:47:04,322 Now in reality, of course, 732 00:47:05,532 --> 00:47:06,533 this was all a sham. 733 00:47:07,868 --> 00:47:12,038 This was a Potemkin village of a DTC account. 734 00:47:12,706 --> 00:47:14,749 Now, what had actually happened is, 735 00:47:14,833 --> 00:47:19,921 Frank DiPascali had hijacked the legitimate clearing house feed 736 00:47:20,005 --> 00:47:23,925 from the legitimate firm upstairs 737 00:47:24,009 --> 00:47:28,763 and had woven fake trades into it 738 00:47:28,847 --> 00:47:33,143 so that he could summon it up, show it to Jeffrey Tucker, 739 00:47:33,226 --> 00:47:37,856 and reassure him that, in fact, his AOL stock was safe and sound. 740 00:47:38,523 --> 00:47:42,277 So he had created a perfect replica. 741 00:47:43,320 --> 00:47:48,033 Madoff and DiPascali really had a remarkable relationship, 742 00:47:48,116 --> 00:47:49,034 in that, 743 00:47:49,826 --> 00:47:53,955 DiPascali was able… to intuit 744 00:47:54,539 --> 00:47:57,500 what Madoff would need 745 00:47:57,584 --> 00:48:02,547 and what Madoff could best use to cover up his fraud. 746 00:48:04,633 --> 00:48:08,053 There was one amazing episode 747 00:48:08,136 --> 00:48:12,891 where an accountant for a fund asks DiPascali 748 00:48:12,974 --> 00:48:16,478 to see the trade ledger for a random date, 749 00:48:16,561 --> 00:48:19,481 and DiPascali says, "Oh sure, sure," 750 00:48:19,981 --> 00:48:22,067 and says, "We need a trade ledger." 751 00:48:23,234 --> 00:48:27,197 Well, his minions there frantically go into action. 752 00:48:27,280 --> 00:48:31,034 They create a fake trade ledger. 753 00:48:31,117 --> 00:48:34,496 It prints off the printer, this huge stack of paper, 754 00:48:34,579 --> 00:48:38,208 but, oh wait, it's too pristine, it's too clean. 755 00:48:38,291 --> 00:48:43,171 They toss that wad of paper around the office like a beach ball 756 00:48:43,254 --> 00:48:47,926 until it looks sufficiently ragged and thumbed and well-used. 757 00:48:48,009 --> 00:48:50,720 But, oh wait, it's hot off the printer. 758 00:48:51,262 --> 00:48:52,639 That's a problem. 759 00:48:52,722 --> 00:48:55,725 So they chill it in the office refrigerator. 760 00:48:56,977 --> 00:49:01,898 And, of course it's completely convincing to the accountant. 761 00:49:01,982 --> 00:49:05,360 So, this kind of stagecraft, you can't call it anything else, 762 00:49:05,443 --> 00:49:08,613 just seemed to fit like a hand into a glove 763 00:49:09,114 --> 00:49:14,119 uh, for what Madoff needed to reassure his investors. 764 00:49:14,202 --> 00:49:17,205 Even before Madoff himself knew what he needed. 765 00:49:19,499 --> 00:49:21,209 "I am standing here today 766 00:49:21,292 --> 00:49:24,129 to say, that from the early 1990s 767 00:49:24,212 --> 00:49:26,423 until December of 2008, 768 00:49:27,215 --> 00:49:30,427 I helped Bernie Madoff and other people 769 00:49:30,510 --> 00:49:33,179 carry out the fraud that hurt thousands of people." 770 00:49:33,930 --> 00:49:37,600 "There was one simple fact that Bernie Madoff knew, 771 00:49:37,684 --> 00:49:40,520 that I knew, and that other people knew, 772 00:49:40,603 --> 00:49:42,772 but that we never told the clients, 773 00:49:42,856 --> 00:49:46,109 nor did we tell the regulators like the SEC." 774 00:49:46,192 --> 00:49:52,407 "No purchases or sales of securities were actually taking place in their accounts." 775 00:49:52,490 --> 00:49:55,326 "It was all fake. It was all fictitious." 776 00:49:55,410 --> 00:49:58,663 "It was wrong, and I knew it was wrong at the time." 777 00:50:08,339 --> 00:50:10,550 This fraud went on for decades. 778 00:50:12,260 --> 00:50:14,137 But without the proper paperwork, 779 00:50:14,220 --> 00:50:16,931 the whole thing would have been exposed very quickly. 780 00:50:17,724 --> 00:50:19,309 Account statements, 781 00:50:20,477 --> 00:50:22,187 trade confirmations, 782 00:50:23,104 --> 00:50:25,732 reports for clients when they wanted a report… 783 00:50:25,815 --> 00:50:28,818 The only way that could be done is through the use of the computer. 784 00:50:30,737 --> 00:50:35,200 And you can't go out and buy software for fictitious trades. 785 00:50:35,283 --> 00:50:38,453 You need to create your own software to make that happen. 786 00:50:40,413 --> 00:50:45,460 So, computer programmers George Perez and Jerry O'Hara were critical 787 00:50:45,543 --> 00:50:48,588 in helping Madoff continue the fraud for so long. 788 00:50:52,717 --> 00:50:56,054 Jerry and George didn't lead the same lifestyles 789 00:50:56,137 --> 00:50:58,556 as the 17th floor staff. 790 00:50:59,724 --> 00:51:01,768 Frank had a two-million-dollar boat. 791 00:51:02,477 --> 00:51:05,730 Jodi had this house on the Jersey Shore. 792 00:51:06,606 --> 00:51:10,485 They didn't have that. They kind of lived pretty modestly. 793 00:51:11,236 --> 00:51:13,613 But they knew what they were doing was wrong. 794 00:51:14,322 --> 00:51:17,492 They know that they're falsifying reports, 795 00:51:17,575 --> 00:51:20,161 and over time, they become uncomfortable with that. 796 00:51:22,747 --> 00:51:26,626 George and Jerry were getting a little nervous that they were gonna be discovered 797 00:51:26,709 --> 00:51:28,753 because they're at risk here. 798 00:51:32,257 --> 00:51:34,884 They start to confront Frank DiPascali, 799 00:51:35,468 --> 00:51:39,430 and it turns into almost a comical blackmail, 800 00:51:39,514 --> 00:51:42,600 because they start saying they need more pay to do this. 801 00:51:43,476 --> 00:51:47,272 And they don't want it to look like there's a sudden bump in pay, 802 00:51:47,355 --> 00:51:49,566 so they ask to be paid in diamonds. 803 00:51:51,526 --> 00:51:54,404 Of which Frank is thinking, "That's fucking nuts." 804 00:51:55,655 --> 00:51:57,824 And they actually put together a note saying, 805 00:51:57,907 --> 00:52:00,326 "We're very concerned with reports we're running, 806 00:52:00,410 --> 00:52:03,496 and we don't know if our lives may be in jeopardy," 807 00:52:04,372 --> 00:52:06,583 and they want to get this on the record. 808 00:52:09,460 --> 00:52:13,840 It says, "I've expressed to my boss, Frank DiPascali, 809 00:52:13,923 --> 00:52:18,219 my unwillingness to work on projects which I am uncomfortable with." 810 00:52:18,761 --> 00:52:23,391 "I don't know how far up the ladder my unwillingness has been communicated, 811 00:52:23,933 --> 00:52:28,062 but it is a matter of short time before it hits the top." 812 00:52:28,146 --> 00:52:31,274 "I fear for my job, my family, my future." 813 00:52:31,774 --> 00:52:33,776 And it's signed George Perez. 814 00:52:39,324 --> 00:52:42,118 Then they confronted Bernie about it. 815 00:52:43,369 --> 00:52:47,123 And Bernie, he didn't, like, bend over backwards and say, 816 00:52:47,207 --> 00:52:49,459 "Oh yeah, you know, okay, yeah, you got me, guys." 817 00:52:49,542 --> 00:52:52,587 "Take whatever you want." He was gonna play hardball with them. 818 00:52:54,839 --> 00:52:57,717 They go into Madoff's office with Frank, 819 00:52:58,384 --> 00:53:01,596 and they basically say they're not comfortable. 820 00:53:01,679 --> 00:53:04,224 "And furthermore, we think you should shut down 821 00:53:04,307 --> 00:53:06,726 the investment advisory business." 822 00:53:06,809 --> 00:53:10,647 Which, of course, drives Bernie into pure bully mode. 823 00:53:14,609 --> 00:53:16,069 He browbeat them. 824 00:53:17,820 --> 00:53:20,949 It's a precarious situation for both sides because 825 00:53:21,032 --> 00:53:24,244 these boys don't deal with Bernie directly day-to-day. 826 00:53:24,327 --> 00:53:26,579 And furthermore, they've just threatened this guy 827 00:53:26,663 --> 00:53:30,375 who is the man that runs the firm and is a legend on Wall Street. 828 00:53:30,458 --> 00:53:32,877 Get the fuck out of my office. Now! 829 00:53:34,879 --> 00:53:39,300 And eventually Madoff negotiated this through Frank, 830 00:53:39,384 --> 00:53:42,303 and, you know, Frank got them some more money. 831 00:53:43,513 --> 00:53:46,975 They ended up with an additional $60,000, 832 00:53:47,058 --> 00:53:50,937 which, in the scope of this whole case, really isn't a lot. 833 00:53:52,981 --> 00:53:56,276 They actually could have extorted Bernie for any amount of money, 834 00:53:56,359 --> 00:53:58,778 most likely, and kept their jobs. 835 00:54:00,154 --> 00:54:04,993 The boys settle for this rather average increase, 836 00:54:05,952 --> 00:54:09,247 and Bernie sort of has yet another narrow escape. 837 00:54:10,081 --> 00:54:11,207 For the time being.