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Guys, we should probably mention,
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AP led with a story a few moments ago.
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Bernie Madoff,
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the architect of the largest
Ponzi scheme in American history,
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died today in prison. He was 82.
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I understand that
when Bernie died, he was cremated.
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Judaism is against cremation.
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We believe very strongly
that our body does not belong to us.
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It belongs to God who gave it to us,
so we're supposed to return it.
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From earth you come,
to the earth you return.
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But then the real twist of the story
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is that the remains of this man
are still around
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and are sitting on a shelf
of a lawyer's office in some box,
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because the family refuses
to receive the ashes.
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I guess I can understand it, but it hurts.
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There must have been good times with him.
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They're so angry with him that
that anger will stay forever.
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Everybody gets buried, even murderers.
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They get buried.
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This should have happened with him,
as bad as I think he is.
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And was.
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Nobody in the family,
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they don't want to be
connected to him in any way.
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Who wants to be connected
to the ashes of this vicious monster,
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who did not have any compunctions
destroying people's lives?
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By the time 2007 dawned,
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Bernie Madoff must have looked back
over the previous two years and said,
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"I never thought
I'd make it through, but I did."
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With the help of the feeder funds,
with the help of inept SEC investigators,
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he had managed to reach 2007
with his slush fund fat.
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He regularly flies his private jet
to his townhouse in the south of France,
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where he has a new boat to play with.
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He lives large,
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but Bernie and Ruth Madoff
were not the only ones
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benefiting from this
extraordinary year of extravagance.
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Back in New York,
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Madoff made sure that
his trusted minions on the 17th floor
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shared in this wealth.
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He doubled Frank DiPascali's salary
from $2 million to $4 million.
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Frank bought a new fishing boat,
everything he ever dreamed of having.
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Annette Bongiorno
is given a substantial raise,
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and that year unfolds
with more and more luxury.
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That sense of exuberance
of having arrived at last
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at a pinnacle of Wall Street success.
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The basic concept of Wall Street,
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which sometimes the regulators
lose sight of, as do the academics,
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is it's a for-profit enterprise.
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By benefiting one person,
you're disadvantaging another person.
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In 2008, all of a sudden,
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the global economy
was teetering on the brink.
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Problems with the housing market
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are making news tonight,
and now there is even more stark evidence
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of how serious
things are getting in this country.
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Mortgage brokers
were selling homes based on liar loans,
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which mean no documentation of income,
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to people that couldn't afford them
with mortgages they didn't understand.
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And then the investment banks
were taking these lousy loans
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they knew were going to crater,
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packaging them into securities,
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getting AAA ratings
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from the Wall Street rating agencies,
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and selling them
to investors on Wall Street.
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And then, boom, fell off a cliff.
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Hundreds of thousands of
homeowners are defaulting on their loans.
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It literally was like
the world was falling off its axis.
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Every bank was falling to pieces.
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Lehman Brothers reeling
because of these bad real estate loans.
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Lehman Brothers
had filed for bankruptcy.
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Merrill Lynch, AIG was teetering.
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Morgan Stanley and Goldman Sachs
had to be bailed out.
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We're talking
about investment banks,
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these are the smartest money
on Wall Street.
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How have they been
getting it wrong for so long?
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Bernie and Ruth
are in the south of France,
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but Bernie can't tear himself away
from what's happening back home.
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The stock market
is dropping precipitously.
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We are faced with the prospect
of a global meltdown.
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So that was the environment
that Bernie finds himself in
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when he and Ruth get
back on that jet for the last time
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and arrive back in New York.
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At this point, all anybody cared about
was getting their cash quickly.
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Where could they turn?
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They could turn to Bernie Madoff.
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And they did.
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Phones ringing from Frankfurt,
from London,
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Madrid, Vienna, Abu Dhabi.
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"We want our money back."
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And the withdrawal notices
start to flow in, and then pour in,
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and then avalanche in.
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September-October,
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that is when the screws begin to tighten.
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Bernie by now
is tap dancing as fast as he can.
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He's badgering, he's bullying,
he's cajoling many of his oldest clients
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to stop pulling out money,
start putting money back in.
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He calls his mainstay investor,
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Fairfield Greenwich,
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run by Jeffrey Tucker
and Walter Noel, and says,
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"This is a great time to buy." "No."
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Then he calls Sonja Kohn of Bank Medici,
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makes the same plea.
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She doesn't take the bait either.
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By the 2nd of December,
the writing's on the wall.
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Bernie is facing about $1.5 billion
worth of withdrawal requests.
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And he only has roughly
$300 million left in his bank account.
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If he writes checks to those clients
who want to withdraw their money,
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the checks will bounce.
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But obviously, you know,
I couldn't keep doing that
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because of the nature of the Ponzi scheme.
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So I knew that… that the game was over.
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At this point,
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he and Frank DiPascali
have a conversation about,
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where do they go from here?
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Bernie makes it clear to Frank
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that they're too far underwater
to ever get out again.
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Frank has an immediate recognition
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that he's gonna go
to jail for a long time,
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and Frank just went ape shit.
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DiPascali will later claim
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that this was the moment
when he first realized
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that Bernie didn't actually have
a whole bunch of assets
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set away somewhere else
that would bail everybody out.
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That this was when he realized
it was really a fraud.
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What Bernie wants to do with
the money he has left, he tells Frank,
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is he wants to write checks to some
of his biggest long-term investors,
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for some of the faithful employees,
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for extended family members
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who had trusted him with their money
and now were going to be wiped out.
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After all, the fraud is up now.
The fraud is done.
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As Frank DiPascali
is preparing these checks
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that Bernie plans to use
to distribute the last of his slush fund,
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he portrays it to his sons
as early bonuses for employees.
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Well, Mark and Andrew
are deeply disturbed by this.
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It makes no sense to them
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to be writing bonus checks,
given the state of the market.
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So on the morning of December 10th
of 2008, I was sitting at my desk,
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and things hadn't
been going well for weeks now.
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Bernie was acting very peculiar,
and I was trying not to disturb him.
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You know, I felt he was fragile.
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And I saw Peter just sitting there,
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and I remember
Mark and Andy coming into his office.
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Ordinarily, they would
check with me and say,
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you know, "What's my dad doing?
What's going on in the office?"
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They didn't this time, they just walked
right past me and went into the office.
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Mark and Andrew
attempt to change his mind
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about issuing all of these checks.
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They say, "Dad, you know, how do you know
what the rest of the year is gonna bring?"
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"Wouldn't it be safer
to hang on to this cash
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until we see how the year ends up?"
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After a few attempts to deflect,
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Bernie loses his composure.
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I had mail for Bernie
and I went to go bring it to his office.
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I obviously startled them,
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and they all jumped out of their chairs
and stared at me.
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And shortly after that,
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Mark and Andy, they put Bernie's coat on,
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and they escorted him out.
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And Bernie never went anywhere
without telling me where he was going,
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and he just walked past me.
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He never looked at me.
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And Mark came over to my desk
and leaned over and whispered,
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you know, "We're going to go
do a little Christmas shopping."
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I never saw Bernie again.
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Mark and Andrew take him
back to the penthouse in Midtown.
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Ruth is there,
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and this is the first time
that Bernie comes clean.
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I was in a mental state
that I could no longer continue it.
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So it was almost like
a relief to say, "This is it."
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"I just can't continue
this charade any longer."
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And that's what caused me
to acknowledge to my family,
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uh, that I had been committing this fraud.
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Bernie continues to explain how big it is.
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Billions of dollars.
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And all he has left is that 300 million
that he was trying to give away.
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Andrew just slides down the wall
until he's sitting on the floor in tears.
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As soon as he hears the confession
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that the entire business
has been destroyed,
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there's no money,
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Mark is totally devastated.
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Ruth finally is able
to say something, and what she says is,
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"What's a Ponzi scheme?"
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It must have been one of those moments
when your world just turns upside down
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and everything you thought
was true before is no longer true.
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Madoff's sons get up and leave.
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Before they reach the lobby, they have
decided that they must consult a lawyer.
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Mark's father-in-law
is a noted lawyer in Manhattan.
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They arrange to meet with him
at his apartment.
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Mark and Andrew tell him
what their father has said,
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and their lawyer makes it clear to them:
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"This is a fraud in progress."
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"Your father is writing checks
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to distribute what will soon be called
the ill-gotten gains of his fraud,
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and if you do not report it,
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you will be accessories
to that continuing crime."
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They had to turn their father in.
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The FBI go
to the Madoff apartment
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early the following morning.
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Bernie's in his bathrobe.
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"You know why we're here?"
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"Yes."
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They ask him,
"Is there an innocent explanation?"
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And Bernie says, "No."
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He tells them, "It's a Ponzi scheme."
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What he told his sons was true.
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One of the agents calls the office
and quickly briefs them on the outcome,
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and is told, "Bring him in."
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00:14:42,716 --> 00:14:47,220
So they brief Bernie
on the dress code for being arrested.
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No shoelaces, no belts, no tie.
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He sheds his wedding band and his watch.
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Bernie's taken downtown
to the FBI building on Foley Square,
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and processed as
any criminal would have been.
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And then he calls Ike Sorkin.
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"Hello?"
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00:15:18,001 --> 00:15:20,963
"Ike, it's Bernie. I'm handcuffed
to a chair at FBI headquarters."
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00:15:21,046 --> 00:15:22,172
"I need your help."
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I then immediately tell Madoff,
"If you're talking, stop talking."
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I didn't know at the time,
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but for two hours, he told the FBI
everything he knew before he called me up,
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and he told them
that he was the only one involved.
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I was thinking that,
"Quite frankly, he's in a lot of trouble."
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"The government's not
walking away from this."
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But the bail was set at $10 million,
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so Bernie goes back to the apartment,
and that's when it all blew up.
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All hell broke loose.
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If you work on a trading desk,
stop what you're doing
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00:16:02,963 --> 00:16:05,507
before you walk out
and clean your desk out for the day.
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00:16:05,590 --> 00:16:07,843
Bernie Madoff has been arrested.
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00:16:07,926 --> 00:16:09,803
Federal authorities are calling it
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00:16:09,886 --> 00:16:12,389
one of Wall Street's
biggest Ponzi schemes.
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Police say the man behind it was one
of the most admired men on Wall Street.
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00:16:16,226 --> 00:16:17,811
Bernard Madoff,
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00:16:17,894 --> 00:16:19,938
a former chairman
of the NASDAQ Stock Exchange.
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My cell phone rings, and it's Harry,
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00:16:25,110 --> 00:16:28,655
and he's screaming
at the top of his lungs,
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00:16:28,739 --> 00:16:30,824
"Madoff just capitulated."
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We had it right on!"
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00:16:32,826 --> 00:16:34,327
I said, "Hold on, Harry."
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00:16:34,828 --> 00:16:39,458
And I put down that phone,
and I had such fists of rage.
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00:16:39,541 --> 00:16:41,293
I just felt dirty and violated,
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00:16:41,376 --> 00:16:46,339
like, "How could this be? How could I be
so wrong about someone's character?"
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00:16:46,423 --> 00:16:51,845
Everything that I thought about this man,
Bernie, was completely wrong.
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00:16:52,929 --> 00:16:54,681
It felt like a betrayal.
242
00:16:59,519 --> 00:17:03,315
After Bernie was arrested,
it was complete chaos.
243
00:17:06,485 --> 00:17:11,198
There was the FBI coming in,
there was the SEC coming in.
244
00:17:11,698 --> 00:17:13,533
There were people who took off.
245
00:17:14,034 --> 00:17:17,913
I had absolutely no direction,
but I knew we had to answer the phones.
246
00:17:19,414 --> 00:17:21,583
A gentleman called in.
247
00:17:21,666 --> 00:17:25,170
We had a nice relationship, we would
always talk, you know, and he said,
248
00:17:25,253 --> 00:17:26,588
"Eleanor,
249
00:17:26,671 --> 00:17:28,173
did you know?"
250
00:17:28,840 --> 00:17:31,009
It was like somebody hit me in the chest,
251
00:17:31,093 --> 00:17:34,346
because I didn't even think
people were going to think I was involved.
252
00:17:34,930 --> 00:17:38,266
That was just like, now another blow.
I was like, "Holy shit."
253
00:17:39,976 --> 00:17:42,187
And I said, "No. No, I didn't."
254
00:17:42,687 --> 00:17:46,441
And Pete is standing there,
and I hung up the phone and I'm going,
255
00:17:46,525 --> 00:17:48,360
"What am I supposed to do here?"
256
00:17:48,443 --> 00:17:51,113
"You know, what is going…
What am I supposed to do?"
257
00:17:51,196 --> 00:17:53,073
Peter just walked away from me.
258
00:17:53,907 --> 00:17:56,159
And I was just like, "You're on your own."
259
00:17:58,620 --> 00:18:00,747
There were people
down in the lobby, calling up,
260
00:18:00,831 --> 00:18:03,708
demanding that somebody
comes down and talks to them.
261
00:18:04,251 --> 00:18:08,964
I would go down to reception,
and I got some of the other ladies,
262
00:18:09,047 --> 00:18:11,216
and we would do it
for 20 minutes at a time
263
00:18:11,299 --> 00:18:14,511
because it was too much. It was sickening.
264
00:18:15,887 --> 00:18:19,474
People were scared. You could hear it
in their voices. They were scared.
265
00:18:25,105 --> 00:18:28,859
Typically, in any
investigation, drug, organized crime,
266
00:18:28,942 --> 00:18:32,028
you're starting with
the lower-level figures,
267
00:18:32,112 --> 00:18:34,114
working your way up the organization.
268
00:18:34,197 --> 00:18:38,326
Well, here we have the top guy, and
we just know a lot of money is missing.
269
00:18:39,744 --> 00:18:44,457
All the employees had been
basically corralled on the 19th floor,
270
00:18:44,541 --> 00:18:49,629
and you don't know
which one of them is a co-conspirator,
271
00:18:50,422 --> 00:18:52,340
potentially a cooperator,
272
00:18:52,424 --> 00:18:55,510
or another person
that has nothing to do with it.
273
00:18:56,136 --> 00:18:57,470
We had to start somewhere.
274
00:18:57,554 --> 00:19:01,474
So we start interviewing
all the employees.
275
00:19:02,309 --> 00:19:07,272
After talking to employees, the FBI
uncovers there's a whole another floor.
276
00:19:10,483 --> 00:19:12,903
And after being led to the 17th floor,
277
00:19:12,986 --> 00:19:15,780
a key card is swiped
that gets them access.
278
00:19:22,037 --> 00:19:24,539
We went in, and we were like,
279
00:19:26,291 --> 00:19:27,292
"Holy shit."
280
00:19:29,794 --> 00:19:34,132
And there's just
rooms and rooms full of boxes,
281
00:19:34,674 --> 00:19:37,510
papers and documents everywhere.
282
00:19:38,595 --> 00:19:42,349
And I realized that
if we start moving this evidence,
283
00:19:42,933 --> 00:19:45,352
we're going to lose a lot of context.
284
00:19:46,811 --> 00:19:50,899
So I declared
the 17th floor a crime scene,
285
00:19:50,982 --> 00:19:54,569
and we just started the investigation
right then and there.
286
00:19:57,864 --> 00:20:00,617
Now, you talk about
the proverbial needle in a haystack.
287
00:20:00,700 --> 00:20:02,535
How do you figure all this out?
288
00:20:03,245 --> 00:20:07,749
The key is a source, informant,
or cooperating witness
289
00:20:07,832 --> 00:20:10,794
who could shepherd you through that.
290
00:20:11,628 --> 00:20:13,171
And that was Frank DiPascali.
291
00:20:13,880 --> 00:20:17,842
He knew that he had
a lot of criminal exposure.
292
00:20:17,926 --> 00:20:20,887
He had a family he cared deeply about.
293
00:20:21,680 --> 00:20:25,183
He had to think of,
what could he do for himself?
294
00:20:26,893 --> 00:20:29,980
And Frank provides us with the roadmap
295
00:20:31,064 --> 00:20:34,192
to figure out how the scheme worked.
296
00:20:36,695 --> 00:20:39,614
It was really kind of amazing to see.
297
00:20:40,532 --> 00:20:44,744
There was no real investing
ever happening.
298
00:20:44,828 --> 00:20:46,413
There were no trades.
299
00:20:47,038 --> 00:20:53,128
In other Ponzi schemes, you've had guys
who would trade stocks, and they'd lose.
300
00:20:53,211 --> 00:20:57,257
I mean, they were bad traders,
and they were always trying to catch up.
301
00:20:57,340 --> 00:21:00,510
I had never seen anything like this,
where there was absolutely
302
00:21:01,177 --> 00:21:02,637
no investing going on.
303
00:21:04,681 --> 00:21:07,851
Mr. Madoff, what would you say
to all those people who lost money?
304
00:21:07,934 --> 00:21:11,062
Pushing and shoving,
that's what Bernard Madoff came home to
305
00:21:11,146 --> 00:21:15,066
after making a brief appearance
in a Manhattan federal court Wednesday.
306
00:21:15,150 --> 00:21:21,364
I was in the back of that whole scrum
of television cameras and reporters.
307
00:21:22,365 --> 00:21:23,575
Don't touch me.
308
00:21:23,658 --> 00:21:28,621
There is that famous scene
of him pushing a television camera,
309
00:21:28,705 --> 00:21:30,957
and that was a daily occurrence.
310
00:21:31,041 --> 00:21:34,044
Mr. Madoff, what would you say
to all those people that lost money?
311
00:21:34,127 --> 00:21:35,462
What would you say to them?
312
00:21:35,545 --> 00:21:38,548
Bernie Madoff's fraud
was like a nine-alarm fire
313
00:21:38,631 --> 00:21:40,508
in the world of business journalism.
314
00:21:41,509 --> 00:21:44,054
It was a fire hose of news.
315
00:21:44,137 --> 00:21:45,430
It was wall-to-wall,
316
00:21:45,513 --> 00:21:50,352
because what it represented
was so much larger than this one man.
317
00:21:50,977 --> 00:21:53,772
When you think about the financial crisis,
318
00:21:53,855 --> 00:21:56,316
it was this moment
where everybody's losing their home,
319
00:21:56,399 --> 00:21:58,151
they're losing their 401K.
320
00:21:58,234 --> 00:22:00,570
The unemployment rate is skyrocketing.
321
00:22:01,738 --> 00:22:04,741
People wanted to point fingers,
but they were all big institutions,
322
00:22:04,824 --> 00:22:07,535
they were buildings,
in many people's minds.
323
00:22:08,745 --> 00:22:11,831
And then all of a sudden,
Bernie Madoff arrives on the scene,
324
00:22:11,915 --> 00:22:16,002
and he becomes
the personification of this crisis,
325
00:22:16,086 --> 00:22:20,298
he becomes the face
for the financial crisis.
326
00:22:20,382 --> 00:22:22,884
All of the hate,
all of the venom, all of the anger
327
00:22:22,967 --> 00:22:26,388
that was being focused on Wall Street,
on everything,
328
00:22:26,471 --> 00:22:28,765
they could put it onto him
all of a sudden.
329
00:22:29,432 --> 00:22:34,104
And people want to know,
how come Madoff got bail?
330
00:22:35,271 --> 00:22:36,815
How come he's living in his penthouse,
331
00:22:37,482 --> 00:22:40,902
unlike some other
less fortunate individual
332
00:22:40,985 --> 00:22:42,779
who doesn't have his monetary means
333
00:22:42,862 --> 00:22:46,616
who's, you know, being held
without bail on Rikers Island.
334
00:22:47,867 --> 00:22:50,078
It just didn't, you know, seem right.
335
00:22:54,165 --> 00:22:57,293
In the beginning,
you'd hear about Bernie Madoff.
336
00:22:57,377 --> 00:22:59,254
Then you'd hear about some investors.
337
00:22:59,337 --> 00:23:02,841
Filmmaker Steven Spielberg,
Mets owner Fred Wilpon…
338
00:23:02,924 --> 00:23:07,387
The bold-faced names
in his investor list surfaced first.
339
00:23:07,470 --> 00:23:11,057
Elie Wiesel, the Nobel Peace Prize winner
and Holocaust survivor…
340
00:23:11,141 --> 00:23:12,434
For the first moment…
341
00:23:15,019 --> 00:23:16,771
…I felt a kind of,
342
00:23:18,148 --> 00:23:22,610
not physical, but spiritual,
mental nakedness.
343
00:23:23,695 --> 00:23:25,155
That everything was taken.
344
00:23:25,238 --> 00:23:30,201
It took several more days,
weeks in some cases, to put together
345
00:23:30,285 --> 00:23:32,412
the retired corrections officer,
346
00:23:32,495 --> 00:23:35,832
the retired teachers,
the retired dentists.
347
00:23:37,041 --> 00:23:39,169
These were, like, real people,
348
00:23:39,252 --> 00:23:43,256
and you could see them and you knew them
and you'd see their faces.
349
00:23:43,882 --> 00:23:47,051
I think all of a sudden
it made this human. It made it real.
350
00:23:49,762 --> 00:23:52,974
When my father passed away,
my younger brother says,
351
00:23:53,057 --> 00:23:58,146
"Well, all of Dad's money was in Madoff,
we might as well leave it."
352
00:24:00,648 --> 00:24:04,068
I decided to retire because I said,
353
00:24:04,777 --> 00:24:07,322
"My God, there's money there."
354
00:24:07,405 --> 00:24:12,952
"I could draw on that money.
I could take my money and live on it."
355
00:24:13,036 --> 00:24:17,499
And I moved to Florida,
and I used my money,
356
00:24:17,582 --> 00:24:20,460
money that I had saved, to buy the house,
357
00:24:20,543 --> 00:24:24,214
and I figured, "This is gonna be terrific
because I'll get my distribution,
358
00:24:24,297 --> 00:24:27,634
that'll pay back the money
that I put into the house,
359
00:24:27,717 --> 00:24:31,137
and then I'll have
some money to retire on."
360
00:24:32,263 --> 00:24:34,557
I said. "This is the last place
I'm gonna live in."
361
00:24:34,641 --> 00:24:36,017
And I was very happy.
362
00:24:37,185 --> 00:24:41,814
I was in the house four months,
that's all, when my brother called,
363
00:24:42,690 --> 00:24:48,738
and he said, "Bernie Madoff
was just arrested for fraud."
364
00:24:51,241 --> 00:24:53,785
And it was such a shock.
365
00:24:56,538 --> 00:24:57,956
I often thought,
366
00:24:58,039 --> 00:25:00,041
"What would have happened
if my father had been alive
367
00:25:00,124 --> 00:25:01,918
and had heard the news?"
368
00:25:02,961 --> 00:25:07,131
And I think it would have killed him
even faster than the cancer.
369
00:25:08,174 --> 00:25:11,844
My father was with Madoff
since at least the early '80s.
370
00:25:11,928 --> 00:25:17,267
All the accounts together,
we had somewhere around $30 million,
371
00:25:17,976 --> 00:25:21,688
and then the money in Madoff went "Poof!"
372
00:25:21,771 --> 00:25:22,897
Like that, gone.
373
00:25:22,981 --> 00:25:26,025
It was 30 million Monopoly dollars.
374
00:25:27,110 --> 00:25:31,531
I felt stupid that I had been conned,
375
00:25:31,614 --> 00:25:33,157
which obviously I was.
376
00:25:33,241 --> 00:25:35,535
Also, my family said,
377
00:25:35,618 --> 00:25:37,787
"Well, Rich has had
some Wall Street experience,
378
00:25:37,870 --> 00:25:39,706
so he understands what's going on."
379
00:25:39,789 --> 00:25:42,375
And shouldn't I have known better?
380
00:25:43,459 --> 00:25:47,505
So, it was definitely a thing
that really affected me personally.
381
00:25:49,716 --> 00:25:52,635
Initially,
when I heard about what happened
382
00:25:52,719 --> 00:25:54,554
and knew I wasn't getting any money,
383
00:25:54,637 --> 00:25:57,557
I was very upset, scared.
384
00:25:58,808 --> 00:26:01,894
You know, what am I going to do?
I can't try to look for work.
385
00:26:01,978 --> 00:26:04,188
I was in my mid-seventies already.
386
00:26:06,274 --> 00:26:12,113
But I really felt terrible for my father,
even though he had passed away.
387
00:26:12,989 --> 00:26:17,368
There's an expression that
my mother used to use, called,
388
00:26:17,452 --> 00:26:19,662
"It's a shanda for the neighbors,"
389
00:26:20,371 --> 00:26:27,170
which means your neighbors will know
that you made that bad decision.
390
00:26:27,253 --> 00:26:28,588
It's a shame.
391
00:26:30,340 --> 00:26:31,674
He was fooled.
392
00:26:33,134 --> 00:26:36,596
And that made me very angry.
393
00:26:37,263 --> 00:26:40,600
We had made certain
financial decisions, my wife and I.
394
00:26:40,683 --> 00:26:43,478
We have a son with disabilities,
395
00:26:43,561 --> 00:26:46,481
and we said, "Well,
we really don't need the life insurance
396
00:26:46,564 --> 00:26:49,609
because we have this asset with Madoff,
397
00:26:49,692 --> 00:26:53,321
this nest egg, which would
eventually be used for his care."
398
00:26:53,404 --> 00:26:54,489
That got blown to bits.
399
00:26:56,115 --> 00:27:00,078
My mission was
to try to keep my mother in her house,
400
00:27:00,953 --> 00:27:04,040
the house that
my father built in Palm Beach.
401
00:27:04,916 --> 00:27:09,837
But I knew eventually the house,
which was our biggest asset,
402
00:27:09,921 --> 00:27:11,506
was going to have to go.
403
00:27:12,882 --> 00:27:15,218
My mother was devastated by it.
404
00:27:17,970 --> 00:27:19,931
But don't cry me a river.
405
00:27:20,723 --> 00:27:24,519
A lot of people
lost everything altogether.
406
00:27:26,562 --> 00:27:30,274
A white-collar crime
is different than a blue-collar crime.
407
00:27:30,358 --> 00:27:34,487
A blue-collar crime,
the bodies drop before you investigate.
408
00:27:36,030 --> 00:27:38,825
And a white-collar crime,
they drop afterwards.
409
00:27:40,410 --> 00:27:42,954
A French investment fund manager
410
00:27:43,037 --> 00:27:47,709
who had $1.5 billion of his clients' money
with Bernie Madoff
411
00:27:47,792 --> 00:27:52,088
was found dead in his Manhattan office
today, an apparent suicide.
412
00:27:52,171 --> 00:27:54,841
René-Thierry de la Villehuchet.
413
00:27:56,843 --> 00:27:58,344
It was all over the news.
414
00:27:58,886 --> 00:28:00,221
Thierry's suicide.
415
00:28:00,304 --> 00:28:03,891
It happened 11 days after
Bernie turned himself in.
416
00:28:07,603 --> 00:28:10,481
Thierry locked himself
in his office that night,
417
00:28:10,565 --> 00:28:13,401
and he sliced his arms open
and bled into a trashcan
418
00:28:13,484 --> 00:28:15,695
so he wouldn't make a mess
for the cleaning lady.
419
00:28:17,238 --> 00:28:21,159
He chose
the methodology of death that he did,
420
00:28:22,034 --> 00:28:23,494
a painful solution,
421
00:28:23,995 --> 00:28:26,789
to atone for his sins of omission.
422
00:28:27,957 --> 00:28:29,709
What a waste of a man.
423
00:28:31,127 --> 00:28:33,629
He was a man of honor,
and he was betrayed.
424
00:28:34,839 --> 00:28:37,175
It was traumatic for me personally.
425
00:28:37,258 --> 00:28:38,968
I cried for three days straight,
426
00:28:39,969 --> 00:28:42,054
because I was thinking of calling Thierry.
427
00:28:42,138 --> 00:28:44,223
I knew he had lost a lot personally.
428
00:28:44,307 --> 00:28:46,225
I knew his firm was done for.
429
00:28:47,059 --> 00:28:50,563
I wish I had reached out.
Maybe I could have prevented that.
430
00:28:59,739 --> 00:29:01,741
For what might be the last time ever,
431
00:29:01,824 --> 00:29:05,703
Bernie Madoff left his $7 million
Manhattan penthouse early this morning
432
00:29:05,787 --> 00:29:07,872
and made his way to federal court.
433
00:29:07,955 --> 00:29:11,584
Bernie essentially decided
to plead guilty because he was guilty.
434
00:29:12,168 --> 00:29:15,588
He had very little to gain
by going to trial.
435
00:29:15,671 --> 00:29:18,174
It would have prolonged a process
436
00:29:18,257 --> 00:29:21,969
that was subjecting his family
to a relentless,
437
00:29:22,053 --> 00:29:25,473
scalding degree of public attention.
438
00:29:25,556 --> 00:29:28,392
He made the decision,
in effect, "Let's get this over with."
439
00:29:28,476 --> 00:29:30,019
"I gotta get rid of those cameras,
440
00:29:30,102 --> 00:29:32,230
I've gotta protect Ruth,
I gotta protect the boys."
441
00:29:33,689 --> 00:29:37,026
They came up with
an array of securities fraud
442
00:29:37,109 --> 00:29:40,279
and money laundering charges against him,
443
00:29:40,905 --> 00:29:42,615
and it's a long process.
444
00:29:42,698 --> 00:29:48,204
He had to not only say "guilty,"
he had to explain what he'd done.
445
00:29:49,914 --> 00:29:55,336
At the end, his attorney asks
for a continuance of bail
446
00:29:55,419 --> 00:29:59,298
until Bernie could be sentenced,
which would happen several months later.
447
00:30:00,675 --> 00:30:01,717
The judge says no.
448
00:30:03,803 --> 00:30:07,723
"He's pleaded guilty,
he is a confessed felon,
449
00:30:07,807 --> 00:30:09,308
he's going to be locked up."
450
00:30:12,019 --> 00:30:17,233
And at that moment, you know,
Bernie is going to jail that day.
451
00:30:20,319 --> 00:30:22,989
Could have heard
a pin drop in that courtroom.
452
00:30:24,991 --> 00:30:29,287
And you could hear the click
of the handcuffs around his wrists.
453
00:30:32,623 --> 00:30:36,252
He was housed
in the Manhattan Correctional Center
454
00:30:36,335 --> 00:30:38,004
until he could be sentenced.
455
00:30:38,087 --> 00:30:40,381
The government wanted,
the prosecutor wanted me
456
00:30:40,464 --> 00:30:43,342
to plea bargain with them, to, uh…
457
00:30:45,428 --> 00:30:47,513
you know, make some sort of a deal
458
00:30:47,597 --> 00:30:51,934
by providing information as to
who else was involved in this fraud.
459
00:30:52,018 --> 00:30:57,565
Uh… I mean, the belief was that
I couldn't be doing this all myself,
460
00:30:57,648 --> 00:31:00,026
that there had to be
other people involved.
461
00:31:03,195 --> 00:31:06,115
When Bernie Madoff said,
"I did it all by myself,"
462
00:31:06,198 --> 00:31:10,661
I knew that he was protecting
mostly his family,
463
00:31:11,287 --> 00:31:12,788
and of course, his employees.
464
00:31:14,123 --> 00:31:18,127
There was no way that one person
can pull off such a complicated fraud.
465
00:31:20,338 --> 00:31:25,885
The 17th floor employees are
what I call the witless co-conspirators,
466
00:31:25,968 --> 00:31:28,804
all of whom were hired
as high school graduates,
467
00:31:28,888 --> 00:31:31,182
knowing nothing about
how the Street operated,
468
00:31:31,265 --> 00:31:34,810
and were able to basically enable
469
00:31:34,894 --> 00:31:39,106
the operations of this Ponzi scheme,
undetected, for years.
470
00:31:39,190 --> 00:31:41,233
During our investigation,
471
00:31:41,317 --> 00:31:44,362
the big defense of all the employees,
472
00:31:45,279 --> 00:31:47,031
and even Frank DiPascali,
473
00:31:47,114 --> 00:31:51,202
was they didn't know
it was a Ponzi scheme.
474
00:31:51,285 --> 00:31:55,122
When they said they didn't know
it was a Ponzi scheme,
475
00:31:55,206 --> 00:31:58,751
they also said, "Well,
we knew the trades weren't legitimate,
476
00:31:59,418 --> 00:32:02,672
but that somehow Bernie had
the assets somewhere in Europe
477
00:32:02,755 --> 00:32:05,841
and gold and real estate to cover it."
478
00:32:07,176 --> 00:32:09,136
Well, that's still illegal.
479
00:32:09,220 --> 00:32:12,682
Federal investigators
are ripping apart 20 years of fraud
480
00:32:12,765 --> 00:32:15,768
inside Madoff's firm,
moving beyond Bernie,
481
00:32:15,851 --> 00:32:19,355
looking at sons Andrew and Mark
who directed trading activities.
482
00:32:20,314 --> 00:32:23,359
Andrew and Mark Madoff certainly knew
483
00:32:23,442 --> 00:32:26,320
that the investment advisory business
484
00:32:26,404 --> 00:32:30,116
was not like
your typical brokerage account.
485
00:32:30,908 --> 00:32:33,619
Maybe they didn't know
it was a Ponzi scheme,
486
00:32:33,703 --> 00:32:36,706
but they knew
it wasn't what it appeared to be.
487
00:32:37,623 --> 00:32:39,750
I worked there for 25 years.
488
00:32:40,376 --> 00:32:42,378
Those boys grew up in front of me.
489
00:32:43,045 --> 00:32:47,383
They never went downstairs
to the investment advisory side.
490
00:32:47,925 --> 00:32:50,302
They didn't work there.
There was no connection.
491
00:32:51,262 --> 00:32:54,974
Also under the microscope,
Madoff's wife of 49 years, Ruth,
492
00:32:55,057 --> 00:32:56,767
who has not been charged in the case.
493
00:32:56,851 --> 00:33:00,021
I have no comments at this time
on any subject.
494
00:33:01,147 --> 00:33:05,192
I'm often asked the question,
"Do you think Ruth knew?"
495
00:33:05,276 --> 00:33:07,653
I looked really closely at Ruth.
496
00:33:09,238 --> 00:33:13,993
Ruth had an office kind of
around the corner from Bernie's office.
497
00:33:15,745 --> 00:33:19,498
Go into her office, open the file cabinet,
498
00:33:20,082 --> 00:33:23,461
and I was like,
"Whoa! We hit pay dirt here!"
499
00:33:24,712 --> 00:33:27,798
If Ruth Madoff had,
you know, a street name,
500
00:33:27,882 --> 00:33:33,054
it would be Ruthie Books, because she was
a bookkeeper and she was highly organized.
501
00:33:33,596 --> 00:33:36,932
Personal tax returns,
bank account statements,
502
00:33:37,016 --> 00:33:39,977
information on Bernie's boats,
503
00:33:40,061 --> 00:33:41,312
property they owned…
504
00:33:41,896 --> 00:33:44,899
It was all laid out perfectly for us.
505
00:33:46,817 --> 00:33:50,237
So we learned a lot
about Bernie's lifestyle,
506
00:33:50,780 --> 00:33:56,243
but I never saw anything that pointed
to her knowing about the Ponzi scheme.
507
00:33:57,286 --> 00:34:00,915
Whatever Bernie shared with her,
we don't know.
508
00:34:10,049 --> 00:34:13,761
You know,
my father was very money-conscious.
509
00:34:14,553 --> 00:34:18,808
He tried to bring me up
in a money-conscious kind of a way.
510
00:34:19,558 --> 00:34:23,020
And he would say, "You know,
if it looks too good to be true, it is."
511
00:34:27,149 --> 00:34:29,527
But he didn't follow his own advice.
512
00:34:30,903 --> 00:34:32,238
And I don't blame him either.
513
00:34:33,739 --> 00:34:35,157
I blame the government.
514
00:34:35,658 --> 00:34:38,077
The SEC, they believed the con.
515
00:34:38,160 --> 00:34:39,453
They were conned too.
516
00:34:40,371 --> 00:34:43,499
If you have the SEC going forward
517
00:34:43,582 --> 00:34:46,961
and conducting an exam
or doing an enforcement investigation,
518
00:34:47,044 --> 00:34:49,672
and instead of having
the appropriate effect,
519
00:34:49,755 --> 00:34:53,175
which is to relatively easily
uncover the fraud,
520
00:34:53,259 --> 00:34:58,222
you actually allow the fraud
and give the fraud credibility,
521
00:34:58,305 --> 00:35:03,435
and it grows because
of your exams and investigations,
522
00:35:03,519 --> 00:35:06,188
that's a very severe indictment
of the government.
523
00:35:07,273 --> 00:35:09,358
I think if it wasn't
for the financial crisis,
524
00:35:09,441 --> 00:35:10,901
he may never have been caught.
525
00:35:11,819 --> 00:35:14,530
"We are sorry,
and we're fixing the problem."
526
00:35:14,613 --> 00:35:18,200
That was the response today from
the Securities and Exchange Commission.
527
00:35:18,284 --> 00:35:21,704
Contrite regulators were
called on the carpet by Congress today
528
00:35:21,787 --> 00:35:25,499
after a scathing report said
the agency was incompetent.
529
00:35:28,794 --> 00:35:31,213
There was an investigation
called for by Congress,
530
00:35:31,297 --> 00:35:32,548
and I had to give testimony.
531
00:35:33,132 --> 00:35:35,718
So when I showed up, I showed up early.
532
00:35:36,886 --> 00:35:38,929
Every seat for the press was full.
533
00:35:39,013 --> 00:35:42,516
I talked to everybody in the press,
let them know it would be a prizefight,
534
00:35:42,600 --> 00:35:44,768
and they could expect
some riveting testimony.
535
00:35:44,852 --> 00:35:47,605
And sitting there next to the press
was all the SEC staff.
536
00:35:49,190 --> 00:35:52,735
And I was signaling them a message
that I was going to pound them.
537
00:35:53,652 --> 00:35:55,946
As today's testimony will reveal,
538
00:35:56,030 --> 00:35:59,533
my team and I tried our best
to get the SEC to investigate
539
00:35:59,617 --> 00:36:01,827
and shut down the Madoff Ponzi scheme
540
00:36:01,911 --> 00:36:07,374
with repeated and credible warnings
to the SEC that started in May 2000,
541
00:36:07,458 --> 00:36:11,462
when the Madoff Ponzi scheme
was only a $3 to $7 billion fraud.
542
00:36:12,963 --> 00:36:16,258
We knew then that
we had provided enough red flags
543
00:36:16,842 --> 00:36:18,802
and mathematical proofs
544
00:36:18,886 --> 00:36:22,431
where they should have been able
to shut him down right then and there.
545
00:36:23,432 --> 00:36:24,767
Unfortunately,
546
00:36:24,850 --> 00:36:27,686
as they didn't respond
to my written submissions in 2000,
547
00:36:27,770 --> 00:36:33,025
2001, 2005, 2007, and 2008,
548
00:36:33,108 --> 00:36:34,276
here we are today.
549
00:36:34,360 --> 00:36:37,655
It was like an explosion
that you had never seen before.
550
00:36:37,738 --> 00:36:40,282
The agency literally shook.
551
00:36:40,366 --> 00:36:41,700
He was…
552
00:36:42,701 --> 00:36:46,872
so, uh, specific about the failures
553
00:36:46,956 --> 00:36:49,708
and so, in some ways,
harsh about the failures.
554
00:36:49,792 --> 00:36:51,585
The SEC is over-lawyered
555
00:36:51,669 --> 00:36:54,129
and has too few staff
with relevant industry experience
556
00:36:54,213 --> 00:36:56,799
and professional credentials
to find fraud,
557
00:36:56,882 --> 00:37:00,511
even when a multibillion-dollar case
is handed to them on a silver platter.
558
00:37:00,594 --> 00:37:02,096
You have no excuses.
559
00:37:02,179 --> 00:37:04,932
You darn well better be
apologizing to the Madoff victims.
560
00:37:05,516 --> 00:37:09,228
The SEC continues to roar like a mouse
and bite like a flea.
561
00:37:10,145 --> 00:37:13,482
I was told it was the most heated
Congressional testimony since Watergate.
562
00:37:13,565 --> 00:37:17,152
I think I speak for everyone
when I say we hate fraud.
563
00:37:17,236 --> 00:37:19,613
We wish it never happened.
We wish we could get to--
564
00:37:19,697 --> 00:37:22,908
But your job is to prevent fraud,
not to hate it.
565
00:37:22,992 --> 00:37:27,204
One guy led you to this pile of dung
that is Bernie Madoff
566
00:37:27,288 --> 00:37:30,082
and stuck your nose in it,
and you couldn't figure it out.
567
00:37:30,165 --> 00:37:32,543
You could've shut Madoff down
in one half hour
568
00:37:32,626 --> 00:37:35,129
by just following up
on one of his allegations
569
00:37:35,212 --> 00:37:37,214
that they were not conducting trades.
570
00:37:37,298 --> 00:37:41,552
If you are the watchdog, you have totally
and thoroughly failed in your mission.
571
00:37:42,303 --> 00:37:43,554
Don't you get it?
572
00:37:43,637 --> 00:37:46,515
Is the SEC
too cozy with the industry?
573
00:37:46,598 --> 00:37:48,475
Are they captive by this industry,
574
00:37:48,559 --> 00:37:51,603
or are they looking out for us?
Looking out for the taxpayers?
575
00:37:54,898 --> 00:37:57,568
When I started
doing business with all my clients,
576
00:37:58,235 --> 00:38:00,112
I was a little guy with nothing.
577
00:38:01,488 --> 00:38:03,699
I was this little kid from Queens.
578
00:38:04,575 --> 00:38:06,618
Didn't go to Harvard or… and so on.
579
00:38:06,702 --> 00:38:10,331
Why would anybody trust me
to give me business?
580
00:38:10,414 --> 00:38:11,832
Turn their money over to me?
581
00:38:13,334 --> 00:38:15,502
But the first thing I learned:
582
00:38:16,086 --> 00:38:18,756
Whatever you do in this business,
583
00:38:19,465 --> 00:38:20,966
never break your word.
584
00:38:22,217 --> 00:38:24,887
Your word was your bond,
literally, and that was it.
585
00:38:25,637 --> 00:38:26,930
You trusted everybody.
586
00:38:29,850 --> 00:38:33,687
But nothing in this industry
is what it looks like.
587
00:38:37,608 --> 00:38:40,527
The fact that Bernie Madoff pled guilty,
588
00:38:40,611 --> 00:38:43,614
I think drew attention away from banks
589
00:38:43,697 --> 00:38:46,367
and maybe some other big investors
590
00:38:46,909 --> 00:38:49,161
who should have gone to jail,
but they didn't.
591
00:38:49,912 --> 00:38:54,917
In my opinion, the feeder funds
abrogated their responsibilities
592
00:38:55,000 --> 00:38:57,586
and had no criminal liability
593
00:38:57,669 --> 00:39:01,090
for the fact that all these folks
were wiped out innocently.
594
00:39:01,173 --> 00:39:07,304
Their culpability was a complete failure
to do due diligence, which was their job.
595
00:39:07,388 --> 00:39:10,182
And I think
the owners of Fairfield Greenwich,
596
00:39:10,265 --> 00:39:13,727
Sonja Kohn, all those folks,
they should have gone to jail.
597
00:39:15,104 --> 00:39:18,524
But Madoff could never have perpetrated
the fraud that he perpetrated
598
00:39:18,607 --> 00:39:21,151
had he not had
the complicity of JPMorgan Chase.
599
00:39:22,194 --> 00:39:25,656
JPMorgan is the only entity
600
00:39:25,739 --> 00:39:29,493
that had a view
into Bernie's Ponzi scheme:
601
00:39:30,619 --> 00:39:31,620
The checking account.
602
00:39:32,371 --> 00:39:33,831
The 703 account.
603
00:39:35,124 --> 00:39:37,960
The bank
stipulated that during the period
604
00:39:38,043 --> 00:39:42,089
from 2003 to 2008,
605
00:39:42,172 --> 00:39:45,217
you maintained on deposit
at JPMorgan Chase
606
00:39:45,300 --> 00:39:47,636
$3 to $6 billion.
607
00:39:47,719 --> 00:39:49,304
-Is that correct?
-Yes.
608
00:39:50,222 --> 00:39:53,767
That's enough to draw
the bankers' attention to the fact
609
00:39:53,851 --> 00:39:56,353
that this is not
a normal banking relationship.
610
00:39:56,437 --> 00:39:59,731
They had a statutory obligation
under the Bank Secrecy Act
611
00:39:59,815 --> 00:40:01,358
to monitor that account
612
00:40:01,442 --> 00:40:03,902
and to gain an understanding
of what his business was.
613
00:40:05,446 --> 00:40:09,825
When you move more
than $10,000 through a banking system,
614
00:40:09,908 --> 00:40:13,829
and the banker cannot see
the logic of that transaction,
615
00:40:14,496 --> 00:40:19,543
it generates something
called a suspicious activity report.
616
00:40:20,127 --> 00:40:22,463
And then the Feds start looking at it.
617
00:40:22,546 --> 00:40:23,422
FBI.
618
00:40:24,381 --> 00:40:26,258
How do you transfer
619
00:40:26,341 --> 00:40:32,473
billions of dollars on phony transactions
back and forth at major banks
620
00:40:33,682 --> 00:40:35,559
and not generate a SARs report?
621
00:40:37,811 --> 00:40:40,063
People knew
not to ask too many questions.
622
00:40:40,147 --> 00:40:43,442
If you're getting good returns
and you're getting lots of money,
623
00:40:43,525 --> 00:40:46,737
and you're not to ask any questions,
you don't ask any questions.
624
00:40:46,820 --> 00:40:49,615
And, you know,
greed has a way of doing that to people.
625
00:40:50,908 --> 00:40:54,036
JPMorgan paid
a few billion dollars in criminal fines
626
00:40:54,119 --> 00:40:56,038
for their role in the Madoff case.
627
00:40:56,121 --> 00:40:59,750
Yet no one went to jail. Not one person
at the bank was found guilty of anything.
628
00:40:59,833 --> 00:41:01,793
In fact, no one was even charged.
629
00:41:01,877 --> 00:41:03,670
I ask you, how is that possible?
630
00:41:05,047 --> 00:41:06,924
This is their way of doing business.
631
00:41:07,591 --> 00:41:12,596
JPMorgan Chase has pled guilty
to five massive criminal conspiracies
632
00:41:12,679 --> 00:41:16,308
involving billions of dollars
within the last six years.
633
00:41:16,850 --> 00:41:17,935
When they get caught,
634
00:41:18,018 --> 00:41:21,605
they're never required to disclose
the profits they made on the scheme.
635
00:41:21,688 --> 00:41:23,440
They just pay a fine and they go on.
636
00:41:24,775 --> 00:41:27,736
So JPMorgan Chase financially profited
637
00:41:28,529 --> 00:41:29,988
from Madoff's crimes.
638
00:41:31,323 --> 00:41:32,658
And I have to believe that
639
00:41:32,741 --> 00:41:34,952
they absolutely understood
what was going on.
640
00:41:36,495 --> 00:41:39,915
The Madoff fraud dwarfed so many frauds.
641
00:41:39,998 --> 00:41:43,001
It's the largest Ponzi scheme
in the world to date.
642
00:41:43,544 --> 00:41:47,464
The statement value at the end,
when the music stopped in 2008,
643
00:41:47,548 --> 00:41:50,968
was $64 billion
people thought they had with Madoff.
644
00:41:54,012 --> 00:41:56,306
Sixty-four billion dollars.
645
00:41:57,099 --> 00:41:58,892
But that was imaginary money.
646
00:41:58,976 --> 00:42:01,103
Bernie had created it out of thin air.
647
00:42:01,853 --> 00:42:04,815
The $64 billion, don't forget,
648
00:42:04,898 --> 00:42:09,027
was the false profits
that were being generated.
649
00:42:09,111 --> 00:42:11,363
But there's
another number that was real money.
650
00:42:12,656 --> 00:42:15,993
The real money that
people handed to Bernie in cash
651
00:42:16,076 --> 00:42:19,329
totaled about $19 billion.
652
00:42:22,124 --> 00:42:26,128
Nineteen billion dollars
of cash actually invested with Madoff.
653
00:42:26,211 --> 00:42:29,214
That's a staggering number, $19 billion.
654
00:42:29,298 --> 00:42:32,676
From nonprofit organizations
that had invested money,
655
00:42:32,759 --> 00:42:35,262
to foundations, to individuals,
656
00:42:35,345 --> 00:42:37,681
to people that had sold
a mom-and-pop business
657
00:42:37,764 --> 00:42:39,850
and invested their life savings in it.
658
00:42:40,767 --> 00:42:44,146
A lot of people put their money
with Madoff, all of their money,
659
00:42:44,229 --> 00:42:45,439
and lost it all.
660
00:42:48,108 --> 00:42:51,445
After the shocking discovery
that Bernie had made no investments,
661
00:42:51,528 --> 00:42:55,324
there were no stacks of securities
tucked away in a bank vault somewhere,
662
00:42:55,407 --> 00:42:56,658
there was despair.
663
00:42:56,742 --> 00:43:01,538
But despair brightened when
the ruling was made from Washington
664
00:43:01,622 --> 00:43:06,418
that Bernie was a member of the Securities
Investors Protection Corporation.
665
00:43:06,501 --> 00:43:08,879
SIPC, as it's called.
666
00:43:08,962 --> 00:43:11,006
SIPC was established
667
00:43:11,089 --> 00:43:16,178
pursuant to the Securities Investor
Protection Act in 1970 by Congress,
668
00:43:16,261 --> 00:43:22,267
and its purpose is
to operate an insurance fund
669
00:43:23,101 --> 00:43:27,064
to provide up to $500,000 per account
670
00:43:27,147 --> 00:43:30,525
if the broker takes the money
and doesn't buy the securities.
671
00:43:30,609 --> 00:43:33,987
That $500,000 dollars
is coming out of Wall Street's pocket.
672
00:43:34,071 --> 00:43:38,492
Wall Street finances SIPC
through dues that its members pay.
673
00:43:39,910 --> 00:43:41,536
But the Madoff case,
674
00:43:41,620 --> 00:43:44,164
the courts decided that
675
00:43:44,247 --> 00:43:49,628
there should be what's called
a Ponzi scheme exception to statutes.
676
00:43:49,711 --> 00:43:53,340
Basically SIPC insurance
wouldn't apply to a Ponzi scheme.
677
00:43:53,423 --> 00:43:54,800
But this is just nonsense.
678
00:43:54,883 --> 00:43:58,887
It's exactly when there's a Ponzi scheme
that customers need the insurance.
679
00:43:59,388 --> 00:44:00,597
The irony of it is,
680
00:44:01,181 --> 00:44:06,728
the insurance fund had been woefully
inadequate for almost two decades.
681
00:44:06,812 --> 00:44:10,565
In 1990, SIPC decided
682
00:44:10,649 --> 00:44:13,694
that the amount that
each member firm should contribute
683
00:44:13,777 --> 00:44:15,737
to fund the Insurance fund
684
00:44:16,697 --> 00:44:19,282
was $150 a year,
685
00:44:19,366 --> 00:44:22,703
not per customer,
which still would have been a joke,
686
00:44:22,786 --> 00:44:23,995
but per firm.
687
00:44:24,579 --> 00:44:28,250
That's less than they spend on flowers
in the Executive Suite every week.
688
00:44:28,834 --> 00:44:31,461
Ultimately, there were
so many Madoff victims
689
00:44:31,545 --> 00:44:35,882
that if they were to compensate everyone,
SIPC would have gone bankrupt.
690
00:44:38,009 --> 00:44:40,429
So that's where Irving Picard stepped in.
691
00:44:40,929 --> 00:44:42,764
He became the Madoff trustee.
692
00:44:44,516 --> 00:44:47,811
A trustee is the person who's responsible
693
00:44:47,894 --> 00:44:52,858
for liquidating a registered
broker-dealer that becomes bankrupt.
694
00:44:53,358 --> 00:44:57,404
Picard is appointed by the Securities
Investor Protection Corporation.
695
00:44:57,487 --> 00:45:01,158
His fees are paid by the Securities
Investor Protection Corporation.
696
00:45:01,825 --> 00:45:07,289
Irving Picard has to
figure out exactly who is owed what.
697
00:45:07,956 --> 00:45:13,336
There's a formula that
Picard decides is the simplest one.
698
00:45:13,420 --> 00:45:15,213
It's called the net equity formula.
699
00:45:15,297 --> 00:45:19,217
We're continuing to get money out,
and we're trying to be fair.
700
00:45:19,718 --> 00:45:21,845
Some are net losers,
701
00:45:21,928 --> 00:45:26,475
which means that they weren't able to
get their money out of the Ponzi scheme.
702
00:45:27,225 --> 00:45:30,437
But let's say
I'm an early Madoff investor.
703
00:45:32,314 --> 00:45:34,941
And all the while
I've been taking money out,
704
00:45:35,442 --> 00:45:39,529
not knowing it's a fraud,
and I've made more than I've put in.
705
00:45:39,613 --> 00:45:43,033
According to the trustee,
I'm a net winner,
706
00:45:43,116 --> 00:45:45,202
and I need to give that money back.
707
00:45:45,744 --> 00:45:47,370
That's what's known as a claw back.
708
00:45:50,457 --> 00:45:55,170
These clawback lawsuits
were filed by the trustee
709
00:45:55,253 --> 00:45:59,466
against hundreds and
hundreds and hundreds of investors.
710
00:46:00,342 --> 00:46:03,595
But it was quite a contentious issue,
711
00:46:03,678 --> 00:46:08,475
because the net winners
were many of the smaller, older investors
712
00:46:08,558 --> 00:46:11,770
who had been with Bernie from the get-go.
713
00:46:11,853 --> 00:46:16,316
They had invested money with him
and then lived off the profits
714
00:46:16,399 --> 00:46:19,653
that he was supposedly
generating for them over the years.
715
00:46:20,987 --> 00:46:22,155
For example,
716
00:46:22,239 --> 00:46:25,075
if my grandfather had opened
an account with Bernard Madoff,
717
00:46:25,158 --> 00:46:27,786
and that account
was inherited by my mother,
718
00:46:27,869 --> 00:46:30,497
and then upon her death,
I inherited the account,
719
00:46:30,580 --> 00:46:33,333
you'd be asking me as the granddaughter
720
00:46:33,416 --> 00:46:36,753
to pay back for withdrawals
my grandfather made 45 years ago.
721
00:46:37,796 --> 00:46:41,049
So you can imagine
that people were furious,
722
00:46:41,132 --> 00:46:44,594
particularly those who had been
taking money out every year,
723
00:46:44,678 --> 00:46:49,349
say, to fund their retirement
or to send their kids to college.
724
00:46:49,432 --> 00:46:52,394
And by the way,
they were paying taxes on that.
725
00:46:52,477 --> 00:46:56,147
People were saying, "How can I give back
money I've already given to the IRS?"
726
00:46:57,524 --> 00:47:01,444
Basically, Picard took money
from one set of Madoff investors
727
00:47:01,528 --> 00:47:04,072
to pay off another
set of Madoff investors,
728
00:47:04,155 --> 00:47:06,157
which I call the reverse Ponzi scheme.
729
00:47:07,158 --> 00:47:09,744
The victims were victimized again.
730
00:47:11,538 --> 00:47:15,125
I had been
in Madoff for so long, since 1992,
731
00:47:15,208 --> 00:47:17,502
and we took out
more money than we put in.
732
00:47:17,586 --> 00:47:21,756
So the trustee came back at us
and said, "Fork it over."
733
00:47:21,840 --> 00:47:22,924
We didn't have it,
734
00:47:23,008 --> 00:47:26,136
because we took out the money
and spent it every year.
735
00:47:26,219 --> 00:47:29,180
And our claw back case went on for years.
736
00:47:29,264 --> 00:47:33,435
Years of calling the lawyers
and saying, "What's going on?"
737
00:47:35,854 --> 00:47:38,148
We could not plan the rest of our life.
738
00:47:39,024 --> 00:47:40,609
It was just horrible.
739
00:47:40,692 --> 00:47:41,902
Just horrible.
740
00:47:42,569 --> 00:47:48,241
At one point, we were told we'd
probably be better off getting a divorce,
741
00:47:48,325 --> 00:47:53,788
because we had heard that
they're not taking the wife's assets.
742
00:47:53,872 --> 00:47:57,834
But you just don't know,
and now you don't trust anybody anymore.
743
00:47:58,627 --> 00:48:00,962
But then we said, "Hell, no."
744
00:48:01,046 --> 00:48:03,840
And we thought
we'd fight it a different way,
745
00:48:03,924 --> 00:48:06,468
which was through
the Hardship Application.
746
00:48:08,929 --> 00:48:11,431
They give you
a form to fill out and say, "You know…"
747
00:48:11,514 --> 00:48:15,060
Yeah, they said,
"If you had to go into your closet
748
00:48:15,143 --> 00:48:20,023
and sell all your clothing right now,
what would you get for it?"
749
00:48:20,106 --> 00:48:22,525
And, you know, I had six pairs of jeans.
750
00:48:22,609 --> 00:48:24,319
What's the value of jewelry?
751
00:48:24,402 --> 00:48:25,946
-Jewelry…
-I don't wear jewelry.
752
00:48:26,029 --> 00:48:28,823
We didn't have that.
They wanted to know your artwork…
753
00:48:28,907 --> 00:48:29,908
We don't have artwork.
754
00:48:30,909 --> 00:48:35,538
We filled out the form showing you
what we have, which is not a whole lot.
755
00:48:35,622 --> 00:48:38,792
This is painful for us to go through this
756
00:48:38,875 --> 00:48:41,336
year after year,
not knowing what's going to happen.
757
00:48:43,129 --> 00:48:46,716
But in the end, it worked.
758
00:48:48,718 --> 00:48:53,473
Our attorneys in New York talked to them,
and the trustee ended up saying,
759
00:48:53,556 --> 00:48:54,683
"You're free."
760
00:48:55,558 --> 00:48:59,479
I kind of lost my husband
for several years,
761
00:48:59,562 --> 00:49:03,900
because all he did
was try to find a solution.
762
00:49:03,984 --> 00:49:08,238
And he got so absorbed
in finding the solution.
763
00:49:08,321 --> 00:49:11,491
There was part of him that was gone.
764
00:49:11,574 --> 00:49:13,910
And that takes its toll.
765
00:49:15,537 --> 00:49:17,831
I earned all the money,
I invested all the money,
766
00:49:17,914 --> 00:49:19,582
I did all the due diligence,
767
00:49:19,666 --> 00:49:21,543
and it all blew up in my face.
768
00:49:28,591 --> 00:49:29,759
You know, it's…
769
00:49:30,510 --> 00:49:35,265
…it's one thing to lose your life savings,
770
00:49:36,307 --> 00:49:37,475
and that's bad.
771
00:49:38,101 --> 00:49:40,562
But when you lose your house too,
it's terrible.
772
00:49:43,773 --> 00:49:46,609
I think you have to distinguish
773
00:49:46,693 --> 00:49:48,820
who the victims are in this case.
774
00:49:49,487 --> 00:49:53,033
There are, you know,
the widows out there who…
775
00:49:53,116 --> 00:49:55,452
This was all their money.
They trusted it to Bernie.
776
00:49:56,411 --> 00:49:59,247
People who invested via feeder fund.
777
00:49:59,831 --> 00:50:01,249
They didn't know any better.
778
00:50:02,167 --> 00:50:05,628
But if you look at big investors,
779
00:50:07,088 --> 00:50:10,675
people who had hundreds of millions
or even billions of dollars
780
00:50:10,759 --> 00:50:12,260
on the books with Madoff,
781
00:50:12,927 --> 00:50:16,639
who are supposedly
very savvy, sophisticated,
782
00:50:17,182 --> 00:50:20,977
they entered into
this agreement with the devil, in effect.
783
00:50:21,644 --> 00:50:25,940
I think that they knew
what they were getting into.
784
00:50:26,733 --> 00:50:31,696
We're talking about
the big four investors.
785
00:50:31,780 --> 00:50:33,656
Norman Levy,
786
00:50:33,740 --> 00:50:35,575
Jeff Picower,
787
00:50:35,658 --> 00:50:37,285
Stanley Chais,
788
00:50:37,368 --> 00:50:39,120
and Carl Shapiro.
789
00:50:40,121 --> 00:50:44,084
I had a very special relationship
with the big four clients, all right?
790
00:50:44,876 --> 00:50:48,213
They didn't want to screw me either,
generally, because, number one,
791
00:50:48,296 --> 00:50:51,257
we had a close
family type of relationship,
792
00:50:51,341 --> 00:50:53,093
and also I made them a lot of money.
793
00:50:53,176 --> 00:50:55,762
They didn't wanna kill
the goose that laid the golden egg.
794
00:50:56,554 --> 00:50:58,306
Picower was a little bit different.
795
00:50:59,682 --> 00:51:02,560
Picower behaved as a co-conspirator.
796
00:51:04,646 --> 00:51:08,024
I don't think
Bernie's billion-dollar Ponzi scheme
797
00:51:08,108 --> 00:51:09,818
could have survived without him.
798
00:51:11,820 --> 00:51:14,447
Bernie needed Picower to help
799
00:51:15,532 --> 00:51:17,200
keep the money flowing,
800
00:51:17,992 --> 00:51:24,207
and it is my opinion that Bernie Madoff
helped Jeffry Picower commit tax fraud.
801
00:51:25,083 --> 00:51:26,459
They used each other.
802
00:51:28,086 --> 00:51:33,424
Moreover, Picower made more money
off of Madoff's fraud than anyone else,
803
00:51:33,508 --> 00:51:37,303
and Irving Picard knew what was going on.
804
00:51:37,971 --> 00:51:40,181
So after Madoff was arrested,
805
00:51:40,265 --> 00:51:44,769
Irving Picard starts
chasing him for money.
806
00:51:44,853 --> 00:51:46,187
Irving Picard,
807
00:51:46,271 --> 00:51:49,107
the trustee in charge of recovering
money lost in the scheme,
808
00:51:49,190 --> 00:51:51,985
sued the publicity-shy
Picower and his wife,
809
00:51:52,068 --> 00:51:58,032
citing outrageous annual returns
as high as 950% on Madoff investments
810
00:51:58,116 --> 00:52:01,953
at a time average returns on the market
were only about 9%.
811
00:52:02,954 --> 00:52:08,168
I've always believed that Picower
knew a lot more about the fraud.
812
00:52:08,251 --> 00:52:10,170
Unfortunately, we will never know.
813
00:52:10,253 --> 00:52:12,213
Investigators are trying to figure out
814
00:52:12,297 --> 00:52:14,299
how Jeffry Picower wound up dead
815
00:52:14,382 --> 00:52:16,926
at the bottom of his swimming pool
in Palm Beach County.
816
00:52:17,010 --> 00:52:19,345
Police are investigating
his death as a drowning,
817
00:52:19,429 --> 00:52:21,764
but apparently are not
ruling anything out.
818
00:52:22,348 --> 00:52:25,685
Obviously, they knew he was
in the midst of being held accountable
819
00:52:25,768 --> 00:52:27,854
for his role in the Ponzi scheme,
820
00:52:27,937 --> 00:52:30,315
and that he might have
tried to commit suicide.
821
00:52:31,858 --> 00:52:36,404
But the general consensus from the autopsy
was that it was a heart attack.
822
00:52:36,487 --> 00:52:38,990
Had Jeffry Picower lived,
823
00:52:39,073 --> 00:52:40,992
I believe he would have been indicted.
824
00:52:44,454 --> 00:52:48,208
While Jeffry Picower
certainly should have gone to prison,
825
00:52:48,291 --> 00:52:51,753
Picard was able to claw back the money.
826
00:52:52,962 --> 00:52:57,759
So Jeffry Picower's wife Barbara
is forced to return $7.2 billion
827
00:52:57,842 --> 00:53:00,929
of the ill-gotten gains
from the Ponzi scheme.
828
00:53:01,429 --> 00:53:04,974
We are hopeful
that positive and fair outcomes,
829
00:53:05,058 --> 00:53:09,562
like that of the Picower negotiations
and several of our other settlements,
830
00:53:09,646 --> 00:53:11,773
can and will be repeated.
831
00:53:13,483 --> 00:53:15,818
As for the other longtime investors,
832
00:53:15,902 --> 00:53:19,656
Norm Levy's estate
is forced to return $220 million.
833
00:53:20,657 --> 00:53:25,161
The estate of Stanley Chais
agreed to settle for $277 million.
834
00:53:26,246 --> 00:53:30,375
And Carl Shapiro
forfeited $625 million.
835
00:53:31,709 --> 00:53:36,047
Irving Picard had recovered
more than 14 billion
836
00:53:36,130 --> 00:53:40,009
of the roughly 19 billion in cash
837
00:53:40,093 --> 00:53:43,054
that had flowed into the fraud.
838
00:53:44,389 --> 00:53:50,270
No one would ever have dreamed that
you would recover that amount of money.
839
00:53:50,353 --> 00:53:55,400
But the methods
that the law required him to use
840
00:53:55,483 --> 00:53:57,277
were just heartbreaking.
841
00:53:57,360 --> 00:54:01,030
Going after innocent Madoff victims,
842
00:54:01,114 --> 00:54:03,449
many of which the average age was 70,
843
00:54:03,533 --> 00:54:05,868
some of these folks
had to go work in Walmart…
844
00:54:05,952 --> 00:54:08,913
Suing them for their IRAs
and their houses,
845
00:54:08,997 --> 00:54:12,208
and the amount of fees they took
I consider unconscionable.
846
00:54:13,835 --> 00:54:17,213
Irving Picard's law firm,
over the course of many, many years,
847
00:54:17,297 --> 00:54:22,760
billed over a billion dollars
to oversee the Madoff trusteeship.
848
00:54:23,678 --> 00:54:28,182
So Irving Picard became a very wealthy man
as a result of the Madoff debacle.
849
00:54:29,976 --> 00:54:34,814
I don't think the process was fair at all
because we were innocent,
850
00:54:34,897 --> 00:54:37,275
and to put us through all that…
851
00:54:37,358 --> 00:54:39,861
Yeah. I feel victimized for sure.
852
00:54:40,361 --> 00:54:42,113
But I feel differently.
853
00:54:42,196 --> 00:54:45,992
Um, I mean, looking at it analytically,
854
00:54:46,075 --> 00:54:48,953
it was the only way
to pay the other victims,
855
00:54:49,037 --> 00:54:52,040
is to take money back
from people that took more money out,
856
00:54:52,123 --> 00:54:54,042
because there's no other money.
857
00:54:54,125 --> 00:54:56,919
I don't like the law,
but I don't have a better alternative.
858
00:54:57,003 --> 00:55:00,298
I think it was a necessary evil
that we had to go through,
859
00:55:00,381 --> 00:55:02,884
and he was doing his job, the trustee.
860
00:55:21,319 --> 00:55:24,072
For the last three months,
Bernie Madoff has spent his days
861
00:55:24,155 --> 00:55:26,699
in a 7.5x8-foot jail cell
862
00:55:26,783 --> 00:55:28,076
here in Lower Manhattan,
863
00:55:28,159 --> 00:55:29,535
not far from this court.
864
00:55:29,619 --> 00:55:31,621
Today he'll find out how he will spend
865
00:55:31,704 --> 00:55:32,872
the rest of his life.
866
00:55:32,955 --> 00:55:35,166
I wake up every morning and my wife…
867
00:55:41,422 --> 00:55:43,674
The things that matter, I have.
868
00:55:45,301 --> 00:55:46,969
And he can't take them away.
869
00:55:47,053 --> 00:55:52,558
It says a lot about America's history
of punishing white-collar crime
870
00:55:52,642 --> 00:55:58,231
that the biggest fear Madoff's victims had
as he approached his sentencing date
871
00:55:58,314 --> 00:56:00,441
was the slap on the wrist.
872
00:56:02,026 --> 00:56:04,695
That he would somehow
get patted on the head
873
00:56:04,779 --> 00:56:08,282
and sent off to some
fairly pleasant prison environment
874
00:56:08,366 --> 00:56:11,702
to spend, you know,
a fairly lenient sentence.
875
00:56:11,786 --> 00:56:15,039
I mean, this had happened.
People had seen that.
876
00:56:16,332 --> 00:56:20,253
When I went
to the sentencing in June of 2009,
877
00:56:20,336 --> 00:56:24,465
there were a lot of Bernie Madoff's
victims in the courtroom.
878
00:56:25,299 --> 00:56:26,801
They were really captivating,
879
00:56:26,884 --> 00:56:29,262
talking about how
they had lost everything.
880
00:56:29,345 --> 00:56:31,013
I was in the process of retiring.
881
00:56:31,097 --> 00:56:33,474
That will never happen,
the way things are right now.
882
00:56:33,558 --> 00:56:36,477
I go to the grocery
and have to watch what I'm buying.
883
00:56:36,561 --> 00:56:38,062
A whole different ball game now.
884
00:56:38,146 --> 00:56:41,399
I wake up in the middle
of the night, dreaming about this,
885
00:56:41,482 --> 00:56:45,194
and how… The damage
that he's done to my entire family.
886
00:56:50,450 --> 00:56:55,455
The vastness of the financial pain
was something I had never seen before.
887
00:56:56,831 --> 00:56:59,584
The defense lawyer, Ike Sorkin,
888
00:56:59,667 --> 00:57:02,336
pleaded for mercy, for leniency.
889
00:57:02,420 --> 00:57:04,922
He said, "This is a 70-year-old man!"
890
00:57:05,006 --> 00:57:07,717
"He's obviously not going to commit
a crime like this again."
891
00:57:08,885 --> 00:57:13,431
And then Bernie said,
"I will turn to my victims and apologize."
892
00:57:14,515 --> 00:57:17,059
The strange part was that
893
00:57:17,852 --> 00:57:20,688
Bernie Madoff really had no expression.
894
00:57:21,397 --> 00:57:23,483
He didn't show any remorse.
895
00:57:23,566 --> 00:57:24,901
He wasn't emotional.
896
00:57:26,277 --> 00:57:30,364
He was like a financial serial killer.
897
00:57:30,948 --> 00:57:35,411
He was able to look widows in the eye
898
00:57:35,495 --> 00:57:37,747
and take their money and say,
899
00:57:37,830 --> 00:57:40,458
"You are taken care of. You can trust me,"
900
00:57:40,958 --> 00:57:44,754
and screw them over in the next breath.
901
00:57:46,672 --> 00:57:49,759
And he did that
over and over and over.
902
00:57:52,637 --> 00:57:54,555
And then the judge began to talk.
903
00:57:55,139 --> 00:57:59,393
He announced that
he was required to impose a sentence
904
00:57:59,477 --> 00:58:04,482
that would reflect
the magnitude of Madoff's crime.
905
00:58:05,191 --> 00:58:07,652
And he sentenced him to 150 years.
906
00:58:14,867 --> 00:58:18,287
This was a purely symbolic sentence.
907
00:58:19,247 --> 00:58:21,207
It was a judge saying,
908
00:58:21,290 --> 00:58:25,086
"You have inflicted
so much harm on society."
909
00:58:26,087 --> 00:58:31,842
"Society is going to inflict
a commensurate amount of harm on you."
910
00:58:34,095 --> 00:58:36,764
It was a remarkable moment
in that courtroom.
911
00:58:45,565 --> 00:58:48,943
Once Madoff himself
had pled guilty and been sentenced,
912
00:58:49,026 --> 00:58:51,529
there was a real desire
913
00:58:51,612 --> 00:58:55,616
by multiple government agencies,
by victims, by all of us,
914
00:58:55,700 --> 00:58:59,912
to try to hold the people
who were criminally involved accountable.
915
00:58:59,996 --> 00:59:02,373
And for a period of time,
I was a member of the team
916
00:59:02,456 --> 00:59:06,085
prosecuting everything relating
to the Madoff Securities fraud.
917
00:59:06,669 --> 00:59:09,922
It takes several years for them
to put the whole case together
918
00:59:10,006 --> 00:59:12,425
based on everything that Frank told them,
919
00:59:12,508 --> 00:59:17,013
and this leads to charges
against 17th-floor employees
920
00:59:17,096 --> 00:59:20,516
that were complicit in the Ponzi scheme,
according to the government.
921
00:59:21,726 --> 00:59:27,356
Annette Bongiorno
and Jodi Crupi got six years in prison.
922
00:59:28,899 --> 00:59:32,862
Jerry O'Hara and George Perez
both got two and a half years.
923
00:59:33,446 --> 00:59:35,448
What sometimes gets forgotten
924
00:59:35,531 --> 00:59:40,661
is Peter Madoff remained
under scrutiny by prosecutors.
925
00:59:41,662 --> 00:59:45,583
Peter Madoff pled guilty
and was convicted of two counts,
926
00:59:45,666 --> 00:59:49,378
one of falsifying the records
of a broker-dealer,
927
00:59:49,462 --> 00:59:52,548
and the other of engaging
in a criminal conspiracy
928
00:59:52,632 --> 00:59:54,508
that actually had multiple criminal aims.
929
00:59:54,592 --> 01:00:00,556
None of those charges accused him
of participating in the Ponzi scheme,
930
01:00:00,640 --> 01:00:05,061
and he insisted that
he had known nothing about it.
931
01:00:05,144 --> 01:00:08,981
Nevertheless, he was sentenced
to ten years in federal prison.
932
01:00:11,233 --> 01:00:14,487
Frank DiPascali,
he's charged with securities fraud.
933
01:00:15,154 --> 01:00:18,240
But because Frank cooperates
with the government,
934
01:00:18,324 --> 01:00:22,453
his sentence isn't given until
after the government case is finished.
935
01:00:22,536 --> 01:00:25,331
Government case finishes,
we're now talking years.
936
01:00:25,414 --> 01:00:27,708
Frank has lung cancer
and dies within four weeks,
937
01:00:28,501 --> 01:00:30,169
and is never sentenced.
938
01:00:32,755 --> 01:00:35,716
This was a fraud of epic proportions,
939
01:00:35,800 --> 01:00:38,719
and each of the people
that was convicted at trial
940
01:00:38,803 --> 01:00:41,597
was involved in that fraud
for a period of decades,
941
01:00:42,181 --> 01:00:45,976
And their hands weren't just
a little dirty, they were totally dirty.
942
01:00:46,060 --> 01:00:50,523
At the same time, they plainly
were not the prime movers of the fraud.
943
01:00:50,606 --> 01:00:54,443
So, you know,
was the sentence imposed on them
944
01:00:55,319 --> 01:00:56,320
fair?
945
01:00:57,613 --> 01:00:59,365
You know, that's not for me to say.
946
01:00:59,448 --> 01:01:02,743
If I were the judge,
would it have been more severe?
947
01:01:02,827 --> 01:01:03,828
It would have been.
948
01:01:06,914 --> 01:01:11,669
After Bernie was arrested,
so many people hated Mark and Andy.
949
01:01:12,753 --> 01:01:16,799
They hated these lovely young men,
who they saw as monsters.
950
01:01:16,882 --> 01:01:18,592
Since the scandal broke,
951
01:01:18,676 --> 01:01:22,054
the pressure has not let up
on Mark or his brother Andrew.
952
01:01:22,138 --> 01:01:25,725
I want his family to feel the pain
that they've inflicted on our family.
953
01:01:26,392 --> 01:01:30,855
They were subjected
to the most unrelenting, fierce,
954
01:01:30,938 --> 01:01:35,234
hostile public and media coverage
I've ever seen.
955
01:01:35,317 --> 01:01:36,318
Mr. Madoff?
956
01:01:37,445 --> 01:01:43,159
The sons were shocked
and horrified by their father's crime.
957
01:01:43,242 --> 01:01:47,913
And they confronted Ruth
with the need to choose.
958
01:01:47,997 --> 01:01:51,459
In fact, they insist that
she break off all contact with Bernie.
959
01:01:51,542 --> 01:01:54,920
"It's him or us," they told her.
960
01:01:55,004 --> 01:01:56,297
And even worse,
961
01:01:56,380 --> 01:01:59,383
"It's him or your grandchildren."
962
01:02:00,718 --> 01:02:01,635
"Choose."
963
01:02:02,845 --> 01:02:05,931
But she could never totally let go of him.
964
01:02:06,766 --> 01:02:09,018
She'd been with him
since she was 13 years old,
965
01:02:09,101 --> 01:02:13,355
she couldn't walk away from him
in his hour of need.
966
01:02:13,439 --> 01:02:17,234
And that set up
what became months of conflict
967
01:02:17,318 --> 01:02:20,529
between Ruth and her beloved sons.
968
01:02:21,614 --> 01:02:23,449
They'd refuse to see her.
969
01:02:23,532 --> 01:02:25,951
The family just shattered.
970
01:02:26,035 --> 01:02:28,329
It was as if
you'd smashed it with a hammer.
971
01:02:30,122 --> 01:02:35,669
What he did to me, to my brother,
and to my family, is unforgivable.
972
01:02:35,753 --> 01:02:38,464
What he did to thousands of other people,
973
01:02:38,547 --> 01:02:40,591
destroyed their lives, um…
974
01:02:41,467 --> 01:02:44,470
I'll never understand it
and I'll never forgive him for it,
975
01:02:44,553 --> 01:02:46,764
and I'll never speak to him again.
976
01:02:48,057 --> 01:02:51,685
Andy found a way
that he wanted to move on,
977
01:02:51,769 --> 01:02:52,937
and Mark didn't.
978
01:02:53,437 --> 01:02:54,605
He just didn't.
979
01:02:55,231 --> 01:02:56,190
It was too much.
980
01:02:57,066 --> 01:02:58,567
Have you talked to your dad?
981
01:02:58,651 --> 01:03:00,820
I have no comment.
I'm sorry. I can't help you.
982
01:03:01,362 --> 01:03:03,322
He went into a dark place.
983
01:03:03,405 --> 01:03:07,827
And I don't know if there was anything
anybody could have done for him, because
984
01:03:08,619 --> 01:03:12,081
he was constantly being accused.
985
01:03:13,249 --> 01:03:15,459
The innuendos from people.
986
01:03:15,543 --> 01:03:17,086
There was no relief.
987
01:03:17,920 --> 01:03:19,755
There was nowhere he could go.
988
01:03:22,466 --> 01:03:25,010
It's hard for me
to talk about Mark. Anyway.
989
01:03:40,943 --> 01:03:43,904
The Madoff scandal
took a tragic twist on Saturday
990
01:03:43,988 --> 01:03:47,741
when the oldest son
of the disgraced imprisoned financier
991
01:03:47,825 --> 01:03:52,079
was found hanging from a pipe in his
fashionable New York City apartment,
992
01:03:52,580 --> 01:03:54,331
dead of an apparent suicide.
993
01:03:54,915 --> 01:03:57,251
Police said 46-year-old Mark Madoff
994
01:03:57,334 --> 01:04:01,463
was discovered by his father-in-law
shortly after 7:30 a.m.,
995
01:04:01,964 --> 01:04:04,425
a black dog leash wrapped around his neck,
996
01:04:05,092 --> 01:04:08,095
Madoff's two-year-old son
asleep in his room.
997
01:04:09,346 --> 01:04:12,600
He leaves behind
four children from two marriages.
998
01:04:14,310 --> 01:04:18,522
I remember thinking at the time that
999
01:04:18,606 --> 01:04:20,858
that was an "F you" to his father.
1000
01:04:21,483 --> 01:04:23,819
He did it on the two-year anniversary
of his father
1001
01:04:23,903 --> 01:04:26,113
telling him about the Ponzi scheme,
1002
01:04:26,196 --> 01:04:29,867
and I think he purposely
planned it for the anniversary
1003
01:04:29,950 --> 01:04:32,953
as a way to tell his father,
1004
01:04:33,829 --> 01:04:35,372
"This is what you did to me."
1005
01:04:39,126 --> 01:04:43,130
I just can't get over
what he did to him… what happened.
1006
01:04:43,213 --> 01:04:44,048
I can't.
1007
01:04:44,632 --> 01:04:50,804
It's because I have a son
who's close in age to him, you know,
1008
01:04:50,888 --> 01:04:54,099
and I can't imagine him
suffering like that.
1009
01:04:55,392 --> 01:04:57,770
And he suffered, he really suffered.
1010
01:04:58,812 --> 01:05:00,522
I think that's why I cry.
1011
01:05:03,025 --> 01:05:05,778
We were very close.
He was my best friend.
1012
01:05:06,779 --> 01:05:09,448
And, uh, I wanted to help him.
1013
01:05:10,032 --> 01:05:15,788
I just wish until my dying day
that I had done what he wanted.
1014
01:05:15,871 --> 01:05:19,500
I don't know if it would have
made a difference or not, but…
1015
01:05:20,751 --> 01:05:23,879
If I could change things,
at least if I had tried.
1016
01:05:25,798 --> 01:05:28,092
In the aftermath of Mark's death,
1017
01:05:28,175 --> 01:05:31,512
Ruth had grown increasingly close to Andy.
1018
01:05:31,595 --> 01:05:34,765
There was some kind
of rapprochement between them,
1019
01:05:34,848 --> 01:05:41,146
and he became a great source
of support and encouragement for her.
1020
01:05:43,649 --> 01:05:48,320
And then just almost
too much sorrow to believe,
1021
01:05:48,404 --> 01:05:53,450
the cancer that Andrew
had defeated a decade earlier
1022
01:05:53,534 --> 01:05:54,535
came back…
1023
01:05:57,454 --> 01:05:59,498
and in a virulent form.
1024
01:06:00,416 --> 01:06:03,919
It was terrible,
but Andy was fighting it.
1025
01:06:04,420 --> 01:06:09,425
I said, "Do you think it would help you
to talk to him? To talk to Bernie?"
1026
01:06:09,508 --> 01:06:11,301
He goes, "That's not gonna happen."
1027
01:06:13,178 --> 01:06:15,055
I saw him in the spring.
1028
01:06:15,139 --> 01:06:20,060
He came down to talk to a class
I was teaching at Princeton.
1029
01:06:20,144 --> 01:06:24,189
And over lunch with his fiancée,
he said to me,
1030
01:06:24,273 --> 01:06:26,775
"You know, my dad's crime…
1031
01:06:28,652 --> 01:06:31,947
it killed my brother quickly
and it's killing me slowly."
1032
01:06:33,032 --> 01:06:36,452
Andrew Madoff
died of lymphoma at the age of 48,
1033
01:06:36,535 --> 01:06:39,705
six years after father
Bernie Madoff's infamous
1034
01:06:39,788 --> 01:06:43,042
$65 billion Ponzi scheme collapsed.
1035
01:06:45,169 --> 01:06:50,591
He passed away with
his family around him, leaving Ruth alone.
1036
01:06:51,467 --> 01:06:55,929
Her husband locked up for life,
her sons both gone.
1037
01:06:57,347 --> 01:07:01,393
Bernard Madoff at least
knows he'll have a roof over his head.
1038
01:07:01,477 --> 01:07:05,147
His wife, Ruth, though,
doesn't have that assurance anymore.
1039
01:07:06,774 --> 01:07:08,650
Yesterday,
federal marshals seized
1040
01:07:08,734 --> 01:07:11,862
Bernard Madoff's
$7 million Manhattan penthouse.
1041
01:07:11,945 --> 01:07:13,447
The apartment is gone,
1042
01:07:13,530 --> 01:07:16,241
and so are the seized homes
in Palm Beach, Florida,
1043
01:07:16,325 --> 01:07:19,036
the south of France, and Long Island,
1044
01:07:19,119 --> 01:07:22,247
leaving his wife effectively homeless.
1045
01:07:23,582 --> 01:07:26,710
I was there when we basically
threw her out of her apartment.
1046
01:07:26,794 --> 01:07:29,338
We took everything and…
"You got to get out of here."
1047
01:07:31,173 --> 01:07:35,552
I was in the kitchen,
and I'm actually inventorying her jewelry.
1048
01:07:40,307 --> 01:07:43,602
She really seemed numb and shell-shocked.
1049
01:07:45,604 --> 01:07:47,523
And she was smoking a cigarette.
1050
01:07:48,440 --> 01:07:50,943
I said, "Ruth, that's gonna kill you."
1051
01:07:53,612 --> 01:07:55,823
And she said, "Oh, if only it would."
1052
01:07:58,951 --> 01:08:05,666
She seemed kind of resigned to this,
you know, bad ending.
1053
01:08:08,710 --> 01:08:11,255
Ruth Madoff
has vacated the residence.
1054
01:08:11,338 --> 01:08:15,425
She has surrendered all personal property
to the United States Marshal Service.
1055
01:08:17,010 --> 01:08:19,847
Suddenly, she was a nomad.
1056
01:08:20,556 --> 01:08:24,810
She lived out of two suitcases
in the back of her car.
1057
01:08:24,893 --> 01:08:26,895
And that was her life now.
1058
01:08:28,105 --> 01:08:29,481
She lost everything.
1059
01:08:29,565 --> 01:08:31,733
She lost her position in life,
1060
01:08:31,817 --> 01:08:33,569
she lost both her sons,
1061
01:08:33,652 --> 01:08:37,197
and she lost her husband
that she'd been with since she was 13.
1062
01:08:40,075 --> 01:08:43,412
When I visited
Bernie in prison in the years after,
1063
01:08:43,495 --> 01:08:46,331
there was very little authentic
1064
01:08:46,415 --> 01:08:52,087
about Bernie's descriptions of his fraud,
about how he felt about what he'd done,
1065
01:08:52,171 --> 01:08:58,051
but I felt that there was
that authentic evidence of grief
1066
01:08:58,135 --> 01:09:00,596
about what had happened to his family.
1067
01:09:02,014 --> 01:09:06,018
Noted psychiatrists
that I talked with about Madoff's case
1068
01:09:06,101 --> 01:09:12,941
hypothesized that what Bernie was grieving
was the loss of his family's adoration.
1069
01:09:14,985 --> 01:09:17,654
It was not so much that he loved them
1070
01:09:17,738 --> 01:09:21,241
as that he loved having them love him.
1071
01:09:21,909 --> 01:09:26,622
Which is, of course,
pure narcissism and pure sociopath.
1072
01:09:28,790 --> 01:09:34,755
But, whatever it was,
I could see the toll that it took.
1073
01:09:35,589 --> 01:09:37,382
-Thank you.
1074
01:09:37,466 --> 01:09:39,676
Thank you. Please, everybody be seated.
1075
01:09:39,760 --> 01:09:42,596
It is an indisputable fact
1076
01:09:42,679 --> 01:09:46,558
that one of the most significant
contributors to our economic downturn
1077
01:09:46,642 --> 01:09:50,729
was an unraveling
of major financial institutions
1078
01:09:50,812 --> 01:09:53,941
and the lack
of adequate regulatory structures
1079
01:09:54,024 --> 01:09:56,318
to prevent abuse and excess.
1080
01:09:57,152 --> 01:10:00,030
A culture of irresponsibility took root
1081
01:10:00,614 --> 01:10:03,742
from Wall Street
to Washington to Main Street.
1082
01:10:04,868 --> 01:10:07,371
So the question is, what do we do now?
1083
01:10:08,330 --> 01:10:11,208
We did not choose how this crisis began,
1084
01:10:11,291 --> 01:10:14,920
but we do have a choice
in the legacy this crisis leaves behind.
1085
01:10:17,047 --> 01:10:19,800
I think the global financial crisis
1086
01:10:19,883 --> 01:10:22,010
showed us that
you can't trust Wall Street.
1087
01:10:22,594 --> 01:10:24,346
You can't trust the investment banks.
1088
01:10:24,429 --> 01:10:27,933
You can't trust the Wall Street analysts,
you can't trust the rating agencies,
1089
01:10:28,016 --> 01:10:30,060
and you certainly
can't trust the regulators.
1090
01:10:30,143 --> 01:10:33,063
Madoff was the scapegoat
for the financial crisis.
1091
01:10:34,564 --> 01:10:39,194
No one went to jail except for Madoff
and a few of his henchmen and henchwomen.
1092
01:10:40,112 --> 01:10:42,114
No one from the rating agencies
went to jail.
1093
01:10:42,197 --> 01:10:44,491
No one from the Wall Street
analyst community.
1094
01:10:44,574 --> 01:10:46,785
No one at the investment banks
went to jail.
1095
01:10:46,868 --> 01:10:49,955
The CEOs didn't go to jail.
They got to collect their bonuses.
1096
01:10:50,038 --> 01:10:51,623
Their banks were bailed out.
1097
01:10:52,416 --> 01:10:55,168
But no one bailed out Bernie's victims.
1098
01:10:58,130 --> 01:11:00,340
You can't
distance yourself from the victims.
1099
01:11:00,424 --> 01:11:01,800
To see what they went through,
1100
01:11:03,385 --> 01:11:04,386
it's difficult.
1101
01:11:05,762 --> 01:11:09,891
In the end, my mother passed away
before we had to sell the house.
1102
01:11:10,934 --> 01:11:13,937
That last day, leaving and packing up,
1103
01:11:14,021 --> 01:11:16,231
it was one of the worst days of my life.
1104
01:11:16,315 --> 01:11:19,151
I drove away through the gate at the end.
1105
01:11:20,569 --> 01:11:23,780
And I started crying like…
1106
01:11:24,614 --> 01:11:26,116
Couldn't hold back.
1107
01:11:27,034 --> 01:11:29,536
I wasn't just leaving
the house that my father built…
1108
01:11:30,954 --> 01:11:32,664
…that my mother lived in.
1109
01:11:35,584 --> 01:11:37,586
It was the end of Palm Beach life.
1110
01:11:38,128 --> 01:11:41,673
A big part of my life. Over. Gone.
1111
01:11:46,970 --> 01:11:50,432
I live in a rented condo,
so I don't own anymore.
1112
01:11:50,515 --> 01:11:52,267
I miss that house.
1113
01:11:52,351 --> 01:11:54,686
I would've liked
to have been able to hold on to it,
1114
01:11:54,770 --> 01:11:57,481
but I learned to live
without a lot of money.
1115
01:11:57,564 --> 01:12:01,693
Maybe that's the good thing that
my father taught us: how to survive.
1116
01:12:04,071 --> 01:12:09,534
So, I don't begrudge
having to move or doing new things.
1117
01:12:09,618 --> 01:12:14,664
Now I'm learning
all about Shakespearean plays,
1118
01:12:14,748 --> 01:12:16,249
and I thought,
1119
01:12:16,333 --> 01:12:20,045
Bernie Madoff's story
is very Shakespearean.
1120
01:12:20,128 --> 01:12:24,174
It fits with the way
Shakespeare liked to write,
1121
01:12:24,257 --> 01:12:28,053
and he's had a villain in it,
and he had children,
1122
01:12:28,804 --> 01:12:30,389
but he wanted power.
1123
01:12:31,640 --> 01:12:33,058
And it is a tragedy.
1124
01:12:36,436 --> 01:12:41,483
The fact that Bernie Madoff
had been turned in to the FBI by his sons
1125
01:12:41,566 --> 01:12:47,072
lifted it into something
more and more tragic in terms of betrayal,
1126
01:12:47,155 --> 01:12:48,949
and the more I studied the story,
1127
01:12:49,032 --> 01:12:54,871
the more I began to see it
as this parable of betrayed trust.
1128
01:12:55,872 --> 01:12:58,583
It's the monster in everybody's closet.
1129
01:12:59,167 --> 01:13:00,794
It's the terror under the bed.
1130
01:13:00,877 --> 01:13:06,466
It's what everyone knows
could happen to anyone.
1131
01:13:07,801 --> 01:13:10,929
The only people
who can deceive you completely
1132
01:13:11,012 --> 01:13:13,390
are people you trust completely.
1133
01:13:15,600 --> 01:13:20,230
And the price of trusting anyone
is that they can betray you like that.
1134
01:13:23,733 --> 01:13:28,363
People want to believe
in good returns without downside risk.
1135
01:13:28,447 --> 01:13:30,532
Everybody wants that in their portfolio,
1136
01:13:30,615 --> 01:13:32,492
but they're chasing the Holy Grail.
1137
01:13:33,869 --> 01:13:36,455
The Holy Grail doesn't exist in real life,
1138
01:13:36,538 --> 01:13:38,498
nor does it exist in finance.
1139
01:13:39,875 --> 01:13:42,711
Madoff was a fake.
There was nothing real there.
1140
01:13:47,090 --> 01:13:50,510
And so could there be
another Bernie Madoff in the future?
1141
01:13:50,594 --> 01:13:52,512
There will be another Bernie Madoff.
1142
01:13:52,596 --> 01:13:54,806
That will happen. Mark my words.
1143
01:13:57,642 --> 01:14:01,605
The Madoff case.
It's a record-breaking case as of 2008.
1144
01:14:02,522 --> 01:14:03,440
But remember…
1145
01:14:05,817 --> 01:14:07,319
records are made to be broken.