Bernard Madoff, the Manhattan investment adviser who promised stellar returns to his A-list clients and instead defrauded them of more than $19 billion in history's largest Ponzi scheme, has died. Image Credit: Gulf News archive

New York: Bernard Madoff, the Manhattan investment adviser who promised stellar returns to his A-list clients and instead defrauded them of more than $19 billion in history's largest Ponzi scheme, has died. He was 82.

His death was confirmed by the New York law firm of Brandon Sample, Madoff's attorney. Madoff's home since July 2009 was the Butner Federal Correctional Complex in Butner, North Carolina, where he was serving a 150-year term. He requested compassionate early release, citing end-stage kidney disease, in February 2020.

Like Charles Ponzi, whose 1920 con earned him a place in the annals of crime, Madoff seemed to deliver stunning returns to his clients, when in fact he was paying existing investors with money from new ones.

Unlike Ponzi, who soared and fell in the course of one year, Madoff achieved a level of respect and acclaim among finance professionals - he was chairman of the Nasdaq Stock Market in 1990, 1991 and 1993 - and kept his ruse going for at least 15 years, even under the gaze of regulators who visited his office to inspect his records.

His thousands of clients entrusted him with more than $19 billion in principal and were led to believe, through fake statements and trade confirmations, that they had almost $65 billion among them in their accounts. Irving Picard, the trustee appointed to unwind the accounts, had recovered more than $14.4 billion to partially reimburse clients who lost money.

Client List

Madoff's big-name investors included Fred Wilpon, then-majority owner of the New York Mets; husband-and-wife actors Kevin Bacon and Kyra Sedgwick; Henry Kaufman, former chief economist at Salomon Brothers; the late Boston philanthropist Carl Shapiro; two of Europe's wealthiest women, Alicia Koplowitz of Spain and Lilliane Bettencourt of France; charitable foundations of director Steven Spielberg and Holocaust survivor Elie Wiesel; and New York and Yeshiva universities.

Contributing to Madoff's facade was the existence of legitimate businesses alongside the fraudulent one at his firm, Bernard L. Madoff Investment Securities LLC.

The company's market-making and proprietary-trading units, run by his sons and brother, occupied the 18th and 19th floors of the red, cylindrical Lipstick Building in Midtown Manhattan. Madoff's 17th-floor office, where the fraud was run, was off-limits to most employees.

With his promise to deliver steady returns through markets bullish and bearish, Madoff built such a sterling reputation that he had to turn some prospective investors away. He owned homes in Manhattan and Montauk in New York state, Palm Beach in Florida, and Cap d'Antibes on the French Riviera. He sailed on a yacht called "Bull" and lavished jewelry on his wife, Ruth.

The end

The fraud collapsed in December 2008, when plunging equity markets prompted clients to seek more withdrawals than he could accommodate. His sons Andrew and Mark notified the Federal Bureau of Investigation that their father had confessed to them.

"The money is gone," Andrew Madoff quoted his father as telling the family. "It's all been one big lie." Andrew Madoff recalled the quote for Laurie Sandell's "Truth and Consequences: Life Inside the Madoff Family" (2011), an authorized biography.

Madoff pleaded guilty in March 2009 to fraud, money laundering, perjury and theft. In court, and in later interviews from prison, he insisted that he had run a genuine investment business for many years before finding himself unable to maintain the generous returns his clients had come to expect.

He said that - "to the best of my recollection" - the fraud began in the early 1990s, during a recessionary period for the U.S. economy, and that he "believed it would end shortly and I would be able to extricate myself and my clients."

"As the years went by, I realized that my arrest and this day would inevitably come," he said.

Prosecutors said the fraud began in the 1980s, if not earlier.

Family Fallout

As for Madoff himself, he lost not just his wealth and freedom but the once-strong bonds of family.

The oldest of his two sons, Mark Madoff, who had been head of sales at the firm, killed himself on Dec. 11, 2010, the second anniversary of his father's arrest. He was found hanging from a dog leash attached to a pipe in the living room of his Manhattan apartment.

His suicide was the final straw for his mother, Ruth Madoff, who said it prompted her to break off all communications with her imprisoned husband.

"I was responsible for my son Mark's death, and that's very, very difficult," Bernard Madoff said in a May 2013 telephone interview from prison, according to CNN Money. "I live with that. I live with the remorse, the pain I caused everybody, certainly my family, and the victims."

In September 2014, his son, Andrew, died of cancer.

SEC case

His father worked for Manhattan-based Everlast Sporting Goods Manufacturing Co., the maker of boxing equipment, before opening his own sporting-goods manufacturer, Dodger Sporting Goods Corp., which sold the Joe Palooka punching bag. The company filed for bankruptcy in 1951 after struggling with rising raw-material prices due to the Korean War, Diana B. Henriques wrote in "The Wizard of Lies: Bernie Madoff and the Death of Trust" (2011).

His father then set up a brokerage firm, Gibraltar Securities, in his wife's name and at the family home's address. The SEC, in 1963, accused the company of failing to file required financial reports, and the Madoffs withdrew their registration.

Innovator image

That push led to the creation of the Nasdaq exchange. It also allowed Madoff "to add a few brushstrokes each year to his portrait as a committed market innovator, an ally in the crusade to drag the nation's tradition-bound markets into the modern age," according to Henriques.

"I was very driven," Madoff said in a 2011 interview with the Financial Times. "But I was always outside the club, the club being the New York Stock Exchange and white-shoe firms. They fought me every step of the way."

When, exactly, Madoff began cooking the books was the subject of dispute.

During his guilty plea in court, Madoff said, "To the best of my recollection, my fraud began in the early 1990s," when a bear market was making it impossible for him to "satisfy my clients' expectations." His response, he said, was to claim he was employing a strategy, which he called "split strike conversion," using well-timed investments in and out of Standard & Poor's 100 Index companies, hedged by options contracts in those same stocks.