NEW YORK (AP) – Bernard Madoff, the infamous architect of an epic securities fraud that burned thousands of investors, outwitted regulators and earned him a 150-year prison sentence, died behind bars early Wednesday. He was 82 years old.
Madoff’s death at the Federal Medical Center in Butner, North Carolina has been confirmed by his attorney and the Bureau of Prisons.
Last year, Madoff’s lawyers unsuccessfully asked a court to release him from prison during the coronavirus pandemic. He suffered from end-stage kidney disease and other chronic diseases.
His death was due to natural causes, a person familiar with the matter told The Associated Press. The person was not allowed to speak publicly and spoke to the AP on condition of anonymity.
For decades, Madoff enjoyed an image as a self-made financial guru whose Midas touch defied market fluctuations. As a former chairman of the Nasdaq Stock Exchange, he attracted a dedicated legion of investment clients – from Florida retirees to celebrities like film director Steven Spielberg, actor Kevin Bacon, and Hall of Fame pitcher Sandy Koufax.
But his investment advisory business was exposed in 2008 as a Ponzi program that wiped out people’s fortunes and ruined charities. He was so hated that he wore a bulletproof vest in court.
The scam was believed to be the largest in Wall Street history.
Over the years court-appointed trustees working to run the program have reclaimed more than $ 14 billion of an estimated $ 17.5 billion invested in Madoff’s business. At the time of Madoff’s arrest, fake bank statements told customers they had $ 60 billion in inventory.
Madoff pleaded guilty to securities fraud and other charges in March 2009, saying he was “deeply saddened and ashamed”.
After living under house arrest in his $ 7 million penthouse in Manhattan for several months, he was handcuffed to jail for applause from angry investors in the courtroom.
“He stole from the rich. He stole from the poor. He stole in between. He had no values, ”former investor Tom Fitzmaurice told the judge at the sentencing. “He cheated his victims of their money so that he and his wife could … live an incredible life of luxury.”
Madoff’s attorney for the past few years, Brandon Sample, said in a statement that the financier “lived with guilt and remorse for his crimes” until his death.
“Although the crimes Bernie was convicted of defined who he was, he was also a father and husband. He was soft spoken and an intellectual. Bernie was by no means perfect. But nobody is, ”said Sample.
The US District Judge Denny Chin sentenced Madoff to a maximum sentence.
“This is where the message needs to be sent that the crimes of Mr. Madoff were extraordinarily nasty and that this type of irresponsible manipulation of the system is not just a bloodless financial crime that only takes place on paper, but instead … one that requires staggering more human Tribute, ”said Chin.
A judge issued a foreclosure order forfeiture of all of Madoff’s personal property, including $ 80 million real estate, investments, and assets that his wife, Ruth, claimed were hers. The contract earned her $ 2.5 million.
The scandal also took a personal toll on the family: one of his sons, Mark, killed himself on the second anniversary of his father’s arrest in 2010. Madoff’s brother Peter, who ran the business, was sentenced to 10 years in prison in 2012 despite allegations in the dark about his brother’s misdeeds.
Madoff’s other son Andrew died of cancer at the age of 48. Ruth is still alive.
Jerry Reisman, an attorney for about three dozen Madoff victims, said he spoke to several after Madoff’s death.
“Some of them say they are enjoying this day,” he said. “Nobody sees this as a great loss. Nobody will mourn Bernie Madoff. They are glad they survived it. “
Madoff was born in a lower-middle-class Jewish neighborhood in Queens in 1938. In the financial world, the story of his rise to fame – how he went to Wall Street with Peter in 1960 with a few thousand dollars saved by working as a lifeguard and installing sprinklers – became legend.
“There were two children from Queens fighting. They worked hard, ”said Thomas Morling, who worked closely with the Madoff brothers in the mid-1980s to set up and operate computers that made their company a trusted leader in off-floor trading.
“When Peter or Bernie said something they would do, their word was their bond,” Morling said in a 2008 interview.
In the 1980s, Bernard L. Madoff Investment Securities occupied three floors of a skyscraper in Midtown Manhattan. There he ran a legitimate business with his brother and later two sons as a middleman between buyers and sellers of stocks.
Madoff raised his profile by using the expertise to launch Nasdaq, the first electronic exchange, and was respected for advising the Securities and Exchange Commission on the system. What the SEC never found out, however, was that behind the scenes, in a separate office kept under lock and key, Madoff was secretly spinning a web of phantom assets by using cash from new investors to pay returns to old ones.
An old IBM computer ran monthly bills that showed constant double-digit returns even when the market dipped. At the end of 2008, the data claimed that investor accounts were worth $ 65 billion.
The Ugly Truth: Securities have never been bought or sold. Madoff CFO Frank DiPascali said in a 2009 pledge of guilt that statements about the deal were “all false”.
His customers, many Jews like Madoff and Jewish charities, said they didn’t know. Among them was Nobel Peace Prize laureate and Holocaust survivor Elie Wiesel, who remembered meeting Madoff years earlier at a dinner where they talked about history, education, and Jewish philosophy – not money.
Madoff “made a very good impression,” said Wiesel during a 2009 panel discussion on the scandal. Wiesel admitted that he is “subscribed to a myth that he has created around himself that everything is so special and unique that it has to be kept secret”.
Like many of his clients, Madoff and his wife enjoyed a lavish lifestyle. They had the Manhattan apartment, an $ 11 million mansion in Palm Beach, Florida, and a $ 4 million house on the tip of Long Island. There was another home in the south of France, private jets and a yacht.
In the winter of 2008 everything collapsed with a dramatic confession. At a meeting with his sons, he confided that his business was “just a big lie”.
After the meeting, a family lawyer contacted regulators, who alerted the federal prosecutor and the FBI. Madoff was in his bathrobe when two FBI agents arrived at his door unannounced one December morning. He invited her and then, after being asked, “if there is an innocent explanation,” a criminal complaint said.
Madoff replied, “There is no innocent explanation.”
Madoff insisted he act alone – something the FBI had never believed in.
A trustee was appointed to help recover funds – sometimes by suing hedge funds and other big investors who came out on top. Efforts are still ongoing and to date, around 70% of the funds lost have returned to investors.
More than 15,400 claims have been filed against Madoff.
When Madoff was convicted in 2009, angry former clients called for the maximum sentence. Madoff himself spoke monotonously for about 10 minutes. At various times he referred to his monumental deceit as “problem”, “error of judgment” and “tragic error”.
Claiming he and his wife had been tortured, he said she “cries herself to sleep every night because she knows all the pain and suffering I’ve caused.”
“I live with that too,” he said.
Afterward, Ruth Madoff – often a target of victims’ contempt since her husband’s arrest – said she too had been misled by her high school sweetheart.
“I am embarrassed and ashamed,” she said. “Like everyone else, I feel betrayed and confused. The man who committed this horrific scam is not the man I have known for all these years. “
About a dozen Madoff employees and associates have been charged. Five were tried in 2013.
DiPascali was the public prosecutor’s star witness. He told how Madoff called him to his office shortly before the plan was revealed.
“He had been staring out the window all day,” said DiPascali. He turned to me and said, crying, ‘I’m at the end of my rope. … Do not you understand? The whole damn thing is a scam. ‘”
In the end, this fraud brought new meaning to the “Ponzi Program,” named after Charles Ponzi, who was convicted of postal fraud after drawing thousands of people out of just $ 10 million between 1919 and 1920.
“Charles Ponzi is now a footnote,” said Anthony Sabino, a defense attorney who specializes in white collar crime. “They’re Madoff Plans now.”