Bernie Madoff Was “A Financial Serial Killer”

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL ANCHOR: And turning now to the largest financial fraud in history, the $20 billion Ponzi scheme orchestrated by the infamous and now deceased Bernie Madoff. Oscar nominated director Joe Berlinger turned his camera to the crime that shook America, and he is now revealing new details of never before seen footage for a new Netflix documentary that is called “Madoff: The Monster of Wall Street”. Here is some of the trailer.

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UNIDENTIFIED MALE: People lost everything.

UNIDENTIFIED FEMALE: What am I going to do? I was in my mid-70s already.

UNIDENTIFIED MALE: To lose your life-savings and house, too. It’s terrible.

UNIDENTIFIED MALE: One thing — every one of them was which everybody in the industry is, they’re greedy.

UNIDENTIFIED MALE: Trust. Betrayal. Pure evil. 100 years from now, people will remember this story.

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AMANPOUR: Director Joe Berlinger talked to Hari Sreenivasan about the film and why it’s about more than just one man.

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HARI SREENIVASAN, CORRESPONDENT: Christiane, thanks. Joe Berlinger, thanks so much for joining us. First question, I guess, is that, you know, there have been so many books written about Bernie Madoff and what happened. There’ve been, you know, investigations done. Why choose this person and what he did as a topic for a four-part series?

JOE BERLINGER, DIRECTOR, “MADOFF: THE MONSTER OF WALL STREET”: Yes, great question. Well, you know, I think Bernie, over the years, and particularly in the initial reporting, has and was been mythologized as this incredible evil genius who did something so complex and pulled the wool over Wall Street’s eyes for decades. And the truth is, what he did wasn’t so complex. It was so easy to spot. Lots of people spotted it along the way and simple greed caused people to not ask the right questions. And we see, you know, there’s a big fraud every five to eight years on Wall Street. And the same ingredients come into play, very simple. You have regulators asleep at the wheel. You know, the failure of the SEC here was mind-boggling. And you have people who know better. Now, I’m not talking about the Mom and Pop victims of Madoff. But I’m talking about the sophisticated middlemen who took other people’s money and gave it to Bernie. They all should have known better. I mean, the red flags were abundant. And we see this whether NRAN (ph), whether it’s the mortgage crisis, whether it’s Bernie Madoff or FTX and Sam Bankman-Fried. You see the similar seeds of fraud, which is people so greedy, again, not the victims, but the middlemen, who just don’t want to inquire because they’re making too much money. And you see regulators not doing their job. I mean, the regulators are great at coming in to clean up the mess, but we want them to spot it before it becomes a mess, you know?

SREENIVASAN: Most people won’t know the history of Bernie Madoff. And the first episode in this really goes back into, perhaps, one of those pivotal moments in his life, where he kind of had a choice to make after a financial crisis back then.

BERLINGER: Yes.

SREENIVASAN: And, you know, the — one of the documentarians or one of the journalists that look into his life, Diana Enriquez, you know she — I think her quote was, the choice he made was he could live with himself as a liar much more easily than he could live with himself as a failure. Tell people what did Bernie Madoff do back then that was an indicator perhaps for the rest of your life.

BERLINGER: Yes, you know, a poor kid from Queens who looked across the river, wanted to be in the action of Wall Street back in the early ’60s. Decides to open up his own firm. His father-in-law is an accountant, Saul Alpern, and starts feeding him clients to manage money. And he invested in some risky stocks in the early ’60s. There was a big market crash in 1962 and he was wiped out. And it was $30, 000 which were a kid in his twenties in the early ’60s, that’s a lot of money. And so, instead of telling his clients, like, hey, just like everybody else on the market, we’ve lost your money. He borrowed $30,000 from his father-in-law, gave that money to his clients. He told his clients that he had gotten out just in time. Of course, he looked like a genius, and that started his reputation. And he made that fundamental decision he wasn’t going to be a failure like his father. The fascinating thing is he actually was a financial innovator. If he had just focused on, you know, his legitimate business, which was market making, you know, he popularized electronic trading. He basically helped create the Nasdaq. So, he is an innovator. He was a smart guy. He had a legitimate business. Why he felt the need to manage money secretly, at first on the side, and create this Ponzi scheme is a mystery that even the show doesn’t answer, you know. I mean, I — nobody knows why he would do that.

SREENIVASAN: Yes, because as you’re watching this, you almost see this, sort of, Jekyll and Hyde quality. And wonder like, is this the same guy that’s in the same place? He has a legitimate business on the 19th floor and in illegitimate Ponzi scheme running on the 17th floor. The staffs don’t interact. People don’t know what’s going on on either side of it.

BERLINGER: Exactly.

SREENIVASAN: It was just that he’s, you know, on the one hand, he’s handing out big checks to philanthropies, and on the other hand he’s robbing people.

BERLINGER: He’s taking widows and every dime. And that’s one of the great tragedies of this story is that people were so blinded by his personality that they gave him everything. You know, one of the basic rules of investing is to diversify. Don’t put all of your eggs in one basket. So, the people had put in 10 or 20 percent of their money with Bernie and lost it all, you know, they would still be OK, like any investment that goes bad. But people gave them their life savings. I mean, Elie Wiesel, you know, and Mom and Pops across America. It’s tragic. But, you know, it’s interesting, the last couple of years, I have been doing a lot of shows about serial killers. Literal serial killers, you know, John Wayne Gacy, Jeffrey Dahmer, Ted Bundy. And I liken Bernie to a financial serial killer because he has the exact same qualities. You know, lack of empathy. I mean, you can’t look a widow in the eye, take all their money, tell them you are going to take care of them, and wipe them out. So, there’s a lack of empathy. There is a delusion that somehow it’s all going to work out because I don’t think Bernie ever thought there — this — it would all blow up, you know. In fact, one of the great ironies of the story, one of the scariest parts of the story is the fact that I don’t think he would have been caught had there not been a once in a century black swan event called the financial crisis that where everyone was calling in their chips wherever they could and that made the Ponzi scheme impossible to sustain. Because a Ponzi scheme depends on more coming — more money coming in than going out. But he has all of these qualities of a serial killer. Lack of empathy. Blaming of the victims. I mean, you see in the deposition, he blamed his victims for their greed, as opposed to saying, hey, I did something horrible.

BERNIE MADOFF, MASTERMIND OF THE LARGEST PONZI SCHEME IN HISTORY: I admitted to doing enough things that were totally embarrassing and wrong that I regret, but this is my own doing. No one had a gun to my head. You had to understand, unless you knew me, and you know my relationship with this people, might four big clients being the greedy people that they were, they never wanted to close out the transaction.

SREENIVASAN: You know, that’s something that I don’t think most people have seen is Bernie Madoff in deposition.

BERLINGER: Yes.

SREENIVASAN: How did you get that?

BERLINGER: Yes, that’s incredible footage and it was so eye-opening into his mind. And just listening to him matter-of-factly describing the Ponzi scheme. There was a lot of victim lawsuits related to the claw back. You know, when everything went south, lots of people lost lots of money, but there were some people who actually had taken more money out then had — they had put in. So, they were net winners over the years, which was the phrase that was used. And so — and because (INAUDIBLE) could not have paid all of these claims, they hired a trustee named Irving Picard to oversee this process. Kind of getting, you know — figuring out who should get what money. You know, basically, what money could be recovered had to be moved around and equalized things for the losers. And a lot of — that put a lot of people in a very poor position. So, there was an attorney named Helen Chaitman who represented a lot of the victims in this claw back lawsuits, and she deposed Bernie. And I reached out to her for an interview and she told me about this footage. And she was gracious enough to let us use it, which was incredible because we haven’t really seen Bernie, you know, talking so — from prison so forthrightly about what he did.

SREENIVASAN: Yes, kind of explain the claw backs. For people who haven’t been following this, were people who invested with Bernie Madoff made whole? Did they get, kind of, 10 cents on the dollar, half their money back? What happened?

BERLINGER: Well, the — on paper, there was $64 billion because they thought those investments had belonged (ph) to $64 billion. In reality, it was a $19 billion had been invested. And so, Irving Picard was hired as the trustee to try to figure out where that $19 billion is. And he was able to recover $14 billion of the $19 billion. The problem is, a lot of the money went from individual investors, because they had taken out more than they had put in. And that money was — a lot of it was transferred to institutions that had lost money. So, it was kind of like almost a reverse Ponzi scheme. Money from one group of investors was transferred to another. So, some people, you know, got their money back, but they had been relying on these funds for decades thinking — and paid taxes on it. And so, you know, if you get back an initial investment, it doesn’t mean you haven’t been also wiped out because of all the money you had spent over the years.

SREENIVASAN: Let’s talk a bit about the role of the regulators here in this massive, massive failure. Because throughout this film, you point out the number of times Bernie Madoff came so close to being done. That this was so close to being uncovered. And the watchdogs who were supposed to know better than us, who were supposed to have — who do have better access than us, who can ask any question and supposedly get every answer, time and time and time again how Bernie Madoff skates by. It’s just — it’s so frustrating to watch.

BERLINGER: This is the main reason I wanted to do the show and what I really wanted to emphasize is the utter failure of the regulators. There’s so many — there were so many red flags and so many opportunities to bring this to a head much earlier, you know. The hero of the story is Harry Markopolos, who was a portfolio manager for a competitive company called Rampart Investments in Boston. But he is a mathematician. And his job was to create new products. And he looked at the brochure for Bernie, and within four minutes knew something was wrong and told his colleagues, this could be a Ponzi scheme. And because — as he said, they wanted to throw the, you know, the dirty player off the field. You can’t compete with somebody who’s cheating. And so, he wrote a voluminous correspondence to the SEC laying out 29 or 30 red flags about why this should be looked into. For example, you know, his — Bernie’s returns, you know, were a straight line up every year making money. That is impossible at finance. His strategy. He used a certain options strategy that would have, if you believed that he was using that strategy, it would have required more option contracts to execute those returns and that strategy. It would have required more options than are, in existence, in the universe of the one exchange in Chicago that trades those options. So, the red flags were abundant. And time and time again, Markopolos went to them, five times over eight years, and they were completely ignored.

SREENIVASAN: I think you do a good job in this of trying to humanize some of the victims. Because when the initial news came out about it, besides a sort of, some high-profile celebrities — like — awe, you know, rich people losing money on a Ponzi scheme. But you actually find people who, I don’t know, made the mistake of, and sometimes, trusting the watchdogs that should have been helping them and looking out for them as consumers. And are suffering for the rest of their lives because of the bad decision to place faith in Bernie.

BERLINGER: Yes, that’s a great point. He really wiped out a lot of regular people. And I think the story was misreported or the impression was, as you said, a bunch of rich people who wanted outsized returns. The people who wanted the outsized returns were the middlemen taking money from regular people, like a Fairfield Greenwich, which was called a theater fund. So, those people were greedy. Those people were getting outsized returns in terms of fees. But the regular Mom and Pops who had been investing over the years, they actually went to Bernie because it was a relatively conservative fund with regular but conservative gains. And they believed and trusted either Bernie directly, or the people that they were giving their money to. And they were completely wiped out. And so, I wanted to really focus on some of these victim stories, just to kind of dispel that myth.

SREENIVASAN: The last episode is — it’s sometimes difficult to watch because there’s so many — almost kind of Shakespearean elements to it. I mean, here’s a guy who was — couldn’t be higher than high on Wall Street and life. Reduced down. His children, his wife, and what they go through after this.

UNIDENTIFIED MALE: Mark and Andrew, take them back to the penthouse in Midtown. Ruth is there. And this is the first time that Bernie comes clean.

MADOFF: I was in a mental state that I was — I could no longer continue it. So, it was almost like a relief to say, this is it. I just can’t continue this charade any longer. And that’s what forced me to acknowledge to my family that I had been committing this fraud.

BERLINGER: Yes, I know. It’s a Shakespearean tragedy of epic proportions. You know, you have a guy on Wall Street who actually did some great things. Again, the creation of the Nasdaq, which was a bunch of little opaque stock markets all around the country. Now, Nasdaq is, you know, that’s where Google, Microsoft, Apple trade upon. And the general democratization of markets through electronic trading, that’s an incredible achievement. And he would have been a wealthy man had he just done that. And — but he needed more. He needed to be the guy that everyone looks up to. And for that feeling of importance, he sold out his soul and his family. You know, a lot of people wondered whether the brothers knew. There’s nothing I found that would suggest that they knew. I do think they should have known better, they were principles of a company and they should have pushed harder, but there was, you know, a wall that Bernie put up and did not allow the departments to talk to each other. And some have speculated, while Ruth must have known. But I don’t think she did. So, imagine finding out everything you believed was true is false. Having, you know, all of her funds taken away from her. Her son, Mark, committed suicide on the two-year anniversary of Bernie admitting to the Ponzi scheme as, kind of, F.U. to, you know, his father. Andrew, the other brother, who had cancer prior to the Ponzi scheme being revealed, but it was in remission, the stress of that cancer claimed his life a few years later. And so, Ruth, you know, who — we tried to reach out multiple times. Tried to get her to be involved in the show, but she did not want to. We actually didn’t even get a response back. But I would have loved her POV in the show. But, you know, she’s all alone. She has lost her two sons, her husband. She’s, you know — and the whole house of cards came tumbling down. It’s tragic.

SREENIVASAN: The series is called “Madoff: The Monster of Wall Street”. It’s trending on Netflix all over the world. Director Joe Berlinger, thanks so much for joining us.

BERLINGER: Thank you so much. Great to be here.