Bernard Madoff, the architect of a massive Ponzi scheme, died at 82 while serving a 150-year prison sentence at the Federal Medical Center in Butner, North Carolina. His death was confirmed by his lawyer and the Bureau of Prisons.
Last year, Bernard Madoff’s lawyers sought his release from prison due to his severe health issues, including end-stage renal disease, but the request was denied.
Madoff’s lawyer stated that he is believed to have died from natural causes related to his declining health.
Once a respected financial expert and former Nasdaq chairman, Madoff attracted a wide range of clients, including retirees and celebrities like Steven Spielberg, Kevin Bacon, and Sandy Koufax.
Bernard Madoff’s investment advisory business was revealed as a massive Ponzi scheme in 2008, devastating investors and charities and earning him significant animosity, to the point where he wore a bulletproof vest to court. His fraud is considered the largest in Wall Street history.
Efforts to unravel the scheme have recovered over $14 billion of the estimated $17.5 billion invested, while fake account statements had previously inflated holdings to $60 billion.
In March 2009, Bernard Madoff pleaded guilty to securities fraud and other charges, expressing deep remorse and shame.
After months of house arrest at his $7 million Manhattan penthouse, he was taken to jail in handcuffs, receiving scattered applause from angry investors in the courtroom.
“He stole from the rich. He stole from the poor. He stole from the in between. He had no values,” former investor Tom Fitzmaurice told the judge at the sentencing.
“He cheated his victims out of their money so he and his wife … could live a life of luxury beyond belief.”
Brandon Sample stated that Bernard Madoff “lived with guilt and remorse for his crimes” until his death.
“Although the crimes Bernie was convicted of have come to define who he was — he was also a father and a husband. He was soft spoken and an intellectual. Bernie was by no means perfect. But no man is,” the lawyer said.
A judge issued a forfeiture order that confiscated all of Bernard Madoff’s personal property, including real estate, investments, and $80 million in assets his wife, Ruth, had claimed as her own. This left her with $2.5 million.
The scandal had a profound personal impact on Madoff’s family: his son Mark took his own life on the second anniversary of Madoff’s arrest in 2010, and his brother Peter, who helped run the business, was sentenced to 10 years in prison in 2012 despite claiming ignorance of the fraud.
Madoff’s other son, Andrew, died of cancer at age 48. Ruth Madoff is still alive.
Attorney Jerry Reisman, who represents Madoff victims, said he had spoken with several victims following Madoff’s death.
“Some of them are saying they’re enjoying this day,” he said. “No one sees this as a great loss. No one is going to mourn Bernie Madoff. They are happy they have survived him.”
Bernard Madoff was born in 1938 in a lower-middle-class Jewish neighborhood in Queens. His rise in the financial world is legendary; he and his brother Peter started on Wall Street in 1960 with only a few thousand dollars saved from lifeguarding and sprinkler installation.
“They were two struggling kids from Queens. They worked hard,” said Thomas Morling, who worked closely with the Madoff brothers in the mid-1980s setting up and running computers that made their firm a trusted leader in off-floor trading.
“When Peter or Bernie said something that they were going to do, their word was their bond,” Morling said in a 2008 interview.
In the 1980s, Bernard L. Madoff Investment Securities operated from three floors of a Manhattan high-rise, where Madoff, his brother, and later his two sons ran a legitimate stock brokerage business.
Madoff gained prominence for his role in launching Nasdaq, the first electronic stock exchange, and advised the SEC on the system.
However, unbeknownst to the SEC, Madoff was secretly running a Ponzi scheme in a separate, secure office, using new investor cash to pay returns to older investors.
Madoff’s old IBM computer generated monthly statements showing consistent double-digit returns, claiming investor accounts totaled $65 billion by late 2008.
However, no securities were ever bought or sold. Madoff’s CFO, Frank DiPascali, admitted in a 2009 guilty plea that the trade statements were “all fake.”
Many of Madoff’s clients, including Jewish individuals and charities, were unaware of the fraud.
Among them was Nobel Peace Prize winner and Holocaust survivor Elie Wiesel, who had discussed topics like history and Jewish philosophy with Madoff rather than financial matters.
Elie Wiesel noted that Madoff “made a very good impression” and admitted to being swayed by the myth Madoff created about his business being exceptionally special and secretive.
Madoff and his wife led a lavish lifestyle, owning a Manhattan apartment, an $11 million estate in Palm Beach, a $4 million home on Long Island, a property in the south of France, private jets, and a yacht.
This opulence collapsed in winter 2008 when Madoff confessed to his sons that his entire business was “all just one big lie.”
Following Madoff’s confession to his sons, a family lawyer contacted regulators, who then alerted federal prosecutors and the FBI.
On a December morning, Madoff, in a bathrobe, welcomed two FBI agents into his home.
When asked if there was an innocent explanation, Madoff replied,
“There is no innocent explanation.”
He claimed to have acted alone, though the FBI doubted this. A trustee was appointed to recover funds, which involved suing hedge funds and other large investors who benefited from the scheme.
To date, around 70% of the lost funds have been returned to investors, with over 15,400 claims filed against Madoff.
At Madoff’s 2009 sentencing, angry former clients demanded the maximum punishment. Madoff spoke in a monotone for about 10 minutes, describing his fraud as a “problem,” “an error of judgment,” and “a tragic mistake.”
He claimed both he and his wife were tormented by the situation, stating that she “cries herself to sleep every night, knowing all the pain and suffering I have caused.”
“That’s something I live with, as well,” he said.
After the sentencing, Ruth Madoff, frequently targeted by victims since her husband’s arrest, claimed she had also 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 horrible fraud is not the man whom I have known for all these years.”
Approximately a dozen Madoff employees and associates faced charges, with five going on trial in 2013.
Frank DiPascali, the prosecution’s star witness, testified about a crucial moment before the scheme was exposed when Madoff summoned him to his office.
“He’d been staring out the window the all day,” DiPascali testified. “He turned to me and he said, crying, ‘I’m at the end of my rope. … Don’t you get it? The whole goddamn thing is a fraud.’”
Madoff’s fraud gave a new level of notoriety to the term “Ponzi scheme,” which originally referred to Charles Ponzi. Ponzi was convicted of mail fraud after defrauding thousands of people out of $10 million between 1919 and 1920.
“Charles Ponzi is now a footnote,” said Anthony Sabino, a defense lawyer specializing in white collar criminal defense. “They’re now Madoff schemes.”
