Diana Henriques’s book on Bernie Madoff underlines that greed is a great impairment of vision.
By MATT NESVISKYmadoff_311 reuters(photo credit: Shannon Stapleton / Reuters)
“They liked To send me money,” “New York Times” reporter Diana B. Henriques quotes the disgraced Ponzi schemer Bernard I. Madoff as saying.“They thought I was a nice Jewish boy.”They also thought he was a very smart Jewish boy. Turns out the boy wasn’t all that nice. and evidently not even all that smart.Henriques, who led the coverage of the Madoff scandal for the “Times” and who was the first journalist to interview him (twice) in prison, has written a compelling and detailed account of the case. with much fall-out litigation still under way and with many facts yet to be ascertained, “The Wizard of Lies” will hardly be the last word on Madoff and his crimes. but for the time being, this is the go-to volume.Deeply researched, foot-noted and exhaustive as it may be – the author not only tells us young Bernie was a boy scout but gives us the number of his troop – “Wizard” remains far from a definitive narrative.That’s largely because, as Henriques points out several times, it is very difficult to tell when Madoff is telling the truth and when he is lying. well, of course it is. How else could he have thousands of people flinging their life’s savings at him for decades on end in an effort to share in those fictitious profits he was unfailingly generating? Yes, those profits were too good to be true, but only a very few astute observers saw it that way. The investors willfully closed their eyes to reality; greed is a great impairment of vision. what they saw instead was a moderate, soft-spoken fellow who radiated so much sheer investing talent that he didn’t have to go scrambling after clients; instead, the clients came stampeding after him. like yeshiva students fighting over scraps at the rebbe’s table, everybody wanted access to Madoff’s Tisch.The Jewish metaphor is apt because of the staggering number of bright Jewish boys who were drawn to Madoff. The Ponzi scheme devastated thousands of investors around the world, but among them were scores upon scores of well-educated wall street operators who were not only Jews but were prominent benefactors of Jewish causes. so many Jews in fact were involved with Madoff, either as enablers or feeders or investors, that it is remarkable that the revelation of the scheme didn’t result in a pogrom.Henriques does report that after the scandal broke anti-Semitic rant spiked on the Internet. but such comment evidently came from the usual suspects on the lunatic fringe and gained no traction with the general public. It probably helped too that there were as many Jewish victims of Madoff (“swindler’s list”) as there were aides.It’s heartbreaking of course that so many worthy institutions suffered in the scam – Israeli universities, Holocaust remembrance foundations, the Hadassah women’s organization, Jewish medical centers and social agencies – not to mention the state pension plans, union funds and the like.But many of these outfits never even heard of Madoff; their money had been entrusted to third and fourth and fifth parties who ultimately entrusted it to the Wizard of Lies.(One notable exception was Nobel laureate Elie Wiesel, who personally handed over all of his money – all of it – to Madoff.) Yet it is hard to sympathize with many of Madoff’s suckers. of course they should have known better, but beyond that, one can’t help feeling that many got what they deserved.That’s because they, like their pied piper, had dedicated so much of their intelligence and energy to an “industry” that created nothing and produced nothing – nothing but wealth, transaction by transaction, paper shuffle by paper shuffle, computer pixel by computer pixel. It was all a series of endless castles in the air – a fraction of which could be magically transformed into actual gains, while the vast majority of stakeholders would see their actual houses and other property disappear like so much smoke. In short, a Ponzi scheme.It’s been called the largest Ponzi scheme ever, and it surely was. By one measure some $64 billion was involved – but that’s counting investments and earnings that never existed.Madoff would take a client’s money, pretend to invest it, pretend to reinvest its nonexistent profits, pretend to transfer and reinvest again, fabricate all the necessary paperwork, keep doing this for decades – it’s almost a giggle.The real losses are probably more in the range of $20 billion. Even with that figure, however, no one is giggling.Henriques is very adept at explaining how Bernie did it – even to a reader who can’t tell a hedge fund from a split-strike conversion strategy or the Security and Exchange Commission from the Securities Investor Protection Corporation.Toss in lax or otherwise inadequate regulation, add hyper-computerized transfers of funds, and investment schemes so complicated that even the shrewdest Wall Streeters and economists and bankers were left glassy-eyed and you have the primordial soup-fixings for a scam of astronomical proportions. Too big to fail? How about too big to distrust? The author is also very good on why Madoff did it. He did it because he could. He did it because, with some artful lying, it was so easy.He did it because so many people were causing a cataract of cash at his feet. Madoff was clever; after all, he started in the investment business even before he had graduated from New York’s Hofstra University in 1960.But how clever was clever? At least a decade before his arrest, Henriques reports, Madoff knew it couldn’t last. And when it finally all went poof with the recession of 2008, Madoff admitted all. The relentless demands of maintaining his house of cards had worn him out. He made no attempt to flee, to cover up, or to plea-bargain. If he didn’t exactly welcome his 150-year jail sentence, he accepted it.Did Madoff deserve a 150-year sentence when, say, Sobibor death camp guard John Demjanjuk got five? Who can say? Certainly many of Madoff’s chumps were swindled.But many – the kingpin Wall Streeters, the baseball Hall of Famer Sandy Koufax, the actor Kevin Bacon, the Hollywood producer Jeffrey Katzenberg – were hardly left destitute. And yes, Henriques reports on several suicides, including that of Madoff’s son Mark. Sure, Madoff and his wife Ruth had to forfeit their homes (Manhattan, Montauk, Palm Springs, the Riviera), the luxury cars, the personal jet plane, the yachts. Everything from the Roy Lichtenstein prints to Bernie’s pleated boxer shorts and his seven dozen pairs of never-worn shoes all went in a government yard sale. Still, Ruth was left with $2.4 million on which to scrape by.The culpability of Ruth Madoff, their sons, Bernie’s brother Peter and other relatives remains a mystery; Madoff insists none of his kin ever knew of his schemes, but then again Madoff was the Wizard of Lies. The title of Henriques’s book therefore is perfectly apt.
The subtitle, however, is arguable. There was no “death of trust.” As Henriques herself eloquently states in her summation: “No matter when you are reading this, the next Bernie Madoff is working in secret somewhere in the country, somewhere in the world. A world immune to Ponzi schemes is a world utterly devoid of trust, and no one wants to live in a world like that. Indeed, no healthy economic system can function in a world like that. So right now, some new Madoff is exploiting our need for trust to build another world of lies.“We will read about him next month or next year. Until then, his victims are telling themselves how generous and respected he is in the community. They are admiring his life of quiet luxury, they are flattered when he includes them, they are a little envious of the money he is making for their more successful friends, those sophisticated folks who speak so highly of him. They are telling themselves he is an excellent person, a gentleman, a mensch.“Later, when that new world of lies is torn apart, they will rage at the pain and devastation he caused and brand him an evil, inhuman monster. But if they are honest with themselves, they will have to admit he was recognizably, shamefully human every step of the way – just like the last Bernie Madoff and the first Bernie Madoff.“That is the most enduring lesson of the Madoff scandal: in a world full of lies, the most dangerous ones are those we tell ourselves.”
Related TagsElie WieselBernie Madoff
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