Bernie Madoff, the financier who orchestrated what is thought to be the largest Ponzi scheme in history, has died. He was 82.
He died Wednesday at the Federal Medical Center in Butner, N.C., the Federal Bureau of Prisons confirmed, and had been serving out a 150-year sentence.
As a money manager, Madoff defrauded thousands of investors out of tens of billions of dollars over the course of nearly two decades. His scheme wiped out the savings of individuals, charities, municipal governments and college endowment funds, and he was so hated at the time of his 2009 trial that he wore a bulletproof vest to and from the courthouse.
But long before his name became synonymous with deceit, it had been held in high regard on Wall Street.
His brokerage, Bernard L. Madoff Investment Securities LLC, consistently boasted impressive returns, and his clients — many within the Jewish community — included celebrities and wealthy philanthropists as well as ordinary people.
Before the scheme came to light, Madoff’s credibility was bolstered by his lavish lifestyle, which featured a yacht and properties in Palm Beach, the Hamptons and the south of France. The former NASDAQ chairman portrayed himself not just as a great investor, but a morally upstanding one.
Financial reporter Diana Henriques, who wrote a book about the case, described Madoff’s scheme in a 2011 Fresh Air interview as exploiting not investors’ greed, but their fear.
“Through many of the years of Madoff’s fraud, investors could have made a lot more money even in some of the very prominent mutual funds,” she said. “But they were willing to give up those greater returns in exchange for the consistency of Madoff’s returns. He made them feel safe. They all thought they were taking a conservative step.”
In fact, Madoff was running what prosecutors later described as the largest Ponzi scheme in history, paying off old investors with money from new ones.
Ron Stein, who runs a non-profit group representing Madoff victims, said Madoff was essentially using their money as a “checking account,” investing none of it or in some cases very small amounts.
Madoff admitted to the scheme in 2009. In a statement, he said he began falsifying accounts in the early 1990s because he felt compelled to satisfy his clients’ expectations.
“When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme,” he said. “However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come.”
Madoff said he deposited clients’ funds in a Chase Manhattan bank account rather than investing it, and withdrew from that account to pay back those who asked for redemptions. Over the years, he said, he employed several strategies to cover this up, including filing false financial statements with the Securities and Exchange Commission and wiring money between the U.S. and United Kingdom to create the appearance of securities transactions.
The scheme collapsed during the 2008 financial crisis, when it could no longer attract new investors and too many people wanted their money at once. Madoff confessed to his wife and sons, and was arrested by the FBI that December.
He pleaded guilty to 11 criminal counts in 2009, at the age of 71. Those included securities fraud, investment adviser fraud, mail fraud, wire fraud, international money laundering and perjury. He was ordered to forfeit assets worth more than $170 billion, the amount prosecutors said “flowed into the principal account to perpetrate the Ponzi scheme.”
In 2009, U.S. District Judge Denny Chin sentenced Madoff to 150 years in prison, a verdict he said sent a message his crimes were “extraordinarily evil, and that this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll.”
Hundreds of victims wrote to the court before Madoff’s sentencing to describe the devastating impact of their loss of savings, Chin said, and two investors died by suicide after the scheme was revealed.
As NPR reported during the trial, Madoff showed no emotion during the testimony of nine victims, but did offer an apology to his family and those impacted and said he would “live with this pain, this torment, for the rest of my life.”
Likewise, the impact on many of his victims has been long-lasting and life-altering.
Miriam Siegman, who said she lost her entire pension and savings, was one of the individuals who testified in court.
“He gets sent off and we get a lifetime sentence. That is a horrible sentence,” she told NPR at the time. “It’s a sentence of want, of humiliation and the inability to care for, in my case, to care for myself in my older age.”
Speaking to NPR in 2018, one victim said he had been preparing to retire when he learned that his nest egg and that of his elderly mother were gone, which forced him to return to work for 10 more years. Another talked about severely cutting back on spending and contemplating suicide, citing his fear of being “old and poor in America.”
The impact was also felt on Madoff’s family. Some of his relatives worked at his firm, and claimed not to have known about the fraud in the face of public scrutiny. His son Mark, who had long insisted he played no role in the scheme, died by suicide in 2010. His wife, once a popular society figure, became reclusive, and said in a statement after his sentencing that “the man who committed this horrible fraud is not the man whom I have known for all these years.”
“Bernie, up until his death, lived with guilt and remorse for his crimes,” Madoff’s attorney, Brandon Sample, said in a statement on Wednesday. “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.”
Sample filed a motion for compassionate release last February, saying Madoff was suffering from end-stage renal disease and other chronic medical conditions, with a life expectancy of less than 18 months. Chin, now a U.S. circuit judge, denied the request.
Jim Zarroli contributed to this report.