Bernie Madoff (actually pronounced made-off)

True American Folk Hero

While most folks on the bottom get the shaft, Bernie Madoff made it big. Madoff started his firm with $5,000 in 1960 at 21 years old. He supposedly earned it from installing sprinklers and working as a life guard, a pretty daunting task at 1960 wages even in Long Island. Bernie has now admitted to swindling rich folks out of $50 billion. Now if any of these people had any idea of how hard it would have been to save $5,000 in 1960 at those kind of jobs they never would have invested with him to start with.

Because he makes the rich look foolish, he is not in jail. Madoff is now grounded by the court, the con goes on. He can only go out of his $5 million dollar Manhattan home from 7am until 9pm and is restricted to Connecticut, southern New York State and the city. He did have to turn in his passport, and can no longer visit his two estates on Long Island, or the one in Palm Beach, or the one in France. That was because he couldn’t find four friends to co-sign for his bail.

Pictures of Bernie out for a stroll seem to make him seem like someone those of us on the bottom might even admire. You see Bernie, on his way up learned something a lot of people, rich or poor, don’t know. The rich aren’t any smarter than the rest of us. Of course they want to believe that and they just want you to believe that. Hence the title, Masters of the Universe.

His victims were long established wealthy families, hedge funds, big charities, big players on Wall Street, and as the New York madam said, the rest of the list will be revealed. Some of these brilliant people invested their whole family savings with Bernie. They represent la crème de la crème of the moneyed social circuit who created this financial nightmare.

Most of that wealth was acquired by inheritance or by actions like the stark avarice of the wizards on Wall Street. The result of such inheritance is the production of whole generations of George Bushs in the halls of financial power and government. Bernie screwed those guys, the ones who were screwing the rest of us.

It is difficult to have much sympathy for these folks; they participated in the mugging of the rest of the country. If you are making great returns, especially every quarter, the less you want to know. It’s easy, it’s not much different then not wanting to know that item you just bought was made by slave labor in some polluted third world country.

Bernie knew how to work snobbery built on greed and one-up-manship that has no relation to how the rest of the world lives, and could care less. He appealed to their eager desire to join even more and more exclusive groups. You know the ones, where people supposedly get to make better returns because of their special god given superiority.

In a Dec. 18th article in the New York Times, Christine Haughney writes, “Jeffrey R. Gural, chairman of Newmark Knight Frank, the brokerage firm, said Mr. Madoff had turned his family down as investors about eight years ago because they would not invest at least $20 million. For years, he said, colleagues introduced to Mr. Madoff through relatives or country club friends had sung his praises.

“People used to brag how they were getting these great returns when everybody else was struggling,” he said. “They thought Bernie Madoff was a genius, and anybody who didn’t give them their money was a fool.”’ Now commercial real estate, already looking at sliding over the cliff in 2009, gets a push from real estate outfits who had pledged investments with Madoff as collateral for 100s of millions of dollars.

Madoff also suckered (supposedly) other rich investors who managed funds to place them all with him. They sold access to their funds to invest in his fund of funds, their job complete due diligence. They collected millions in fees for carrying clients to Madoff, now they are crying victim too, poor rich bastards. Madoff’s sons and other family members all claim no knowledge; in fact Bernie says he fooled them all, taking full blame.

The Watchdogs

In 1999 Financial analyst Harry Markopolos asked the SEC to investigate Madoff, stating it was impossible to make his profits legally, he supposedly liquidated every asset every quarter to avoiding reporting investment information and only had one accountant, who didn’t do audits. The SEC investigated Madoff twice and found nothing wrong, so much for due diligence.

The New York Times reported that Michael Markov, a hedge fund consultant hired to evaluate one of Bernie’s rich shills’ investment companies, Fairfield Sentry, he said their returns were “statistically impossible to replicate.” The only other fund he could find that would produce the same returns was the Bayou Fund, prosecuted and shut down for fraud in 2006.

So the money is gone, Bernie is walking on the sidewalk, knowing at worst he’ll get time in a federal penitentiary. He’s 70, he knows he’s had a better life than most. He knows that all those rich schmucks are walking around dazed and confused. They thought they had the connection, the magic one that, they had made it to the promised land, the elite of the elite, who get to make more because they are special.

The market took a turn that Bernie couldn’t survive. As long as the folks that he was able to scam could keep scamming the folks below them, the game was on. No one ever asked what would happen when the folks at the bottom ran out. Except Bernie, he knew, that’s why he didn’t run.

Maybe for Bernie the best is yet to come. There is the trial, the book and of course the movie. Without their money who will the rest be, but Bernie, he will go down in history. Maybe he could have even kept it going, who knows? Maybe it just wasn’t fun anymore unless you could share it.

John M. Kelley is the Managing Editor of We the People News, a monthly progressive newsmagazine in based in Corpus Christi, Texas. He can be reached at: Read other articles by John, or visit John's website.

13 comments on this article so far ...

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  1. Deadbeat said on December 24th, 2008 at 12:06pm #

    I noticed lately when writers describe Madoff they seem to omit that he was President of the NASDAQ. Why is that? That is an extremely important description of the man as well as the WHOLE STOCK MARKET. Nasdaq is one of the most important exchanges. Companies such as Microsoft (MSFT), GOOGLE (GOOG), and other high tech firms trade on this market. The Madoff affair and the possibility of that money being embezzled and laundered to Israel calls into question the entire system.

  2. catherine said on December 24th, 2008 at 12:59pm #

    This guy has the nerve to walk around New York – with or without a bodyguard, do you know?

  3. paul said on December 25th, 2008 at 3:33am #

    very well written and informative article

  4. kahar said on December 25th, 2008 at 9:26am #

    The above is a very unenlightening article. The “rich (Jewish) schmuks walking around confused” are celebrating indeed. Check out Muhammed Rafeeq’s excellent article on Global Research, this is an excerpt:

    “I have acted as a professional consultant to major EC and US financial institutions on corporate and institutional credit risk and the idea that anyone in HSBC or Santander could authorise large investment without the internal checks and controls being employed is almost impossible. To try and believe that EVERY institution that invested in Madoff circumvented their internal control procedures IS impossible.

    Why is this important? Simple. If someone approaches the HSBC credit risk team, for instance, with a view to making a loan or investing a sum as large as £600m to what is ultimately a single institution (therefore a single counterparty credit exposure) a significant number hoops would have to be jumped through. Firstly there is the credit officer competence limit, which is the maximum amount that a single credit officer may be allowed to authorise. More than his/her limit must be referred up the credit approval food chain. In an institution like HSBC or Santander etc, £600bn or US$1bn will have been referred to the very top of the food chain, the banks’ credit committees at the board level. This is an enormous sum and no lacky is going to be able to approve this by themselves, ever.

    … Any company that I have ever worked for would have known internally that such business was being done, because they are all involved…. It is not possible to hide things like this internally for very long, months at the most; 20+ years, NEVER.

    So why plead guilty? The answer is simple. Look on the net and you will see that because this case is being labelled a fraud, it would appear that investors are going to be able to claim their investment back under the US government’s financial fraud protection scheme. A judge has already given his approval in principle for compensation, without any evidence having been presented and financial fraud being demonstrated in a court of law. And it would appear that there will never be such a demonstration in a court of law. Why? It would appear that all the funds financial records are mostly “missing” (rather like Dov Zakheim’s US$1.4tn) and those few records that do survive are in a terrible mess.

    However, since the guy has pleaded guilty we do not need to demonstrate the fraud, because he says he is guilty.

    And look further on the net and you will see that these “victims” have also been told by the US tax authorities that they will probably also be entitled to claim back some taxes on these defrauded sums.

    Rather than saying this hedge fund has gone bust, due to its choice of investment assets and investment methologies, a scenario which is highly probable in the current financial paradigm, since all the professionals are predicting that at least 30% of all hedge funds are about to fail, more than 700 of them, the CEO chooses to fess up to fraud. IF THE CEO ADMIST THE FUND HAS GONE BUST, THEN ALL THOSE WEALTHY MEMBERS OF THE JEWISH COMMUNITY GET NOTHING, BUT IF THE CEO ADMIT TO FRAUD THEY GET THE MONEY BACK AS COMPENSATION FROM THE US TAXPAYER, just as they are also drawing money back from the tax payers with the other hand.”

  5. Deadbeat said on December 25th, 2008 at 11:23am #

    It would appear that the perspective of the Madoff affair by Muhammad Rafeeq would seem to counter to a particular degree that of James Petras. It would seem that unlike the set back to Zionism implied by Petras that Zionism from will in fact thrive from the Madoff affair and get fully funded by taxpayers.

  6. Diane said on December 25th, 2008 at 2:59pm #

    Muhammed Rafeeq article is excellent as is Hudson’s Wealth creation as a Ponzi scheme also on Global Research, below a quote

    “What Ponzi sold was hope, pandering to peoples’ unrealistic desire to believe that a new way to make easy gains had been discovered, with no visible upper limit as to how long gains can persist in excess of the economy’s own rate of growth.”

    Kelley indeed seems to have an unrealistic admiration for Madoff, folk hero, my eye. The way through this crisis, is for ordinary people to maintain scepticism and vigilance, the buggers will screw us all over again, if we aren’t watchful, collectively we must not allow the bastards to get away with it.

  7. Deadbeat said on December 25th, 2008 at 3:41pm #

    A big problem that is not being addressed is that many people are saddle with debt that they cannot get out from under and their are no policies coming from the government that plans to deal with this. Job “creation” won’t address the debt issue and with the bankruptcy law weakened it will be extremely difficult for many working class families to alleviate themselves from their debt burdens. The recession (depression) and unemployment will only exacerbate this problem.

    The Madoff affair clearly exposed the bullshit the working class (especially so-called “professionals”) were sold when they forfeited unions, defined benefits, pensions, etc for ESOP’s and 401-K’s. The market was rigged and Madoff, as Nasdaq chairman, clearly demonstrates the fool errand playing the game of Capitalists.

  8. Hue Longer said on December 25th, 2008 at 5:27pm #

    He robbed from the rich but did he give to the poor? No? Then he robbed from the poor…fuck him

  9. Max Shields said on December 25th, 2008 at 6:02pm #

    Good points DB.

  10. Deadbeat said on December 25th, 2008 at 6:45pm #

    Thanks Max and I hope you and yours are having a Happy Holiday season.

  11. MrCynic3 said on December 27th, 2008 at 6:17am #

    Kahar quoting the excellent article by Rafeeq in global research website
    has hit the nail on the head. I agree with him 100%.
    Yes, this is a case of hedge fund that went bankrupt and its failure was
    claimed to be a Ponzi scheme in order for everyone to get compensation.
    Just wait and see every one of those “schmucks” will get his money back.
    Fifty billions dollar is a small chage compared to the trillions shelled
    out by the taxpayers in the bail-out shenanigans.

  12. Bob said on December 29th, 2008 at 7:44am #

    Muhammed Rafeeq’s perspective(by way of Kahar) on this affair is interesting but not wholly correct.

    While it is true investors will be able to fill a claim with the SEC, under the fraud protection fund. It is rather unrealistic to believe that anyone would come out with more than a couple of pennies on the dollar.

    I understand that the total amount available in the fund to be around $1.5 billion , a small fraction of the reported total of $50 billion stolen. And the Madoff investors would only be entitled to a small portion of that amount.

    So it’s hard to imagine anyone being made whole in the process. Even the “lucky” few who withdrew they money before the collapse, won’t get to keep they’re money. The Federal Bankruptcy Court will recapture those dollars, and disperse them to the other victims proportionally.

  13. giorgio said on December 31st, 2008 at 4:44am #

    “They thought Bernie Madoff was a genius, and anybody who didn’t give them their money was a fool.”’

    So they thought Hitler was a GENIUS, until he hit the brickwall…
    Who the new geniuses for 2009? Any guesses?