Bernard Madoff, the Manhattan investment adviser who promised stellar returns to his A-list clients and instead defrauded them of more than $19 billion in history's largest Ponzi scheme, has died. He was 82.
His death, "believed to be from natural causes," was reported by the Associated Press. Madoff's home since July 2009 was the Butner Federal Correctional Complex in Butner, North Carolina, where he was serving a 150-year term. He requested compassionate early release, citing end-stage kidney disease, in February 2020.
Like Charles Ponzi, whose 1920 con earned him a place in the annals of crime, Madoff seemed to deliver stunning returns to his clients, when in fact he was paying existing investors with money from new ones.
Unlike Ponzi, who soared and fell in the course of one year, Madoff achieved a level of respect and acclaim among finance professionals — he was chairman of the Nasdaq Stock Market in 1990, 1991 and 1993 — and kept his ruse going for at least 15 years, even under the gaze of regulators who visited his office to inspect his records.
His thousands of clients entrusted him with more than $19 billion in principal and were led to believe, through fake statements and trade confirmations, that they had almost $65 billion among them in their accounts.
Irving Picard, the trustee appointed to unwind the accounts, had recovered more than $14.3 billion to partially reimburse clients who lost money.
VIP Client List
Madoff's big-name investors included Fred Wilpon, majority owner of the New York Mets; husband-and-wife actors Kevin Bacon and Kyra Sedgwick; Henry Kaufman, former chief economist at Salomon Brothers; Boston philanthropist Carl Shapiro; two of Europe's wealthiest women, Alicia Koplowitz of Spain and Lilliane Bettencourt of France; charitable foundations of director Steven Spielberg and Holocaust survivor Elie Wiesel; and New York and Yeshiva universities.
Contributing to Madoff's facade was the existence of legitimate businesses alongside the fraudulent one at his firm, Bernard L. Madoff Investment Securities LLC.
The company's market-making and proprietary-trading units, run by his sons and brother, occupied the 18th and 19th floors of the red, cylindrical Lipstick Building in Midtown Manhattan. Madoff's 17th-floor office, where the fraud was run, was off-limits to most employees.
With his promise to deliver steady returns through markets bullish and bearish, Madoff built such a sterling reputation that he had to turn some prospective investors away.
He owned homes in Manhattan and Montauk in New York state, Palm Beach in Florida, and Cap d'Antibes on the French Riviera. He sailed on a yacht called "Bull" and lavished jewelry on his wife, Ruth.
The End
The fraud collapsed in December 2008, when plunging equity markets prompted clients to seek more withdrawals than he could accommodate. His sons Andrew and Mark notified the Federal Bureau of Investigation that their father had confessed to them.
"The money is gone," Andrew Madoff quoted his father as telling the family. "It's all been one big lie." Andrew Madoff recalled the quote for Laurie Sandell's "Truth and Consequences: Life Inside the Madoff Family" (2011), an authorized biography.
Madoff pleaded guilty in March 2009 to fraud, money laundering, perjury and theft. In court, and in later interviews from prison, he insisted that he had run a genuine investment business for many years before finding himself unable to maintain the generous returns his clients had come to expect.
He said that — "to the best of my recollection" — the fraud began in the early 1990s, during a recessionary period for the U.S. economy, and that he "believed it would end shortly and I would be able to extricate myself and my clients."
"As the years went by, I realized that my arrest and this day would inevitably come," he said.
Prosecutors said the fraud began in the 1980s, if not earlier.
'Extricate Myself'
Though Madoff said he alone was responsible, others also went to jail. His brother, Peter, the firm's chief compliance officer, pleaded guilty to securities fraud and falsifying records and was sentenced to 10 years in prison.
Prosecutors said he filed regulatory statements claiming the firm had only 23 accounts, when the real number exceeded 4,000, a lie that helped avert scrutiny by the U.S. Securities and Exchange Commission. A settlement with the trustee required his family to forfeit assets valued at $90 million held by his wife, his daughter and others.
Madoff's key lieutenant, Frank DiPascali Jr., and two of his former accountants, David Friehling and Paul Konigsberg, also pleaded guilty. In March 2014, a jury in Manhattan convicted five former Madoff assistants of having aided the fraud.
Friehling was sentenced to two years' probation, including a year under house arrest. Konigsberg also avoided prison, agreeing to forfeit $4.4 million of commissions his firm received for Madoff clients. DiPascali died of lung cancer in May 2015 before his scheduled sentencing.
Family Fallout
As for Madoff himself, he lost not just his wealth and freedom but the once-strong bonds of family.
The oldest of his two sons, Mark Madoff, who had been head of sales at the firm, killed himself on Dec. 11, 2010, the second anniversary of his father's arrest. He was found hanging from a dog leash attached to a pipe in the living room of his Manhattan apartment.
His suicide was the final straw for his mother, Ruth Madoff, who said it prompted her to break off all communications with her imprisoned husband.
