New Insights Into Madoff’s Fraud
Photo: Catherine Hooper [Andrew's fiance], Andrew Madoff and Ruth Madoff appear on NBC News' "Today" show. (Peter Kramer/NBC/NBC NewsWire via AP Images)
Almost three years after Bernard Madoff was arrested for running a massive $65 billion Ponzi scheme, the two surviving members of his immediate family — his wife, Ruth, and his youngest son Andrew — have broken their public silence in the form of a new book on their family and a handful of media appearances to promote it.
New York Times reporter Diana Henriques, whom Martin Smith interviewed for our 2009 film The Madoff Affair, has been reporting on Madoff for years and is the author of The Wizard of Lies: Bernie Madoff and the Death of Trust. She sat down with Ruth Madoff recently to discuss everything from the early days with Bernie to the public’s perception that Ruth must have known about the fraud.
We spoke to Henriques about the Madoff family’s media blitz over the past few days and whether they’ve offered any new insights into Madoff’s crime.
The most intriguing new information was that Madoff and his wife attempted suicide on Christmas Eve 2008 — what Madoff called “a feeble attempt,” in an email he sent me this weekend.
He is so averse to admitting any form of failure — he even insisted to me, in my first prison interview with him for The Wizard of Lies that he hadn’t failed at his Ponzi scheme; he had merely gotten tired and quit.
That he seriously considered suicide, however ineptly, gives us new insight into the mind of this remarkable criminal. That he survived and never tried again is another piece of the mosaic.
And we learned more about the damaging fallout of Madoff’s crime on his immediate family, too. Mark Madoff’s widow [Stephanie Madoff Mack] disclosed that her husband attempted suicide in October 2009, more than a year before he finally took his life in December 2010, on the second anniversary of his father’s arrest.
Mark’s death came after he had begged Ruth for almost a year to cut herself off from Madoff and stop writing and visiting him in prison — tangible evidence of how deeply furious he was with his father and how betrayed he felt by his mother’s loyalty to Madoff.
Beyond that, there is simply the added texture and depth that comes from hearing from key characters in this drama who have been onstage from the beginning, but are only now being heard.
In your book, someone who knew her in her youth described Ruth as being like Goldie Hawn — “She woke up every day without a care in the world. She was a lively, bubbly girl.” And in your recent interview, she says her son Andrew “thought that people didn’t know who I was because of my portrayal.” So who exactly is Ruth Madoff ?
To me, the “Goldie Hawn” analogy is still persuasive — minus the laughter. Although she has a sad dignity, Ruth still seems deeply baffled by her husband’s crime and mortified by its repercussions. She was near tears when she talked about his many victims and the shame she feels for what he did.
Many of her observations were remarkably childlike and naïve. Unlike her news-obsessed son Mark, she sealed herself off from most of the news of the scandal as it was unfolding — it was just too hostile and hurtful, she said; indeed, she said she didn’t truly comprehend the scale and nature of her husband’s fraud until she read my book last spring. (Her son Andrew recalled that when Madoff made his dramatic confession that he was running a Ponzi scheme, his mother’s stunned reaction was: “What’s a Ponzi scheme?”)
Like millions of wives who sign a joint tax return every year without reading it, she is a member of a generation of women who trusted their husbands to run the business of the family — and that road has led her to a catastrophe that I think she’s struggling to understand.
She stayed after Madoff’s arrest in part because she saw marriage as “for better or worse” and partly because she didn’t know where else to go, what else to do, she said. She cut him off, finally, because it was the only way to reconcile with her sons, but even then, it was difficult for her.
What’s Ruth’s take on her father, Saul Alpern, and his role as an early feeder — and some might argue one of the main reasons Bernie made vital early investment connections with the like of Michael Bienes, Frank Avellino and others?
She told me she could never understand how Avellino & Bienes came to be hired — they were so out of keeping with the kind of person her father was and the kind of partners he typically had. Her speculation was that they came aboard through connections with other accountants in the office — and, indeed, we know that another pair of accountants [Edward Glantz and Steven Mendelow] who shared office space with Alpern operated a “sub-feeder fund” that invested through Avellino & Bienes.
Ruth did recall Madoff being worried in 1992, when the Avellino & Bienes feeder fund got into trouble, but he assured her it was because they had gone off the reservation and done something wrong somehow.
She still insists that her father was the soul of rectitude and cannot believe he had any knowledge of Madoff’s crime.
Ruth says people like Frank DiPascali, Madoff’s right-hand man in the fraud, were motivated by love for Bernie, not by greed. Is this naïve, or part of Bernie’s genius ?
Probably a little of both. DiPascali, in his guilty plea, spoke of his loyalty to Madoff, whom he considered a mentor and a genius. Madoff’s accountant [David Friehling], too, spoke of the awe and reverence Madoff inspired in his family. Madoff had that effect on people — he seemed so certain of himself, who could doubt him?
But Ruth hedged her observation slightly, noting that she had been surprised by the wealth these lower-level staffers had amassed while working in such obscurity on the 17th floor.
Did your interview with Ruth give you any new insight into what happened?
In small brushstroke ways, yes.
For example, I had been at a loss to explain the incident in which Ruth and Bernie wrapped up and mailed out all those valuable pieces of jewelry on Christmas Eve 2008. Did they not realize everything they owned would be forfeited to the government? Now, with Ruth’s report of their state of mind that night and the failed suicide attempt, I can understand. They weren’t focused on the legal ramifications of what they were doing because they didn’t expect to be around to deal with those ramifications.
Madoff’s infidelity to her is another insight that adds a new dimension to Madoff’s character. I was struck by the fact that, when she finally tried to break with him, his continued calls prompted her to change her telephone number. It was as if “he couldn’t not call,” she said, and that rang true. She had always worshiped him and those final months, before she finally cut the cord, show how desperately he seemed to need that adulation — additional evidence that he simply could not tolerate seeing himself as a failure, which I believe to be the root of his eventual corruption.
What’s the status of any criminal investigations into either Andrew or Ruth? Or potential legal action?
Neither Ruth nor Andrew — nor Mark, when he was living — was ever the subject or target of any criminal investigation.
Ruth was granted “innocent spouse” status in her settlement negotiations with the IRS. Andrew and Mark shared a single attorney until Mark’s death — an ethical breach if either had been in any jeopardy of criminal prosecution. To date, no evidence has emerged in any venue — in civil litigation or in the criminal indictments of Madoff’s alleged co-conspirators — that shows they knew about Madoff’s crime.
They are, however, facing a docket of civil lawsuits, chiefly cases filed by the Madoff bankruptcy trustee [Irving Picard] who is suing to recover any payments (from bonuses to credit card expenses) that they received from the legitimate Madoff firm during the years the fraud was in operation. Both say they are trying to negotiate settlements with the trustee.
Many Madoff investors aren’t receiving funds from trustee Irving Picard. And though some are, many people are just plain angry. Have they reacted to your interview with Ruth, and how?
Sad to say, there have been a few very ugly reactions — an anti-Semitic voice mail message, hostile emails, a pitiless post or two on Twitter — but they were anonymous and I have no reason to think they came from aggrieved Madoff investors.
While I understand the anger some victims have expressed in the media, there is a disconnect that baffles me. Ruth is most often attacked for living so well on Madoff’s stolen money — when many angry victims also lived better than they otherwise would have, also on Madoff’s stolen money. If neither they nor Ruth knew the money was stolen, the logic of their condemnation escapes me.
What’s your take on the Madoff family’s future?
I don’t see an easy road ahead for them. Andrew, especially, seems to trust that the public will read his story, listen to his account of what happened and eventually conclude: yes, he’s innocent.
Ruth is less sanguine — she just hopes to eventually be left alone to rebuild what is left of her family. It is hard to see a path that would include reconciliation with Stephanie Madoff Mack, Mark’s widow, given her harsh characterizations of both Andrew and Ruth.
It will take a great deal of forgiveness and maturity to heal the wounds that the last three years have inflicted on this family.