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How are Bernie Madoff’s fraud victims coping five years later?

Recovering the losses from Bernie Madoff’s enormous Ponzi scheme has been slow over the past five years. For more on the where Madoff’s fraud victims are today, Judy Woodruff talks to Diana Henriques of The New York Times, who says his victims are still "living a nightmare."

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    Here to flesh out this story is Diana Henriques, who has been chronicling it from the beginning. She's a reporter for The New York Times and she's the author of a book about the Madoff case, "The Wizard of Lies."

    Diana Henriques, welcome back to the NewsHour.

    You have been following very closely, among other things, the effort to recover as much of the money Madoff stole as possible to get it back to people who lost the money. How is that process going?

  • DIANA HENRIQUES, The New York Times:

    Well, I think here at year five, we can say it has been extremely slow, extremely complicated and for the victims extremely frustrating.

    We're not even halfway through the major compensation program, the one being administered through the bankruptcy court, which, as you mentioned, Judy, has raised about $9 billion. About half of that has been distributed. The rest is being held back in reserve because of a tangle of litigation issues that are still pending.

    There's an entirely separate fund being operated through the Justice Department that is about $2.2 billion. That just got up and operating last month. The claims period doesn't end until February. So, for these victims, many of whom were already in retirement when Madoff's fraud was exposed, they are getting older and more upset about the prospects of ever recovering anything, even where they are eligible to recover.

    And many thousands are not eligible, either because they weren't investors directly with Bernie or because they didn't lose cash principal. They just lost paper wealth they thought was theirs.


    So, you're talking to a number of these victims. What kinds of things are they telling you?


    Well, the victims who have been sued by the trustee for the recovery of cash that they took out thinking it was their own money, but which was actually money Bernie had stolen from someone else, those victims are really living a nightmare.

    They — one victim told me that it was like facing a test in school where you're not prepared, and you know it's coming. They live in a constant state of anxiety, worried about what's going to happen to that litigation.

    For other victims, many are moving on. They're making a point of finding a smaller and simpler, but satisfying life. But we both know that there are a lots of victims for whom the anger and the frustration are still souring the years that they have left. So it's very much a mixed bag, I think, but not much of it happy.


    Now, you're talking to the victims. You have also maintained communication with Bernie Madoff himself over the years.




    And you were telling us that you found that his attitude, the tone you hear coming from him has changed since he's been in prison. Tell us about that.


    It has.

    It actually has changed fairly recently, Judy. For the first several years of our communications — we were exchanging regular e-mails and letters, occasional phone calls — he was very careful to always include a fairly extension — extensive expression of regret, acknowledging his guilt, acknowledging the people he had hurt and the people he had betrayed, whose trust he had betrayed.

    But now, in our more recent conversations over about the past year, that rhetoric is gone. He is very bitter towards his victims. Beyond irony, he sees them as greedy. He sees them as expecting too much from this compensation process. And his remorse has really shrunk down to the very profound and deep remorse that he feels for the wreckage he made of his family's life.


    Well, separately from all of this, we know there's a trial going on of Madoff's associates, a lot of interesting testimony coming out there. Tell us what you're hearing, what you are learning from that that we should know about.


    Well, it is a fascinating trial. It is the government's first opportunity to present the evidence it has for proving the proposition that this fraud began long before Bernie Madoff says it did.

    He insisted when he pleaded guilty that the fraud began in 1992 and that he was an honest money manager until then. The evidence presented in trial has made that even less believable than it already was. I was very confident in writing "The Wizard of Lies" that the fraud began at least by the mid-'80s.

    The evidence in trial this past week brought it back to the mid-1970s. At least some fake trading, bogus trades were being done even in the mid-'70s. So the government has made good on planting its flag on the start date of this fraud.

    I have also learned the incredible detail that Madoff invested in this cover-up. I said to a colleague in court, you know, this is really the Faberge egg of Ponzi schemes, every tiny detail that Madoff paid attention to, making sure that the font, the typeface on some of these forged documents was exactly perfect…




    … that websites that were created were perfect. So, it's been quite enlightening.


    It's been enlightening. What a story. It just doesn't seem to come to an end.

    Diana Henriques of The New York Times, thank you.


    Thank you.