Melanie Sheppard.

The collapse of Bernie Madoff

The collapse of Bernie Madoff

Christmas Eve 2008 in New York City. The city was abuzz with commuters doing their last minute shopping and rushing to get home to celebrate the festive evening with their loved ones. The snow had not yet arrived but the frost in the air was indication that it was on its way. The Christmas tree lights at the Rockefeller Center reflected on the ice rink below as skaters made the most of the festive spirit surrounding them.

However, in a luxurious penthouse in upper Manhattan, the mood was more somber. A husband and wife comforted each other, as they had done for over fifty years and decided to end their lives. Slowly they swallowed handfuls of pills, he more than her because of his larger frame. They said their good-byes, and went to sleep in each other’s arms. The one thing they did not plan on, however, was that they would wake up the next day and the nightmare that had become their life would still be there waiting for them. Their suicide attempt had failed, as had the husband’s attempt to defraud thousands of people out of billions of dollars in the year’s prior.

Bernard Madoff was born on April 29, 1938, in Queens, New York. He was the child of a Polish immigrant who worked as a plumber before getting into finance in the 1950’s. However records show that like his son, Madoff senior was not a clean dealer as the Securities Exchange Commission, (SEC) eventually forced the closure of his business for failing to accurately report their financial position. 

Ruth Alpbern was from Queens New York. Born on May 18, 1941, she attended the Far Rockaway High School and it was here that she met and fell in love with the man who would later be regarded as the most reviled man on American soil.

‘Ruth’ and ‘Bernie’ were rarely apart during their courtship, however Madoff was a strong swimmer and due to his devotion to training he was given a job as a lifeguard at the Silver Point Beach Club in Atlantic Beach, Long Island.

The couple married in 1959 and the following year started his investment company with the $5,000 he saved from his lifeguarding job. Bernard L. Madoff Investment Securities, LLC offered its clients reliable returns and high-end service. His client list included celebrities such as Steven Spielberg and Kevin Bacon.

From the outside, Madoff’s firm appeared to be sound place to invest your money. It was run by professional bunch that not only believed in Madoff, but also looked up to him as if he could do no wrong. According to CNN Money, “Nasdaq made him its chairman; the SEC appointed him to industry panels; Congress invited him to testify. New York Senator Charles Schumer stopped by the office in the run-up to the Iraq war and gave a rousing talk on the trading floor. Everywhere you looked, there were signs that Madoff - and by extension his firm - had special status”.

The Madoff’s lived a life of luxury beyond most people’s comprehension. In addition to the seven million dollar penthouse in Manhattan, they owned a one million dollar house in exclusive Cap d'Antibe in the south of France and an 11 million dollar house in Palm Beach, Florida. Aside from the real estate, there was the added 10 million dollars' worth of furniture and art, and a seven million dollar yacht named "Bull" that was kept in France. In total, according to court documents, in 2008 they had assets worth 823 million dollars.

What no one knew, at least according to Madoff himself, was that he was living a second life, one that was building toward an epic and inevitable explosion.

On December 11th 2008, Bernie Madoff was arrested at his Manhattan penthouse he shared with his wife. Earlier that day he had confessed to his wife and two sons, Mark and Andrew, that his business was “a lie” and a Ponzi scheme.

A Ponzi scheme is investment fraud. False returns are paid to existing investors from funds generated by new investors. Madoff was so successful because he was highly respected and regarded as an esteemed financial expert by those in the industry. His company was well established and his involvement in founding the NASDAQ stock exchange and his role serving a term as its chair added to the public’s confidence in him. He was also operating a legitimate business at the same time that he was running his scheme. He was trusted because whenever a withdrawal was requested, his investment company paid it promptly. In addition, unlike other Ponzi schemers, he didn't deliver unbelievable returns; instead they were moderate and consistent.

Madoff’s sons, apparently shocked at what they were hearing, left the apartment and directly reported their father to federal authorities. On December 11, 2008 he was arrested and charged with securities fraud. The $10 million bail was posted by his wife and brother, however he remained under 24-hour monitoring and house arrest in his Manhattan penthouse.

Many of those who were defrauded by Madoff were friends, family or members of the close knit New York Jewish community. A fog of suspicion immediately engulfed the entire Madoff family members who worked at the firm, as well as employees and business associates. In particular people questioned how it was possible that his son’s were not aware of their fathers illegal dealings when working not only in the same company but also in the same building. They worked on the 19th floor of the lipstick-shaped skyscraper in Midtown Manhattan whilst the engine that controlled the illegal dealings, was only two floors beneath them on the 17th. Both sons vehemently denied any knowledge or involvement.

Both Mark and Andrew vowed to never speak with their father again and told their mother that whilst she supported their father, she too would be ostracized and that this estrangement included their grandchildren. The largest financial fraud in history had been orchestrated by their father and the public now viewed them as the beneficiaries of ill-gotten wealth. In public opinion, it was their bloated greed that saw hundreds of people lose their life savings.

Jail time was inevitable for Madoff and a life without him was unimaginable for Ruth, his wife of 50 years. Asked why they wanted to die on that Christmas Eve, Ruth told Sixty Minutes, “We just couldn’t go on any more. I don’t know whose idea it was, but we decided to kill ourselves because it was so horrendous what was happening”.

The jury is still out on whether Ruth was aware of her husband’s illegal activity. She has denied any knowledge claiming that Madoff never discussed his business dealings with her or her sons. In fact, on the evening of his confession, it is reported that Ruth even asked the question, “What’s a Ponzi scheme?”

On June 29, 2009, Madoff was sentenced to 150 years in prison after pleading guilty in the March prior. Now, he looked broken and frail, stark contrast to the man who came before the courts previously. Madoff stood impassively as the Judge condemned his crimes as “extraordinarily evil” and imposed a sentence that was, according to The New York Times, “three times as long as the federal probation office suggested and more than 10 times as long as defense lawyers had requested”.

“I am responsible for a great deal of suffering and pain. I understand that. I live in a tormented state now, knowing of all the pain and suffering that I have created. I am sorry,” Madoff said in court. He then abruptly added: “I know that doesn’t help you”.

Throughout the trial and after sentencing, Ruth remained loyal to her husband. She was no longer welcomed into the social circles that she and her husband had once inhabited and she was vilified for continuing to support her husband. She moved in with her sister and brother in-law in their Boca Raton home. They too were victims of Madoff’s Ponzi scheme. They lost millions and were now operating a car service to make ends meet

Just as Ruth was beginning to think that her life could get no worse, the unspeakable happened. On the second anniversary of his father’s arrest, Mark Madoff, the elder of the two sons, hanged himself in his Manhattan apartment. He and brother Andrew had been the ones who turned him in but after years of negative headlines, he was unable to move on and took his own life at the age of 46. At the time, both he and his brother were being investigated for their part in their father’s crime. On top of this pressure, it has been reported by Mark’s widow that he was brutally wounded and felt betrayed by his mother, whom he once adored, for supporting his father.

Ruth Madoff flew to Connecticut to be at her son's memorial service, but Mark’s grieving widow Stephanie would have none of it. She blamed Ruth for the fact that her husband was now dead and her two children without a father.

Since this day, Ruth Madoff ceased all communication with her husband, blaming him for the death of her son. According to People magazine, a source has quoted Ruth as saying “At night, it gets to me -- the shame, the disgrace, all the stuff that killed Mark”. 

On October 17 this year the lawsuit filed by liquidators of Madoff Securities International Ltd., based in London was dismissed. They were seeking to recover about $50 million, including payments for a luxury yacht and an Aston Martin sports car. Sadly Mark was not here to feel the vindication he so desperately needed in order to live his life. 

Today, Andrew Madoff is battling stage four cancer. The younger Madoff was diagnosed with stage one mantle cell lymphoma in 2003 and earlier this year, the cancer spread throughout his entire body. He says even on his deathbed, he won't forgive his father for bilking billions of dollars from his investors.

71-year-old Ruth has relocated back to Greenwich to be closer to her son and grandchildren and lives in a home provided by Andrew.   In a statement released by her attorney she says,“I’ve moved back to the New York area for one reason: to spend time with my family, particularly Andy and my grandchildren, whom I love dearly”. She added. “This has been a healing period for me.”

In her statement, Ruth admitted the four years prior to her return to the New York area “have been terribly difficult.”

Referring to the December 2011 suicide of her son Mark, she said, “I lost a son whom I loved dearly. I don’t talk to Bernie anymore, and I find it so hard to reconcile my feelings for the man I was married to for over 50 years,” she said. “Despite this, I’ve chosen to move forward with my life and focus on my remaining family, particularly my grandchildren.”

As for prisoner 61727-054, as he is now referred, he spends his days doing menial prison labor at the Butner Federal Correctional Complex in Florida. He told a CNN reporter recently "I was responsible for my son Mark's death and that's very, very difficult," he said. "I live with that. I live with the remorse, the pain I caused everybody, certainly my family, and the victims."

Whether his sentiments are sincere or not are questionable and are probably no longer relevant.  Madoff biographer Diana Henriques, Forbes magazine contributor and author of "The Wizard of Lies," believes Madoff has a “pathological fear of failure, he finds it much easier to live with himself as a liar than a failure."

And of the 4800 investors who were affected by his fraudulent dealings he has this to say, “I can understand why they hate me, the gravy train is over”. His view of why he may be hated indicates an alarming lack of sincerity, insight and empathy.  

80 years ago the Diagnostic and Statistical Manual Disorders of Mental Health construed a disorder called Moral Insanity. With time the name was changed to Psychopathy and in more recent revisions, Anti-social Personality Disorder.

Despite the softening of the disorder through the passage of time, there is something about the term moral insanity and Bernie Madoff that seems to resonate more accurately.

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