Blogs and Stories
The Bag Lady Papers
Alexandra Penney—a New York artist and former editor of Self Magazine—lost her life savings in the Madoff debacle. Now she shares her wrenching trauma in a Daily Beast exclusive.
Last Thursday at around 5 p.m., I had just checked on a rising cheese soufflé in my oven when my best friend called.
"Heard Madoff's been arrested,” she said. “I hope it's a rumor. Doesn't he handle most of your money?”
Indeed, he did. More than a decade ago, when I was in my late 40s, I handed over my life savings to Madoff’s firm. It was money I’d been tucking away since I was 16 years old, when I began working summers in Lord & Taylor, earning about $65 a week. Not a penny was inherited. Not one cent was from my divorce. I earned all of it myself, through a long string of jobs that included working as a cashier at Rosedale fish market in New York City in my 20s, and later, writing bestselling sex books.
Before I reached for a bedtime Tylenol PM, I Googled the Hemlock Society. I wanted to know a painless way to die.
When I hung up with my friend, I turned on the TV and began to scour Google for news until the message became nauseatingly clear: Forty years of savings—the money I’d counted on to take me comfortably through the next 30 years—had likely evaporated in Madoff’s scheme.
THAT MOTHERFUCKER!! The soufflé fell.
I called Dennis, my consort of 16 years, and he canceled the dinner guests. I took half of a very strong tranquilizer that I’d been stashing for years in case of a death in the family.
My son, in his late 30s and my only child, called from California. “You can live in the back house, mom,” he told me, referring to the cottage behind his Santa Monica home. I was immensely grateful to the point of tears. But I am not going to be a burden to anyone. I never have been and I never will be.
I’d imagined living out my so-called Golden Years working on my art, living in my East Side apartment, and God forbid having to hire an aide should I ever need one. Now what will happen to me? The only thing I have left is the contents of one small bank account I’d saved for a rainy day. Terrifying thoughts of state-run old people’s homes and those slow-eyed attendants who drug you and strap you to wheelchairs suddenly became horribly vivid in my mind.
I had a great fear of being alone that night, and Dennis came right over. He walked in the door and gave me the biggest bear hug of my life and said, “Everything will be fine.” Dennis is a well-known artist, but the art market is dead, dead, dead, right now.
I began to think about my options: I’d have to sell the cottage in West Palm Beach immediately. I’d need to lay off Yolanda. I could cancel the newspaper subscriptions and read everything online. I only needed a cell phone. I’d have to stop taking taxis. And who could highlight my hair for almost no money? And how hard was it to give yourself a really good pedicure?
Then there is my jewelry. I’ve always collected nice watches and pearls. In the back of my mind I’d think, “Buy good stuff because if you're ever a bag lady, you can sell it.” It might have been a rationalization then—but here I am now: The nightmare may be coming true.
Before I reached for a bedtime Tylenol PM that night, I Googled the Hemlock Society. I wanted to know a painless way to die. Would you believe the Hemlock Society no longer exists?
Park Ave. and the Fish Market
I was brought up in very comfortable circumstances in a Waspy Connecticut suburb. My mother was a descendent of Greek royalty, an intellectual grande dame who wore elegant shaded glasses. But my father, a Greek immigrant, was a product of the Depression. He was a smart, strict Harvard lawyer who had seen bad times. I learned to save pennies from the minute I got an allowance.
After graduating from Smith, I moved to New York, dreamed of being a painter, but needed money. I began to work at Vogue magazine and was married briefly to a talented industrial designer. We lived right off Park Avenue and had a son. But the chichi uptown lifestyle was not for me.
My husband and I divorced, and I walked out without a penny. It was the 1970s, I was a feminist, and I would make it on my own.
I took three jobs to support myself and my son, including cashiering at the fish market, where my new style included rubber boots, overalls, and a wrap-around aprons. I also wrote ad copy for Bloomingdale's, and freelanced for The New York Times magazine.
We lived in a tiny two-room apartment on West Broadway before it became SoHo, where I slept on a mattress on the floor so my son could have his own room with his toys.
We lived cheaply and ate a lot of interesting pasta, but I always wanted my surroundings to be beautiful. Our life was more dash than cash.
In the early 1980s, needing more money, I came up with a book idea: How to Make Love to a Man. My parents told me I’d lost my dignity and didn’t speak to me for nine years. Lawyers have advised me not to speak in specific numbers, but the book sold millions of copies worldwide. Four others followed; all hit The New York Times bestseller list.
Checks started rolling in. I bought a one-bedroom apartment on Fifth Avenue, the first thing I’d ever owned. A few years later, Si Newhouse offered me a job as editor-in-chief of Self Magazine. I worked there until the mid-1990s, when I left to pursue my art full time.
The Madoff Connection
I suddenly had a lot of money. I was in my late 40s, and I felt that I was just too old to have it in a plain old bank account. But I was a creative person, not a savvy investor, so I asked around and talked to my smartest friends with Harvard and Wharton MBAs. There appeared to be a secret society of Madoff investors. A friend who was older, wealthier, and more established somehow got me in. I've always had good luck, and I thought it was another stroke of good fortune to be invested with the legendary Bernard Madoff.
Every month I got detailed statements, and my money looked to be growing around 9 to 11 percent. It didn't seem greedy because I knew people other people who were making 15 or 20 percent. I thought, “This is just a very smart investor.”
I never even knew what Madoff looked like. But now I obliterate his face when I see it on television. I think he's a sociopath who said he lost $50 billion for self-aggrandizement, when it was probably closer to the bandied-about number of $17 billion.
The Studio
I woke up Friday, the day after the news broke, at 4:46 a.m. in my pretty bedroom. (How much longer will I be able to stay here?) It takes a moment, but then I remember: Ohmygod, something TERRIBLE HAS HAPPENED! For several seconds I can't remember. And then: dear god! I HAVE NOTHING.
It is too painful to think I will lose my Florida cottage, maybe my studio. This is everything I have worked for.
I started out life as a painter. Since those days, my dream has been to have a studio to do the work I want to do, to be my own boss, to make the smartest art I can conceive.
I finally found my studio two years ago: a small SoHo space awash in light and sun and energy and hope.
I will almost surely have to give it up: It is an amputation I may not be able to bear. Not hearing the click of the key to "AP Studio" room 803 makes my thoughts turn to those sweet almondy cyanide capsules.
White Shirts and Telling Yolanda
I wear a classic clean white shirt every day of the week. I have about 40 white shirts. They make me feel fresh and ready to face whatever battles I may be fighting in the studio to get the best out of my work.
How am I going to iron those shirts so I can still feel like a poor civilized person? Even the no iron ones need touching up.
Yolanda makes my life work. She comes in three mornings a week, whirlwinds around, and voila! The shirts are ironed, the sheets are changed, the floors are vacuumed. She's worked with me for seven years and is a big part of my life. She needs money. She sends it to her family in Colombia. I have more than affection for Yolanda, I love her as part of my family.
On Friday, I tell her I have had a disastrous thing happen to me, but I don't have the guts to tell her I cannot keep her with me any longer. I'll wait till Wednesday.
How Will I Make Money?
The art market, as everyone pretty much knows, is dead. If I can't sell my work, I am going to have to find some way to make money.
I’ve lived a great and interesting life. I love beautiful things: high thread count sheets, old china, watches, jewelry, Hermes purses, and Louboutin shoes. I like expensive French milled soap, good wines, and white truffles. I have given extravagant gifts like diamond earrings. I traveled a lot. In this last year, I've been Laos, Cambodia, India, Russia, and Berlin for my first solo art show. Will I ever be able to explore exotic places again?
Since this happened last Thursday, I have barely left my apartment, I haven't been out for dinner; haven't bought groceries. Can’t remember the last time I ate a full meal. Food, which is one of my most favorite things in the world, has become meaningless. But I look on that as an upside.
Yesterday, I took my first subway ride in 30 years. Dennis came with me to show me how to get a MetroCard. The world looks very different from a crowded Lexington Avenue No. 6 train.
Related:
The Bag Lady's Papers, Part II
The Bag Lady's Papers, Part III
Alexandra Penney is an artist, bestselling author, former editor-in-chief of Self Magazine, and originator, with Evelyn Lauder, of the Pink Ribbon for breast cancer awareness. She had a one-person show at Galerie in Berlin in April and her work was shown at Miami’s Art Basel. She lives in New York, has one treasured son in Los Angeles and more amazing friends than could ever be imagined.
The Right Dumps Carrie
Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
Sarah Drops the Act
Tina Brown is the founder and editor-in-chief of The Daily Beast. She is the author of the 2007 New York Times best seller The Diana Chronicles. Brown is the former editor of Tatler, Vanity Fair, The New Yorker, and Talk magazines and host of CNBC's Topic A with Tina Brown.
Palin's Gold Mine
Duff McDonald is a contributing editor at New York magazine and a former contributing editor at Condé Nast Portfolio. His book, Last Man Standing, about Jamie Dimon, chairman and CEO of JPMorgan Chase, was published by Simon & Schuster in October.
The Bag Lady Papers, Part VIII
Alexandra Penney is an artist, best-selling author, former editor-in-chief of Self magazine, and originator, with Evelyn Lauder, of the Pink Ribbon for breast cancer awareness. She had a one-person show at Galerie in Berlin in April and her work was shown at Miami’s Art Basel. She lives in New York, has one treasured son in Los Angeles and more amazing friends than could ever be imagined.
The Bag Lady Papers, Part VII
Alexandra Penney is an artist, best-selling author, former editor-in-chief of Self magazine, and originator, with Evelyn Lauder, of the Pink Ribbon for breast cancer awareness. She had a one-person show at Galerie in Berlin in April and her work was shown at Miami’s Art Basel. She lives in New York, has one treasured son in Los Angeles and more amazing friends than could ever be imagined.
Madoff Victim Alexandra Penney on His Guilty Plea
Alexandra Penney is an artist, best-selling author, former editor-in-chief of Self magazine, and originator, with Evelyn Lauder, of the Pink Ribbon for breast cancer awareness. She had a one-person show at Galerie in Berlin in April and her work was shown at Miami’s Art Basel. She lives in New York, has one treasured son in Los Angeles and more amazing friends than could ever be imagined.
Hey, you're worried about clean white shirts. So, you're going to have to learn how to iron and stand there until your back hurts, like most people. That's life. Get off your ass, and get to work. And stop feeling sorry for yourself.
It truly is an unfortunate circumstance for you and the others involved in Madoff's evil scheme.
In reading your article, I have to say, I didn't feel as bad for you as I wanted to...
You have to sell the West Palm Beach House and let your maid go?
Wow! With all of the suffering going on in the world - war and violence, political unrest, genocide in the Sudan, child soldiers, not to mention those who are disabled, in wheelchairs, children suffering from cancer, heart ailments...
I've never had much of anything in my life - but what I do have is family - and even my family - who struggles daily with finances working a hard middle class life - we've all adopted a single mother with three boys for the holidays - we've scrounged up 250 dollars from everyone, including friends to work and give this family a holiday.
Don't get me wrong, it's a total blow for you, but really - a subway ride? Most of the world couldn't even afford to buy a Metrocard, for gosh sakes, they can't even afford to buy food to feed themselves and definitely don't have sons with guest quarters... so you... I don't feel bad for you.
Seriously, get over yourself and use this opportunity to give back to the world, help those in need and those who would only dream of having a subway ride in NYC.
Alexandra - Cease the day - use your rage against Madoff to discover the silver lining - potentially more time with your son, a time to give back to those who really need it -
It seems to me Madoff has given you a gift - a gift of reality - because throughout this entire essay - I didn't see one remark about charity or giving back to others.
So no, again, I don't feel bad for you.
I don't feel bad for you one bit.
This brought me to tears. Since the news broke about Madoff, I've been compulsively drawn to every story I can find on the subject. Human pain is not additive;every individual suffers alone, all tragedy is local. But the sheer numbers of people hurt by this is stunning. My sincere good wishes to the writer. The human spirit is miraculously resilient. There's no doubt in my mind you'll write another best seller, perhaps about this experience. You're younger than you think. You'll build again.
It's The (Lack of) Transparency Stupid
I recall as a reporter sent to get the dish on the Securities Traders Assn.(STA) annual bash in Palm Desert, Calif. that the Madoffs, their wives and the other elites were all there. I attended the poolside reception first, chatting with some friendly traders. A man I didn't know walked up to us, pointed to my press tags and asked them what the hell they were thinking.
When subjects are that press shy, you're supposed to be curious. But when the top agency, whose job it is to ask the first questions isn't asking, the story stops there. Oh, I
did try playing round robin tennis with the desperate housewives, in the hope of an inside line, only to get downed with tendonitis by an ace serve in the first round.
Don't think it's just Madoff who played a 'nontransparent' game. Doing a phone interview with a Merrill Lynch employee who rattled on at high speeds, I was told by the PR woman on the conference call that I could pass his quotes by her for accuracy. That's ok, I said, I tape all of my interviews. This is on tape?? she barely screamed across the phone lines. Yes, why, didn't you expect me to hear it? Poor woman raved and threatened everything she could think of, to no avail of course. But it all goes to the same thing - what were they hiding? We now know - plenty!
As for poor Alexandra, were the rumors true that her magazine frequently ripped off freelancers' pitches? If so, moving into a cottage by the pool at your son's Santa Monica home barely seems just. What sappy hyperbole!!
Maureen Nevin Duffy, Planet Finance
What a perfectly horrendous situation. I wish you all the best and know that a sharp, talented woman such as you will find a way to turn this around.
Hopefully, this blog will be a great first step to earning money. As horrific as your story is I did read a wicked sense of humor coming through. So instead of feeling sorry for you,( you give the impression that you will take care of yourself) I just feel immensely sad over what happened to you.
I do believe that your blog can be a comfort and inspiration-- not to mention cheer up anyone who is finding that their world has also changed on a dime.
I lost everything when I was in my late 30s and twenty years later am still not back to where I was, but I can say that you do find ways to recover and you learn that there's a lot of stuff you can do without. You've got to be open to big changes. BTW, I read that some people affected by this matter will be able to recover $500k from some kind of fund that covers fraud or something- it's not much, but it might tide you over.
I agree with the prior commenter. You spend your life accumulating money, living the good life in a very expensive place to live, and give all of your savings to one person or organization to invest. This is financial 101. Don't place all your eggs in one basket. At the very least it may show other 'well-off' people not to make the same naive mistake.
In addition - you apparently have some set of skills outside of being an artist (editor, author, ...) - in a few years you will be back to having a maid - while most other people will have to actually work.
Well, I DO feel bad for her. Very bad.I don't have a maid, and practically no reserveds, and one primary asset - being my ability to work long hours and bill them - but I would not, for a second, be the least bit snide about the sufferings of someone who worked her entire life and built her nest egg on her own, from her own sweat and talent, even from multiple low paying jobs, and then decided to live the well deserved life of comfort in the last third of her life. She did not inherit wealth. She did not marry wealth.She did not win it in a lottery. She obtained it exactly the way that we are supposed to - the way the American Dream is supposed to work - and she did not do those things that so many do - i.e. spend beyond her means, incur debt, leverage everything to her eyeballs. She did it right.She did it carefully.She did it admirably, in small ways, saving the way everybody is supposed to, in the simple way that Jimmy Steward did it in old movies - nothing fancy - and to have the rug pulled out from under her, through no fault, during the period of her life when she had a right to surround herself with comforts and take a deep breath , this is very very sad. Have some compassion, lady!
I can assure Ms. Penney that many in America today feel her pain, however, we must all remember that every thing we see around us is temporary; those things which we cannot see remain will always remain eternal.
America has chosen to abandon it's core values in exchange for pride and greed. We all must reap what we sow.
Although it may be difficult, we must learn to forgive. Hate the sin, not the sinner. I cannot help but feel that as time goes by we will continue to hear these stories of tremendous loss and sorrow.
Killing oneself is not the answer, however, attempting to find a new beginning truly is. I have lost everything recently due to my own grandisement, greed, and failing to accept my addiction to alcohol. I lost my home, my law practice, but I also lost alcoholm gambling, and debauchery. Although as I write these words to another who suffers monetray and personal loss, I can assure Ms. Penney and others that a simple act like prayer and reading God's Word can bring a certain sense of serenity and peace.
Even if you choose not to accept the concept of an Almighty Creator, look to a Higher Power to assist you in your plight. The now famous poem commonly referred to as "Footprints" could be a start! Good Luck Ms. Penney, and may your God bless!
Everything is relative.
Welcome to the world of real life Alexandra. It's not easy living on less. It's not easy to wake up in the middle of the night and wonder where your next meal is coming from. It's not easy to look at your beautiful home and your beautiful clothes and your beautiful jewelry and think I may never have or see you again. If you don't what then my friend? Having been down the road of downsizing I can tell you it's OK. You WILL get through it. In fact at the end of the road you will be a stronger, healthier, happier person. Right now you r saying WTF but if you had it once you may even get again. It's only money. THINGS give us the sense of security but THINGS are not security they are THINGS they are not real life. The fact that you have a son with a home with a cottage for you to live in is one of the biggest gifts of the universe. Maybe you should live there, be dependent, see what is real and what is not. Love my friend of a son of your friends of yourself is more important than anything. Those are the things you will discover with this loss of what was material and so important. You may discover 'you' and all that is within 'you' that has made you strong and successful in the past. You haven't lost that. The loss of your money by that theif allowed you to write this blog and share your story and help others which is what life is really all about. Helping, loving, giving, allowing others to give to you. It's really a beautiful thing. The next time you want to reach for the poison or do away with Mr Madoff who is being taken care of in the way of the world, full exposure and for sure a hefty jail sentence, say thank you God, thank you world, I am reborn to live the life I was meant to live. Just wake up look at your beautiful self in the mirror and say he may have taken my money but he didn't take me. He made me a more giving, caring, self aware soul who by virtue of this very blog has today helped others. Like your son with the cottage and your friend who helped teach you to use a metro card take a look at life and how lucky you are to be living it to the fullest.
Go girl. YOU have a future. It it will be better than any home or pearls or dinner party you ever had. We suffer to gain and that you have in triple digits. Enjoy it gets better and then some other lesson of life will come along and hit you in the butt.
Lynne / LynneWhitesite.com
Welcome to the club of the working sixty year olds!
You kind of had me until the last bit about not taking a subway in THIRTY years-- sounds like you needed a cosmic wake up call--BIG TIME!
niccidanella misses the boat. Theft is a personal violation, a psychological rape. Not to minimize the suffering of others, but they have nothing to do with what happened to her. There is always someone with a worse circumstance. You and your middle class family still live in a setting that would be considered lavish, secure and rich by the standards of many people in the world. Yet if someone broke into your family's house, stole everything then torched the house, then committed identify fraud and robbed your bank accounts and canceled your insurance, you would be devastated and feeling pretty sorry for yourselves too. I doubt you would be thinking, "oh well, at least we're still better off than people in Haiti." This woman didn't have any of her wealth and security handed to her -- she spent decades earning it. And now its gone. She's probably still better off than me, but I still feel enormously sorry for her. And she's absolutely right -- this evil man must be a sociapath of sorts He is basically the equivilent of a mass murderer who's actions for his own personal glory and success will ruin thousands of lives, not just his direct investors but people many times removed who were dependent on the charities that are closing their doors as a result of the money he stole from them. This is a man who has literally stolen medicine from sick little children so he can live in style and be the center of attention. Sick.
In a way, I agree with the poster above, in terms of what some people have lost, this lady has not really lost a whole load. BUT, I know that no matter how many other stories you hear about people losing their 401 K and houses, that your story to you is the real, frightening deal. I have been through a very simillar situation. It will be hard to have to cut back, scale down the life you have been accustomed to, and it is not fair when you have played by the rules and have worked hard all your life. But I am quite confident that you will be able to have a decent life. You will not be destitute! You could definitely travel to exotic locations again... you might have to settle for a 3 start hotel instead of 5 star, but you will be able to! And you might have to move to brooklyn or queens, but you're a single lady, so you wouldn't really want to have a large apartment. I do wish you the best, I hope that we all manage to get out of this economic mess - soon!
You've mourned and self-medicated, now it's time to move on. You still have far more than most. Expensive belongings, homes, well-connected friends, etc. Perhaps this seemingly horrible twist of fate could lead you to a happier, more fulfilling life in which you savor what you DO have not bemoan what you don't. The thread count on your sheets may need to go down, but the quality of your life might actually improve. See the light. Good luck to you.
I do feel compassion for your circumstances and your intense desire to be independent and not a burden.However, although you call yourself lucky,there are some people in this world who are destined to take the wrong road when it comes to a choice. You would rather work three jobs than take alimony from an ex-husband? Whatever possessed you to invest all your money with one person,one you never even met? Wasn't it Benjamin Franklin who said "don't put all your eggs in one basket." A ten dollar investment in "Investments for Dummies" would have told you that. It boggles the mind.Forget about hemlock Pull out your word processor and get to work. Good Luck!!!
I, too wanted to feel empathy. But this article came off as one big whine. I hate to say it, but this kind of litany of woes (OMG, no more jetting to Laos? No more 3-day-a-week cleaning lady?!? How will you ever survive?) cements the idea that NYC is full of elite, self-absorbed a**holes.
Daily Beast-- How about a story from a REAL bag lady? How about telling the story of a working class family forced out of their home due to a major illness? What about hearing from Yolanda?
You have not mentioned the most important thing you still have - your health.
Sell your stuff, reinvent yourself in a new affordable locale and you will once again succeed.
As much as I empathize for Ms. Penney, she brought about her own demise because of greed and ignorance.
The lack of volatility and consistent earnings every month with a cryptic investment strategy was too good to be true. Even if it were true no one should put all there net worth in one asset. Imagine if you only bought Lehman or Bear Stearns or Washington Mutual, You would have suffered the same consequences and thought afterwards it was stupid. Unfortunately, you got was you deserved.
Cry me a River.
It's you incestuous highbrows who have raped this entire country. Go get in line with the rest of us at Walmart.
I also do not feel sorry for Alexandra. She has no small children to care for; and loads of bragging rights that she can use. Pearls do retain value.
Has she ever thought until now of "the poor elderly" being taken care of by slow witted attendants? Maybe she can ask the exiled Greek Royal relatives for money; they are still well off.
Alexandra is healthy, still well off, at least in possessions. maybe be she can write a book about sex in a nursing home.
Patricia
May you find comfort in knowing that you are a good person who has wound up in a very bad situation. I will keep you and your family in my thoughts and prayers. As the holiday season unfolds around Madoff's story of true evil and greed, I hope that you will find some peace and joy in the simple gift of love and friendship.
I admire Ms. Penney's honesty, she's left herself open to criticism as one does with such honesty.
She describes incredible wealth, and I do mean what she has left in every way after the investment melt down.
(Here's something to think about: savings is the most conservative holding meant to preserve wealth; investments are meant to have substantial growth -- don't confuse the two again as tempting as it is to listen to brokers and focus on growth).
I have no doubt she's on her way to rediscovering her astounding talent, love of work and drive once the grief subsides. And I have a feeling once she rediscovers these things another book will be written about this whole transition which her publishing friends will praise and publish and people will read out of curiosity and envy: it would be a classic American tale about loss, redemption and the power of talent and ambition. And she'll recover many of the trappings that she loved too.
Tina Brown has created a fabulous career understanding how people love to see behind the scenes of the wealthy and connected in despair so we can roll our eyes and think 'if you only knew real hardship'.
Thank you.
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