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Madoff Employee Breaks Silence
ANDREW AND MARK MADOFF’S ROLE
In contrast to most Wall Street trading firms, where traders work hard and the atmosphere is intense, tumultuous, and fast-paced, Andrew and Mark Madoff, Bernie’s sons, ran the operation “like a peaceful valley,” he said. “Cursing or shows of emotion were not allowed. Once, this guy slammed down the phone and after he was reprimanded, the brothers called everyone together and said such behavior would not be tolerated and anyone who damaged equipment would have to pay for it themselves."
"The sons were not around a lot," he continued, "but when they were, they were nice guys, good to their staff.” This employee worked there for four and a half years, and left in mid-2007, before the Ponzi scheme was revealed. Why did he leave? “I wanted more freedom, but also I just didn’t like being part of a firm that didn’t make sense.”
Employees who had lost money complained to him and Andrew said: "I’ve been advised by my lawyer not to make any statements." Then he added "You're not the only victim here."
The day after Bernie was arrested, Andrew and Mark came to work, surprising everyone. Staffers who had lost money complained to him and Mark said, according to a friend of the employee: "I’ve been advised by my lawyer not to make any statements." Then he added "You're not the only victim here." (Noteworthy, as it suggests the brothers must have gotten a lawyer right away.)
Regulations require a company to preserve all emails and firms normally archive them in the hard drives of their computers. But Madoff, the employee said, had ordered that all emails be printed out and then deleted.
‘NEVER DAWNED ON ME’
Did he think something was fishy? “It never dawned on me that Bernie was running a criminal operation down on the 17th floor. I thought he was just a quirky guy. Now, in hindsight there are a lot of things that point to illegal activities. The emails, for instance, were clearly handled that way so that nobody could access them. They didn’t want any record if someone got suspicious and wrote so to a colleague, for instance, or you pressed the search bar and the word Ponzi came up.”
The salaries, said the employee, also in hindsight, were so large because Madoff wanted to keep people happy; he wanted allies in case they found out what was really happening. “Nobody left because they could never get another job that paid as well as this one. Some people, after his arrest, speculated that it was kind of like hush money; nobody asked any questions because the Madoffs were nice, protective, generous.
"The Madoffs had all of us out to Montauk for yearly weekends. We didn't go to their houses but they put us up in hotels. They had a barbecue lunch on the sand and a formal dinner under a tent at the yacht club. On Sunday they took a small subset of employees on a fishing trip.
"It was a family affair, everyone brought their spouses and children, but on the beach, the Madoffs socialized with themselves. The employees stood apart.
THE SECRETIVE 17TH FLOOR
The employee says he only saw the 17th floor, where the fraudulent Investment Advisory operation was located, about two times. He noticed the out-of-date computers and the old-fashioned dot-matrix printers that printed out paper with green and white stripes. The computers he saw were about 15 years old, including one system that “is not even around anymore—miles away from modern Windows technology. And the statements I've seen from victims don’t look like my statements from Fidelity. They had primitive typefaces, as though they had been typed on a typewriter. Nobody sends statement like that, so maybe it was done to create the illusion of old-fashioned transparency.”
He learned that those who staffed the 17th floor were less than knowledgeable, often uneducated, often appeared incompetent. “There was this one guy, who had worked there his whole life who generated the statements but he would often not get them out on time.”
John Talks Joe
Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
Amateur Hour at the White House
Leslie H. Gelb, a former New York Times columnist and senior government official, is author of Power Rules: How Common Sense Can Rescue American Foreign Policy (HarperCollins 2009), a book that shows how to think about and use power in the 21st century. He is president emeritus of the Council on Foreign Relations.
Going Rogue: The Index
Christopher Buckley's books include Supreme Courtship, The White House Mess, Thank You for Smoking, Little Green Men, and Florence of Arabia. He was chief speechwriter for Vice President George H.W. Bush, and is editor-at-large of ForbesLife magazine. His new book is Losing Mum and Pup, a memoir. Buckley's Daily Beast column is the winner of an Online Journalism Award in the category of Online Commentary.
Sources: Madoff Indictments Imminent
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
Madoff's Other Girlfriends
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
Ruth's $45 Million Stash
Allan Dodds Frank is a business investigative correspondent who specializes in white collar crime. He also is President of the Overseas Press Club of America, one of the many journalism organizations that protests the arrests of journalists abroad and repression of freedom of speech.
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
shlamazing
Wow..now it's starting to all come together....freaky!
there are enough red herrings in this story to indicate that there are bodies everywhere....inside the madeoff facade and outside in the regulatory bodies looking on
An absolute bombshell!
Another insight into the Madoff "House of Mirrors"......
Will the stories ever end?Stay Tuned!
Lucinda Franks deserves yet another journalism award for her work on this issue. She worked for us, which is a pleasant "change" we can believe in.
This comment has been removed by The Daily Beast's editors.
You are so right!. That's why, one month after your post, we have made no progress in this case. SIPC is not paying us the money that we are legally entitled to under the laws in this country. The higher-ups are not talking at all. We, the legitimate account holders are not getting any help from any quarter. So where are the bodies buried?
Since I've been critical of other posts on the Madoff case by Lucinda Franks--which seemed just recycled information from other papers--I have to tip my hat on thise one. It contains real information, not available elsewhere.
Good job.
MANY MORE THAN NOT
Try to follow the lead of the guy who has the biggest wallet. WHY? I think they see in them a kind of KING like image ---- GOD FORBID if you are of that mindset. Then some might asks who should one look up to? Maybe this man --------his words and deeds are good for us today as when he pinned them to build a fire in us to take back and repossess our Great and Abundant America.
FAMOUS QUOTES BY FREDRICK DOUGLAS 1818 ----- 1885
America is false to the past, false to the present, and solemnly binds herself to be false to the future.
At a time like this, a scorching iron, not convincing argument, is needed.
Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong, which will be imposed on them.
I prefer to be true to myself, even at the hazard of incurring the ridicule of others, rather than to be false, and to incur my own abhorrence.
If there is no struggle, there is no progress.
It is easier to build strong children than to repair broken men.
It is not light that we need, but fire; it is not the gentle shower, but thunder. We need the storm, the whirlwind, and the earthquake.
No man can put a chain about the ankle of his fellow man without at last finding the other end fastened about his own neck.
Power concedes nothing without a demand. It never did and it never will.
The life of a nation is secure only while the nation is honest, truthful, and virtuous.
The limits of tyrants are prescribed by the endurance of those whom they oppose.
The thing worse than rebellion is the thing that causes rebellion.
To suppress free speech is a double wrong. It violates the rights of the hearer as well as those of the speaker.
Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.
Holy crap. What an interview! And I say good for that former employee coming forward to tell this story now, risking heaven only knows what. Yeah, it's easy for us to say, "How could he possibly not have known?" and natter on about how we'd have done better and they must all have known or be congenitally stupid (as Derida suggests in comment 5), but unaffiliated hindsight is 20/20. The Devil never looks like the Devil; that's how he gets away with it.
Lucinda will be getting a subpoena any minute demanding the name of this person, although she gave enough clues for investigators to identify him or her.
The over-compensation factor reminded me of Charles Keating who used to pay secretaries and clerks six figures. This should be one of the first things SEC investors look for when checking out investment firms. Count up all the clerks making an excessive wage, subtract one for the boss' gf and then look closely if there are many more.
I feel pretty confident in stating that the Bankruptcy court and the Criminal Court cases will state the Trading and Proprietary businesses of BLMIS were money losing entities. The records of the trading business were just as much of a mess as the Investment Advisory. Madoff was laundering the Investment Advisory funds to his Trading operations Bank of New York Accounts.
Another reason why the Trading side of the business wasn't making money, the salaries were not in line with earnings, never mind that the bonuses were probably exorbitant as well.
I cannot believe that only a couple of people knew that something was amiss at Madoff's place of business, I agree that more investigating is required into this gigantic Ponzi scheme. People get nuts when it comes to money, they stop thinking about reality and just see dollar signs. If something seems to be too good to be true, more than likely its not true. From the investors to the traders to the sons to the SEC, folks were blinded by quick money, easy profits by a sociopath who cared little about others. Huh, sounds like America as a whole these days! Good job Ms. Franks!!!
A good article, full of shocking substance - stupidity a la lemmings. I only wish that more articles I read in DB were as interesting
Very good piece. But shouldn't this employee be talking to investigators, not reporters?
Of course, they'll be knocking on his door any minute now. Hell, they're probably already there.
OUTSTANDING! This is why I continue to read the Beast.
And I have to agree with the employee--it would be very hard to leave if you were making a large salary and couldn't replicate it elsewhere. Many people could be trapped this way.
Kind of reminds me of General Motors.........
It looks like Madoff borrowed from the "Mob" years ago and them found him self stuck with new "Partners" and made the most of it. Fish Heads and gloves for Bernie??
Can somebody tell me what is the difference between Madoff's scheme and AIG's Financial Products division's Credit Default Swaps. It seems they both sold a lot of nothing to a lot of people.
Don't be surprised when this is all said and done that we find out the number of politicians who had their hands in this pot. The present administration comes to mind. Crooks flock together. Madoff, Dodds, Franks, Schumer, Clintons, Obama and his Hollywood friends, Acorn, etc., etc. etc. Just wait and see.
Really interesting piece. Thanks, Lucinda. Love how someone here referred to Bernie as "Made-off'" Creative play of words! What really struck me about this piece was this employee's comments at the end---how he's wondering now if he was paid with money that belonged--for instance--to the 90 year-old guy bagging groceries. It made me cognizant of the idea that Bernie's vctims are almost countless, from the investors who lost millions, to the guy who quit the firm years ago and feels complicit somehow.
Keep up the good work.....
So Bernie's a neatnik. His prison experience is going to be even more hell than I thought,
Great story about this dirt bag and his family. They should throw this scum and the fake wife in jail in one of the worse on earth to rot. Take every thing they got away.
They complain about greed well they should start rounding up all these dirt bags like them and throw them in jail and stop wasting money on long lengthy trials. And start paying back some of the people they hurt.
ZZZzzzzzzzzzzzzzzzzz!! Wow! Is this story boring and poorly written, or what?
schlocking. THIS is America. a rogue colony of greedy Euro cast offs ... and u tried to make (us) think its was just Australia ... LOL
Thank you.
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