The author and publisher have provided this e-book to you for your personal use only You may not make this e-book publicly available in any way Copyright infringement is against the law If you believe the copy of this e-book you are reading infringes on the author’s copyright, please notify the publisher at: us.macmillanusa.com/piracy * Please note that some of the links referenced in this work are no longer active CONTENTS Title Page Copyright Notice Dedication Cast of Characters Prologue An Earthquake on Wall Street Becoming Bernie The Hunger for Yield The Big Four The Cash Spigot What They Wanted to Believe Warning Signs A Near-Death Experience Madoff’s World 10 The Year of Living Dangerously 11 Waking Up in the Rubble 12 Reckoning the Damage 13 Net Winners and Net Losers 14 The Sins of the Father 15 The Wheels of Justice 16 Hope, Lost and Found 17 The Long Road Forward Epilogue Notes Acknowledgments Index Also by Diana B Henriques About the Author Copyright For my colleagues at The New York Times, yesterday, today, and tomorrow; and for Larry, forever CAST OF CHARACTERS THE MADOFF FAMILY Bernie Madoff, founder of Bernard L Madoff Investment Securities Ruth Madoff (née Alpern), his wife Mark Madoff, their elder son, born 1964 Andrew Madoff, their younger son, born 1966 Peter Madoff, Bernie Madoff’s younger brother Shana Madoff, his daughter Roger Madoff, his son Ralph Madoff, Bernie Madoff’s father Sylvia Madoff (née Muntner), Bernie Madoff’s mother AT BERNARD L MADOFF INVESTMENT SECURITIES Eleanor Squillari, Bernie Madoff’s secretary Irwin Lipkin, Madoff’s first employee Daniel Bonventre, the director of operations Frank DiPascali, the manager on the seventeenth floor Jerome O’Hara, a computer programmer George Perez, his coworker and officemate David Kugel, an arbitrage trader THE ACCOUNTANTS Saul Alpern, Ruth Madoff’s father Frank Avellino, Alpern’s colleague and successor Michael Bienes, Avellino’s longtime partner Jerome Horowitz, an early Alpern partner and Madoff’s accountant David Friehling, Horowitz’s son-in-law and successor Paul Konigsberg, a Manhattan accountant Richard Glantz, a lawyer and the son of an early Alpern associate INDIVIDUAL INVESTORS AND “INTRODUCERS” Martin J Joel Jr., a stockbroker in New York Norman F Levy, a real estate tycoon in New York Carl Shapiro, a philanthropist in Palm Beach Robert Jaffe, his son-in-law Jeffry Picower, a secretive New York investor William D Zabel, his longtime attorney Mendel “Mike” Engler, a stockbroker in Minneapolis Howard Squadron, a prominent Manhattan attorney Fred Wilpon, an owner of the New York Mets baseball team MAJOR U.S FEEDER FUNDS Stanley Chais, a Beverly Hills investor Jeffrey Tucker, a cofounder of Fairfield Greenwich Group Walter Noel Jr., his founding partner Mark McKeefry, the general counsel at Fairfield Greenwich Amit Vijayvergiya, the chief risk officer at Fairfield Greenwich J Ezra Merkin, a prominent Wall Street investor Victor Teicher, his former adviser Sandra Manzke, a pension fund specialist Robert I Schulman, her onetime partner INTERNATIONAL INVESTORS AND PROMOTERS Jacques Amsellem, a French investor Albert Igoin, a secretive financial adviser in Paris Patrick Littaye, a French hedge fund manager René-Thierry Magon de la Villehuchet, his partner Sonja Kohn, a prominent Austrian banker and founder of Bank Medici Carlo Grosso, a manager of the Kingate fund, based in London Rodrigo Echenique Gordillo, a Banco Santander director in Madrid COHMAD SECURITIES Maurice J “Sonny” Cohn, Bernie Madoff’s partner in this firm Marcia Beth Cohn, his daughter WHISTLE-BLOWERS Michael Ocrant, a writer for an elite hedge fund newsletter Erin Arvedlund, a freelance writer for Barron’s magazine Harry Markopolos, a quantitative analyst in Boston SECURITIES AND EXCHANGE COMMISSION (SEC) Christopher Cox, chairman from August 2005 to January 2009 Mary Schapiro, his successor as chairman H David Kotz, their independent inspector general Grant Ward, a regional official in Boston Ed Manion, his coworker Lori Richards, a senior official in Washington Eric Swanson, a lawyer in Washington Andrew Calamari, a senior regional official in New York Meaghan Cheung, a lawyer in the New York office Simona Suh, her colleague William David Ostrow, an examiner in the New York office Peter Lamore, his colleague Lee S Richards III, a New York lawyer in private practice, appointed as receiver for Madoff’s firm FAMILY LAWYERS Ira Lee “Ike” Sorkin, defense lawyer for Madoff Peter Chavkin, lawyer for Ruth Madoff Martin Flumenbaum, lawyer for Mark and Andrew Madoff FEDERAL BUREAU OF INVESTIGATION (FBI) Ted Cacioppi, special agent B J Kang, his colleague FEDERAL PROSECUTORS IN MANHATTAN Preet Bharara, U.S attorney for the Southern District of New York William F Johnson, chief of the Securities and Commodities Fraud Task Force ... Madoff s younger brother Shana Madoff, his daughter Roger Madoff, his son Ralph Madoff, Bernie Madoff s father Sylvia Madoff (née Muntner), Bernie Madoff s mother AT BERNARD L MADOFF INVESTMENT SECURITIES... founder of Bernard L Madoff Investment Securities Ruth Madoff (née Alpern), his wife Mark Madoff, their elder son, born 1964 Andrew Madoff, their younger son, born 1966 Peter Madoff, Bernie Madoff s... out of his hands At midmorning, Mark and Andrew Madoff walk past Squillari’s desk and enter their father’s office According to her, Peter Madoff goes in, too, and sits on the sofa beside the