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If Wall Street had been a monarchy, he would have been its greatest king. And, as such, he lived for decades. The great fortunes, funds, and major investment banks of Wall Street and half the world queued at his offices to request an audience and get the king of finance, the greatest guru in market history, to take part of their capital to invest it and turn it into pure gold. But today, that King Midas works 8 hours a day in a federal prison where he is serving a 150-year sentence for fraud. The longest sentence in history. As was his scam. The story of Bernard Lawrence 'Bernie' Madoff was always written in capital letters.
The pyramidal scam persisted over time because money flowed and there was always new capital interested in entering, and because, in addition, there were never many requests to withdraw capital at the same time. But all that changed in the autumn of 2008.Everything changed on the night of December 10, 2008. That night, Madoff gathered his wife Ruth and his two sons, Mark and Andrew, in his luxurious Manhattan apartment, to confess that the billions of dollars his investment firm was supposed to manage in operations in markets around the world, were actually limited to a few hundred million deposited in a checking account at Chase Bank in New York. Madoff had spent half his life defrauding investors with a Ponzi scheme, using new investors' money to cover the interest of older shareholders. A textbook system, without the slightest financial sophistication, that succeeded because the 'Madoff' brand conquered the money and admiration of great fortunes.
The scam persisted over time because money flowed and there was always new capital interested in entering, and because, in addition, there were never many requests to withdraw capital at the same time. But all that changed in the fall of 2008. Lehman Brothers had just gone bankrupt and the market was already assuming the first wave of the approaching financial tsunami. Investors got scared and began to recover capital to face the new situation. And Madoff saw what, as he later confessed to his lawyer, he had been silently waiting for for years. His empire built on lies was collapsing. And with it, billions of dollars from thousands of investors. The morning after his family confession, Madoff's own children reported him to the FBI and days later the US Attorney's Office estimated the fraud at 65 billion dollars.
Madoff was not selective when it came to ruining people's lives: he gathered capital from large fortunes and European nobility, but he also collected money from pension funds of middle-class holders or from investment funds and banks from both the US, Europe or Asia.Bernie Madoff became not only the most hated man in the United States, but also the most recurrent photograph to illustrate the end of the golden age of unscrupulous Wall Street, the living image of the system that had caused the worst financial crisis in decades. The world needed someone to put in the accusatory crosshairs and Madoff was the ideal candidate. When in June 2009 a court sentenced him to 150 years in prison, thousands of families and a good part of the occupants of Manhattan apartments and the best houses in the Hamptons breathed a little peace thinking that the man who had taken a good part or all of their savings would die in a federal prison far from any luxury. But the money still needed to be recovered. A mammoth task assumed by lawyer Irving H. Picard. A decade later, his team of 50 financial investigators have managed to recover only a minimal part of the defrauded money, less than 20 billion.
The explosion of the scam generated real personal dramas and some of those affected could not assume what was coming their way. This was the case, for example, of the French aristocrat Thierry de Villehuchet. He was 65 years old when he cut his veins in his New York office.Madoff was not selective when it came to ruining people's lives. The financier gathered capital from large fortunes and European nobility while attending high-society parties or playing matches at one of the private clubs where he was a member, but he also collected money from pension funds of middle-class holders or from investment funds and banks from the US, Europe, and Asia. He even invested money from his closest relatives. Madoff's problem, as he himself would later admit, was that everyone begged him to take their money, and he didn't know how to say no to anyone. And when, a few days before Christmas ten years ago, the pyramid fell and exposed billions of dollars in fraud, investors around the world discovered in horror that they had lost everything. There were also victims in Spain. The National Securities Market Commission (CNMV) at that very moment estimated the exposure of Spanish funds and SICAVs to the Madoff fraud at 106.9 million euros, among which were Fonditel Gestión, the Telefónica group's management company, and Invercaixa.
The explosion of the fraud generated true personal dramas, and some of those affected could not cope with what was coming their way. This was the case, for example, of the French aristocrat Thierry de Villehuchet. He was 65 years old when he cut his veins in his New York office a few days after discovering that he had lost nearly 2 billion dollars, his entire fortune. He was not the only one. And the tragedy took on Shakespearean dimensions when, two years after the scandal broke, Madoff's eldest son hanged himself in his luxury apartment in New York's Soho. Mark Madoff, just like his brother Andrew—who died shortly after from cancer—faced multimillion-dollar lawsuits as a former employee and executive of his father's firm. Although the trial against Madoff had excluded them from criminal liability, many victims of the fraud chose to file alternative lawsuits against them and against their mother, Ruth Madoff. They considered them responsible, at least, for having lived like kings for years with the money from a multi-billion dollar fraud and questioned their ignorance about the origin of the fortune.
When Mark Madoff took his own life, he no longer had any of his friends. Many had lost their savings, and others simply didn't want to hear from any Madoff again. Judge Chin also said this during his father's trial. Thousands of letters from victims clamoring for justice had arrived at his office. Not a single letter interceding for him. The most flattered man on Wall Street for decades had been left without a friend.
But like all great stories, Madoff's also has a part of morality and a question: how could one man make billions disappear without anyone suspecting it? Well, someone did. In 1999, a Boston investment manager, Harry Markopolos, sent a letter to the SEC (the stock market regulator in the United States), where he exposed his suspicions about the scam. The SEC did nothing. In fact, no one was losing money. On the contrary. Madoff was also one of the most respected men on Wall Street. He had been one of the promoters of Nasdaq and held dozens of advisory and honorary positions in numerous financial and charitable organizations. The system worked and Madoff was the spearhead of that system. The bursting of the real estate bubble and the financial crisis turned everything upside down. Today, ten years later, Madoff remains in prison, forgotten by everyone, and Wall Street once again celebrates millionaire profits and bonuses while wondering when the new crisis will occur and, above all, who will then be the face placed in the crosshairs of guilt.
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