The Wizard of Lies: Bernie Madoff and the Death of Trust Read Online Free PDF Page A

begins to weep, they do, too. He tells them that the whole investment advisory business was a fraud, just one enormous lie, “basically, a giant Ponzi scheme.” He is finished. He has “absolutely nothing” left. The business—the family business, where his sons had worked all their lives and where they expected to spend the rest of their careers—is insolvent, ruined. He says the losses from the fraud could run to $50 billion. None of them can take in a sum like that, but they know that millions were entrusted to him by his own family, by generations of Ruth’s relatives, by their employees, by most of their closest friends.
    Madoff assures them that he has already told Peter about the fraud and intends to turn himself in within a week. And he actually does have several hundred million dollars left, he says; that bit is true. Before he gives himself up, he plans to pay that money out to certain loyal employees, to family members and friends.
    By now, Ruth and her sons seem to be in shock, almost unable to process the news. Mark is blind with fury. Andrew is prostrate. At one point, he slumps to the floor in tears. At another, he wraps his arms around his father with a tenderness that sears itself into Madoff’s memory. When Andrew’s world stops rocking, he will say that what his father has done is “a father-son betrayal of biblical proportions.”
    The brothers leave the apartment and tell the driver to wait for their father. They stumble through some excuse about going together to have lunch. They head south down Lexington Avenue, toward the office, but go instead to see Martin London, a retired partner at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison who is also the stepfather of Mark’s wife. London is a formidable litigator, a scholar of securities law, and a richly honored attorney. He is also one of the people who has trusted Bernie Madoff. On Mark’s advice, he has invested with the family genius.
    The sons tell him what the family genius has just revealed to them. London is stunned, too, but his legal instincts kick in. He immediately tries to reach a younger colleague at Paul Weiss named Martin Flumenbaum, one of the top trial lawyers in Manhattan.
    Flumenbaum, a short, rotund man with a beaming face, is several hours away, at the federal courthouse in Hartford, Connecticut. Following courthouse rules, he had handed over his cell phone when he went through courthouse security this morning. He retrieves it and sees the urgent messages from New York.
    When he calls Mark Madoff, who has returned to his downtown loft apartment, he learns about the surreal conversation Mark and Andrew had with their father earlier. Flumenbaum promises to meet them late that afternoon at his Midtown law office, in a sleek tower just north of Radio City Music Hall.
    Christmas lights are twinkling in the drizzling winter twilight when Mark’s driver pulls up in front of the building. Andrew is already waiting on the sidewalk, and they walk in together. The driver waits, but after about ninety minutes, Mark calls and tells him to go on to the office party.
    Flumenbaum greets them when they arrive. As they settle down to talk, Mark and Andrew repeat the story of their shocking day, adding a few explanatory details. Madoff’s money management business operates from a small office on a separate floor, they said. It has always seemed successful—they know he has a lot of big hedge fund clients, has turned rich potential clients away—but their father has kept it very private, virtually under lock and key. Dozens of family members have let Bernie manage their savings, trust funds, retirement accounts. Mark and Andrew know he hasn’t used their trading desk to buy or sell investments for his private clients—he’s always said he used “European counterparties.” He has a London office and spends time there, so it made sense.
    Now nothing makes sense. Their father, a man they have looked up to all their