Saturday 29 April 2017

Crushed by the sins of the father

Ed Power

Ed Power

He was found hanging by a dog-leash in the kitchen of his $10m loft-apartment in New York's chi-chi SoHo neighbourhood. In the room next door, his two-year-old son was still sleeping, oblivious to the tragedy. There was no suicide note -- unless you count the email sent to his wife shortly beforehand, in which he bitterly wrote, "nobody wants to hear the truth".

The self-inflicted death this week of Mark Madoff (46), son of Ponzi scheme villain Bernie Madoff, has reignited interest in a financial swindle which devastated the savings of thousands of investors -- among them power players such as Steven Spielberg -- and left the elder Madoff serving a 150-year jail sentence.

Two years to the day since the $65bn (€48.5bn) pyramid scam was exposed to the world, Mark's suicide poured fresh fuel on what may well go down as one of the greatest frauds in financial history.

As news of his death rippled like bushfire through the Manhattan financial industry this week, two, contradictory, views emerged. The first is that Mark was yet another victim of his father's evil scheme, an innocent bystander who could no longer bear the ignominy of the family name. The second is that, for all their denials to the contrary, Mark had to have been an active participant in Bernie's deception and that, with the net closing in, he had taken the drastic way out before being uncovered as a crook.

Bernie Madoff 's downfall began on December 10, 2008, when, so goes his version of events, he confronted his son with a terrible revelation. The multibillion-dollar financial investment firm he'd spent nearly 50 years building was a sham. The vast returns Madoff offered a 'select' group of investors (he insisted on taking clients by referral only, enhancing the impression of exclusivity) was illusory. Far from working miracles on the stock market, Madoff was, in fact, paying his legendarily high returns using other investors' money. With the financial markets in turmoil, the jig was up.

According to this account, Mark, who was on his dad's payroll and worth millions, was flabbergasted. The family firm was one big lie, his father among the biggest financial crooks of the past 100 years. Shocked and angry, Mark insisted on going straight to the FBI, which he duly did.

As word of Bernie's scam spread, however, those who had dealt closely with the Madoffs began to ask whether it was credible that Mark, who had been employed at the company since graduating from college, could really have been unaware of the swindle at its heart (customers were duped by the complex financial statements showing falsified tradings which Madoff sent out every quarter).

For sure, he was not directly involved in cooking the books, an enterprise conducted on the 17th floor of Madoff's headquarters at the iconic 'Lipstick Building' in midtown Manhattan. He had worked as a trader in the stock dealing branch of the enterprise, two storeys above.

Speaking to Vanity Fair last year, a Madoff insider identified only as 'Deborah' said she believed Mark was innocent because he didn't possess his father's capacity for "evil". However, she acknowledged that, to outsiders, it probably seemed incredible that he could have been in the dark. "If I were to say that Mark is innocent, I'd get people looking at me like I'm absolutely nuts."

Mark certainly discovered the Madoff name difficult to live down. Persona non grata in New York, he spent the past two years as a virtual recluse. His wife Stephanie found the association such a burden, she reverted to her maiden name. Attempts by Mark to restart his professional life came to nothing.

He never spoke to Bernie after his confession. he was also said to be estranged from his mother Ruth (who worked at Madoff Securities too).

But according to other accounts, Bernie, a plumber's son from blue-collar Queens, held his Mark in low esteem, believing him 'soft' because he was born into luxury. "Mark never went against him," another insider told Vanity Fair. "He was always trying to please him, and never could."

One of the first to come to the defence of Mark's reputation as the suicide became public knowledge was Eleanor Squillari, Madoff's secretary for a quarter of a century. "He had to live for the last two years under the scrutiny and the innuendos and people alluding to the fact that he couldn't have known or he had to have known," she said. "Well, you know what, he didn't. And I would bet my life on it."

However, a bankruptcy trustee appointed by the court to recover as much of misappropriated funds as possible, in a lawsuit filed just a few days before Mark's suicide, claimed he was guilty of accountancy fraud.

"If he had been doing his job honestly and faithfully," said the trustee in a statement, "the Madoff Ponzi scheme might never have succeeded, or continued for so long."

Irish Independent

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