To the men of Cathedral Prep in my hometown of Erie, Pennsylvania, thank you for your overwhelming support. Thanks especially to Chris Haggerty and my math teachers: Stanley Brezicki, Joanne Mullen, the late Sister Mary Denise, and the late Sister Mary DePaul.
To Ed Manion, thanks for believing me over the years and urging me to stay on the case well past the point of reason. To Mike Garrity, thanks for doing your best to get others in the agency to listen.
To SEC Inspector General H. David Kotz. You are my hero. I’d love my three young sons to turn out just like you. Your hardworking inspector general team restored my faith in government. Thanks to Deputy Inspector General Noelle Frangipane, David Fielder, Heidi Steiber, Christopher Wilson, and David Witherspoon. Your dedication to the truth won out. If the SEC really does adopt all of your recommendations, your work will have been worth it—otherwise it will be business as usual at the SEC, and our nation can’t afford that.
To SEC Chair Mary Schapiro, thank you for having the moral courage to allow the SEC inspector general’s report to be issued as written despite what must have been overwhelming pressure from the senior agency staff to heavily censor it instead.
To all of the FBI agents tirelessly working on this case in order to bring the guilty to justice. Personal thanks to special agents (first names only) Keith, Steve, Julia, Rob, and Paul. The case is in good hands now. Godspeed, keep your chins up, and go where the evidence leads you—because this case is surely the case from hell. No matter what you do, you’ll never get them all. Just try to catch as many as you can. That’s all anyone can ask of you.
And now I would like to make some very important acknowledgments on behalf of each member of the investigation team: Frank Casey, Neil Chelo, and Michael Ocrant, as well as my attorney, Gaytri Kachroo. This story would not be complete without them and their supportive friends and families.
Frank Casey wishes to thank his wife Judy and the late Major Peter W. H. Van Dine, who taught him the skills and responsibilities of leadership when he was a Reserve Officers’ Training Corps (ROTC) cadet at Penn State.
Neil Chelo wishes to acknowledge his parents, Benjamin and Sevinc Chelo; brother John and daughter Sarah Chelo; as well as George Devoe Jr., CFA; Robert Ferguson, CFA; Scott Franzblau; and Jeremy Gollehon.
Gaytri Kachroo thanks her children, Kirin and Maya Kachroo-Levine; her brothers, Leeladher and Vidyadher Kachroo; her sister-in-law, Andrea Gauntlet; and her mother, Mohini Dhar Kachroo. Big thanks to Martha Minow; Mark Byers; Representatives Kanjorski, Frank, Arcuri, Ackerman, and Garrett and their incredibly helpful staffs; Mary Schapiro; David Kotz; Javier Cremades; and the executives of the Global Alliance.
Michael Ocrant thanks his wife Gail and son Max.
Last but not least, acknowledgments on behalf of David Fisher go to editors Meg Freeborn and Bill Falloon, who did such wonderful work under real pressure, as well as to Nancy Rothschild and the rest of the fine people at John Wiley & Sons. Thanks also go to Frank Weimann and Elyse Tanzillo of the Literary Group International.
David also wishes to thank Randall Arthur, Linda Yellin, George Cole, and Patricia Black of Wallin, Simon & Black; the entire Hicker family; his wife, Laura Stevens; sons Taylor Jesse and Beau Charles; Belle, their dog; and Buck, the Hall of Fame cat.
HARRY MARKOPOLOS
Index
Absolute Return
Absolute return strategy
Access International Advisors . See also de la Villehuchet, Rene-Thierry
Accounting firms
Ackerman, Gary L.
Adelman, Jim
Adelphia case
Advisors Act
Affinity scheme
Alarm systems
Arthur Treacher’s Fish and Chips Restaurant
Arvedlund, Erin
Asian investors
Association of Certified Fraud Examiners
Audit opinions
Avellino & Bienes
Bachenheimer, Doria
Bank foreclosures
Barron, Charles
Barron’s
Bates, Harry
Becker, David
Benchmark Plus fund
Bergers, David
Bernard L. Madoff Investment Securities LLC,
Bid/ask spreads
Black box strategy
Bloomberg terminals
Boilermaker’s Union
Bounty program
Broker-dealer profits
Brown, Jerry
Broyhill, Paul H.
Broyhill All-Weather Fund
Bull spreads
Burns, Pat
Bush administration
Call options
Capito, Shelly
Casey, Frank
background of
careers at Rampart
Chicago Art Museum
continued activities of
and Dave Fraley
discovers Bernie Madoff cash needs
discovers fraudulent trades
discussion on Bernie Madoff
and Harry Markopolos
helps Neil Chelo relocate
impact of Bernie Madoff case on
leaves Benchmark
leaves Rampart
London based funds of funds avoids Bernie Madoff
on Madoff operations
meets Mike Ocrant
meets Paul H. Broyhill
meets Scott Franzblau
and mobsters
on Ponzi scheme
on Ponzi scheme vs. front-running
post Bernie Madoff arrest
public acknowledgment of role
and Rene-Thierry de la Villehuchet
on reporting to SEC
on reverse engineering
role of
sailing disaster
on SEC failure
Wall Street Journal
warns individual investors
Casey, Judy
Cattle trading scam
Charles, Prince
Chelo, Neil:
business education of
careers at Rampart
continued activities of
early career of
impact of Bernie Madoff case on
information gathering
leaves Rampart
OPRA tapes
on payment for order flow
on Ponzi scheme vs. front-running
post Bernie Madoff arrest
public acknowledgment of role
on quants
on reporting to SEC
reviews strategy analysis
role of
talks to Amit Vijayvergiya
Wall Street Journal
warns individual investors
Cheung, Meaghan
Chicago Art Museum
Chicago Board of Options Exchange (CBOE)
Chinese vitamin suppliers scandal
Citigroup
Client redemptions
Clinton, Hillary
Cohen, Steve
Collars
Commodities straddle
Commodity Futures Trading Commission
Congress:
Chuck Schumer call to SEC
Harry Markopolos testimony
investigation by
SEC established by
SEC in hearings by
Congressional Record
Contacts and relationships
Cook, Boyd
Correlation coefficient
Corruption:
as business as usual
drug cartels
incompetence vs.
municipal bonds
organized crime
regulatory
reporting on
Russian mafia
vs. stupidity
Wall Street crimes
See also Taxpayers Against Fraud; whistleblowers
Court, Andy
Covered call writing program
Cox, Christopher
Criminal investigation
CSPAN3
Cuomo, Andrew
Danger, concerns about
Darien Capital Management
Data analysis
Data collection
DeBello, Nicole
de la Villehuchet, Bertrand
de la Villehuchet, Claudine
de la Villehuchet, Rene-Thierry:
on Bernie Madoff
and Frank Casey
and Harry Markopolos
meets Frank Casey
suicide
Department of Justice
Derivative experts
Devoe, George
diBartolomeo, Dan
Dickens, Charles
Direct accounts
Discrepancies
Documentation
Documentation and literature
Dominelli, David
Donnelly, Joe
Drosos, Elaine
Drug cartels
Due diligence
Dumb equity
Ebbers, Bernie
Efficient markets hypothesis
Electronic security
Electronic trading
European banks
European investors
Excuses for investing with Bernie Madoff
Fairfield Emerald
Fairfield Greenwich Group
Fairfield Greenwich Sentry Fund
False Claims Act cases
Fax machines
Federal Bureau of Investigation (FBI)
Feeder funds
Fielder, David
Financial frauds. See also front-running; Ponzi schemes
Financial industry functions
Financial industry practices
Financial Industry Regulatory Authority (FINRA)
Financial investigations
Financial products
Financial regulators
Firearms
Firearms permit
Flaghac, François de
Forbes
Fortune
Fraley, Dave
Frangipane, Noelle
Frank, Barney
Franzblau, Scott
Fraud:
financial
financial experts response to
implicit knowledge of
market timing
medical
pharmaceutical
widespread knowledge of
See also Madoff, Bernie
Fraud examiners
Fraud investigation . See also Markopolos, Harry; Taxpayers Against Fraud; whistleblowers
Fraud investigation team
Friehling, Dave
Fritz, Jeff
Front-running
Front-running vs. Ponzi scheme
Fund investment levels
Fund sizes
Gabelli, Mario
Galvin, William
Gamma
Garrett, Scott
Garrity, Mike
competency of
public acknowledgment of role
support from
Givenchy family
Global Alliance
Global Financial Alliance
Golar Freeze
Goldman Sachs
Grant, James
Graphology
Greek heritage
Greek-Turkish
