We got engaged the old-fashioned way. She gave me a deadline and told me if we weren’t engaged by that date I was history. Her dream was a two-carat engagement ring and I wanted to fulfill that dream. I found out one carat was $3,000, so I naively assumed that two carats would be $6,000. That assumption was wrong. The price didn’t double; it increased geometrically to about $20,000. Maybe Bernie had billions, but I certainly didn’t.
I tried to negotiate with her, suggesting, “Maybe we shouldn’t do the same old diamond ring thing. Jewelers rip you off. Diamond rings are like new cars—they lose half their value the moment you take them out of the showroom. I think we should get cubic zirconia because diamonds have flaws in them, but cubic zirconias are flawless, just like you.”
She didn’t buy that one for a second. So I tried to reason logically with her. “I’ll tell you what. I have a buddy, Paul, who works at a trading desk down in Westchester, and he thinks the only silicon worth investing in is a set of breast implants. When he got married, instead of giving his wife a diamond ring he gave her a $6,000 set of breast implants.” I paused for effect, and added hopefully, “I’m willing to do the same for you. That way it’s something we both can enjoy.”
We settled for a carat and a half.
After we were married I convinced her to become an American citizen. Truly one of the most memorable days of my life was watching Faith become a citizen. She was part of a large group taking the oath of allegiance together. I cried, literally. When you’re watching this ceremony, when you’re listening to a cacophony of accents reciting the pledge of allegiance, it is absolutely impossible not to think about this country and the American values. I’m not going to claim I thought about Bernie Madoff at that moment, but I did think of my Greek family who came here to earn an honest living and taught their children the difference between right and wrong.
I have been asked many times why I continued to pursue Bernie Madoff when no one except the members of my team showed any interest and, if I was right and this was a Ponzi scheme, there was no chance of receiving a bounty. The answer is because what he was doing was wrong and he needed to be stopped. I didn’t put any human face on it. I didn’t do it for any potential reward or to save corporate investments. At that time I didn’t even know about affinity schemes. I did it because my parents had taught me the difference between right and wrong.
That was the reason that even after Ward showed no interest in my submission it never even occurred to me to drop our investigation. Frank, Neil, and I never even discussed that possibility. We were intellectually and emotionally engaged in the pursuit of a master criminal, disguised in plain sight as a highly respected member of the community. In some ways it was like playing a real-life game of Clue: Bernie’s in the parlor with $5 billion!
We were living with the constant feeling that we were just about there, that if we could get just a little more evidence the SEC would be forced to listen to us. And when that happened, it would be bye-bye Bernie.
For Frank, of course, there actually was the potential of a pot of gold at the end of this particular rainbow. Frank continued to believe that Bernie was front-running. If Madoff’s fund was closed down, Access alone had at least $300 million to invest, and Frank was confident that I could create a legitimate product whose returns mimicked Bernie closely enough to grab a chunk of that business—and perhaps a lot more.
What our investigation lacked up to that point was any inside information. We had Bernie Madoff’s numbers, but we knew nothing about him or the way he operated. He existed only through his reports and charts and beautiful returns. I had seen photographs of his brother, Peter, and his two sons, but I had no idea what he looked like. The word most often used to describe him was distinguished, which on Wall Street generally means rich and powerful. Later, as our investigation intensified, I would try to find a disgruntled employee or a former employee who was willing to talk about the company. I’ve done several investigations since this first one and I’ve always been able to recruit one or two insiders who would talk to me. But in this case we were never able to find anyone like that. If there were unhappy employees who knew anything about Madoff and his hedge fund operation, we never found them. He kept his employees. He paid them very well and apparently provided great benefits. And those few people who had left for other opportunities either had no inside information or felt they had been treated fairly.
But in the winter of 2001 we got very lucky, and added an investigative journalist to our team. Frank Casey had been invited by the hedge fund industry magazine MARHedge to speak to potential investors at a conference in Barcelona, Spain. MARHedge had been founded in 1994 to provide information for the rapidly growing hedge fund industry. It was the first monthly magazine aimed specifically at fund managers and investors, and had become a must-read for everybody in that industry. MARHedge conferences brought together
