As Frank and his wife climbed into the backseat of a cab that would take them from the Barcelona airport to the hotel, a somewhat harried younger man asked, “Do you mind if I share the cab? I’m also on my way to the conference.”
After settling in the front seat, Michael Ocrant introduced himself. “I’m from Managed Accounts Reports,” he said, reaching across the seatback and shaking hands.
“I’m with Rampart,” Frank responded. “We’re an options management house,” he continued, explaining his product. Frank and Mike Ocrant were doing the industry dance, learning as much about each other as quickly as possible, calculating to see if there was a common ground on which they might meet for some mutual benefit. Frank Casey assumed that Ocrant knew a lot of the fund managers and might well be able to make some valuable introductions. Ocrant was a reporter, continually building a deep reservoir of sources and information, always searching for his next big story—although it’s doubtful he realized his next big story was sitting in the backseat of this cab. Finally Frank asked, “And what do you do for MAR?”
“I’m the editor-in-chief, but I also do some investigative reporting on a selective basis,” Ocrant said, in a way that Frank remembered was self-assured but not overbearing. As they began talking, Ocrant explained that he had been the reporter who uncovered the Hillary Clinton cattle-trading scam. He said, smiling, “I’ll bet you didn’t know that Hillary was the world’s best cattle trader.”
In 1994, as Ocrant explained to Frank and his wife, the New York Times had revealed that in 1978 Hillary Clinton, at that time the wife of the governor of Arkansas, had successfully turned a $1,000 investment in cattle futures into $100,000 in only a year. In 1978 $100,000 was a substantial sum of money. Just after the story was published, Ocrant had been at a cocktail party at the Futures Industry Association conference in Boca Raton, Florida. A well-known futures industry executive had whispered in his ear, “Look at the broker,” then walked off. Ocrant did his homework, discovering through research and sources that a corrupt broker had been allocating his trades, giving the successful trades to his friends and most important clients, while giving the bad trades, the losers, to people who never realized what he was doing. In response to the initial reports Hillary had claimed she made that money by reading the Wall Street Journal.Unlikely, Ocrant thought, and had spoken to the chairman of a commodities exchange, an older, completely bald man. “I said to him,” Ocrant told Frank Casey, “‘What are the chances that she’s telling the truth—that it really happened that way?’
“And he responded, ‘About the same as me waking up tomorrow with a full head of hair.”’ Mike Ocrant’s story was carried around the world, and he later received the National Press Club’s annual award for breaking news.
It was sometime during this long drive to the hotel that it occurred to Frank that Ocrant could be a very valuable ally in the pursuit of Madoff.
He heard the opening he was looking for when Ocrant began discussing the hedge fund industry, claiming that he knew most of the major players in the business. MARHedge maintained a database that tracked about three-quarters of the fund managers. There weren’t that many of them. At that time you could count on your fingers the number of funds running even $2 billion in assets.
Frank listened politely, then said, “Tell you what, Mike. I’ll bet you dinner in Barcelona for my wife and myself that I can name a hedge fund manager that you don’t know anything about, and he’s running more money than anyone you’ve got in your database.”
“That’s impossible,” Ocrant responded. “I know about everybody in that world on that level. Most of them I know personally.”
Frank held up his hands. “There’s an out for you because technically he’s not a hedge fund, but there are funds that have been formed for the sole purpose of giving him money. He might be running upwards of seven billion dollars.”
Ocrant nodded. “Okay, it’s a bet. Who is it?”
Frank said quietly, “Bernie Madoff.”
Ocrant whipped his head around in surprise. “Bernard Madoff Securities? The market maker?”
“Yep.”
“No, that’s not possible. He’s not running hedge funds.”
“I told you that was your out. But we know that he’s running seven billion worth of hedge fund money given to him basically as a loan to his broker-dealer. He’s got full discretion; he can do anything he wants with it.”
Frank and his wife had a lovely dinner in Barcelona with Mike Ocrant. By that time they shared an objective: Frank wanted Ocrant to write about Madoff, hoping the publicity would expose the scam. And Ocrant didn’t need much convincing; the fact that a well-known market maker was quietly running the biggest hedge-fund-like operation in the world was major news for that industry.
It was during their dinner that Frank revealed the details of the investigation. His whole operation was a scam, he said. Madoff was either front-running or it was the biggest Ponzi scheme in history. Like a good reporter, Ocrant casually absorbed the information. He didn’t really respond, but in fact his reaction was typical; he had a tough time believing that Bernard Madoff was running a Ponzi scheme. His professional experience had shown him how difficult it is to sustain a Ponzi scheme for even a couple of years, so it was hard for him to accept the claim that this had been going on for at least a decade. But more than that, he got hung up on the lack of a motive. Once again, it made no sense. If Madoff
