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Evening Standard
Evening Standard
Lifestyle
Simon Hunt

Madoff: The Final Word by Richard Behar review: a riveting read

What would the perfect investment opportunity look like? Something that makes big returns — much more than the competition. And something that would never make a loss, not for a single month, for year after year, decade after decade.

Anyone who owns shares will tell you no such investment exists or has ever existed. If something sounds too good to be true, it probably is. But thousands believed they had found it in Bernie Madoff — the one true investing messiah, a stock market guru with a god-given gift to buy low and sell high, every time.

Even in a downturn, Madoff investors could expect — did expect — to see big gains in their portfolios, upwards of 20 per cent a year for many. Quite how he managed to do this, when rivals were bleeding cash, never seemed to trouble them.

But it ought to have done. Because Madoff was not the all-seeing financial prophet he made out. In fact, he wasn’t trading stocks at all. Madoff’s business, BLMIS, was behind the biggest Ponzi scheme in history. When it all unravelled, some $68 billion in client funds was missing. What Madoff masterminded was not a trailblazing strategy for conquering Wall Street, but something much simpler. He offered top-notch returns and as new investors piled in, honoured that promise by handing their cash to the existing ones. Rinse and repeat.

Investors were periodically sent forged backdated share certificates to make it all seem legit.

Very simple, and very, very illegal. When all was said and done, Madoff was given a 150-year jail sentence, with many of his colleagues put behind bars too. He died in 2021, after only having served out the first decade. During that time, US investigative journalist Richard Behar, below, began a years-long correspondence with Bernie, unpicking how his phoney empire came together, and fell apart.

Two things about Madoff’s swindle are bewildering. The first is quite how long it went on for undetected. By most accounts, the Ponzi started way back in the Sixties, and over decades snowballed into a giant money-spinning machine that even Madoff couldn’t escape from. Somehow banks, regulators, and Madoff’s own clients never seemed to raise the alarm, even when the company’s efforts to conceal its dodgy dealings were clumsy at best.

It’s hard to sympathise with Madoff — but it’s also hard too to sympathise with his customers

Worse still, it might have run on for several more years had economic conditions been more propitious. What really did it for Bernie Madoff was the financial crash, with falling stock prices prompting customers to demand withdrawals from their BLMIS funds to plug losses elsewhere. But those funds were long gone, and in his final flourish, it was the man himself who alerted authorities to his own crimes.

This riveting read falls short in at least one respect, common to books by investigative journalists who spend years on the same story: the cast of characters is longer than a Tolstoy novel.

And it feels odd that the protagonist does not get much of a say. Behar lists off the hundreds of letters, dozens of phone calls and six hours of face-to-face interviews he had with Madoff, but scant detail from any of them is included beyond the odd quote. That perhaps reflects his view that Madoff told so many porkies — still, I’d quite like to hear the porkies from the horse’s mouth.

Can we be sure a Madoff-sized scam won’t repeat itself — that one isn’t going on right now? Financial regulation has ballooned over the past decade, including a raft of, new rules around public disclosure that should make a crime of this kind hard to replicate. But there were plenty of rules around at the time which should have caught him out. Behar suggests, convincingly, that banks and investment firms largely paid lip service to the regulations and when push came to shove, making money always took priority. Indeed the fear of losing Madoff as a client appeared to supersede all else.

And billion-dollar investing frauds remain all-too familiar, not least one involving a certain Sam Bankman-Fried, who earlier this year began a 25-year jail sentence for his crimes at crypto business FTX.

It’s hard to sympathise with Madoff — but it’s also hard too to sympathise with his customers, writes Behar. They received oodles of cash for partnering with a man who was consistently getting impossibly good returns in the market. It was the perfect investment opportunity — until it wasn’t. They ignored the warning signs and suffered the consequences.

Madoff: The Final Word by Richard Behar (Avid Reader Press/Simon & Schuster, £25) is published today

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