Andrew, Ruth Madoff Say They Were Unaware of $65 Billion Fraud

Bernard Madoff
Bernard Madoff, founder of Bernard L. Madoff Investment Securities LLC, leaves federal court in New York on March 10, 2009. Photographer: Jin Lee/Bloomberg

Bernard Madoff’s wife and surviving son say in a new book that they didn’t know of his $65 billion Ponzi scheme, the largest in history, until the day in December 2008 when he confessed his crimes to them.

Andrew Madoff, who worked at Bernard L. Madoff Investment Securities LLC with his older brother Mark, said the first indication there was something seriously wrong with the business came on Dec. 9, 2008, when his father asked his brother to arrange for traders’ bonuses to be paid out.

A day later, Andrew Madoff said he and his brother met with their mother and father at their parent’s apartment on Manhattan’s Upper East Side. It was during this meeting that Bernard Madoff first confessed the firm was insolvent and that he had been operating a fraud scheme for years.

“The money is gone,” Andrew Madoff quoted his father as telling the family. “It’s all been one big lie. It’s a giant Ponzi scheme and it’s been going on for years, and there have been all these redemptions, and I can’t keep it going anymore. I can’t do it.”

The description of what transpired in the days after Bernard Madoff’s confession came in an authorized family biography, “Truth and Consequences,” written by Laurie Sandell, and released yesterday by Little Brown & Co. The book includes interviews with Ruth Madoff and Andrew Madoff and his fiancée, Catherine Hooper.

Bernard Madoff, 73, was arrested by Federal Bureau of Investigation agents on Dec 11, 2008, and his firm was forced into bankruptcy. He pleaded guilty and is serving a 150-year sentence in a federal prison in North Carolina.

‘What’s a Ponzi?’

In describing the family’s reaction to Madoff’s disclosures, Andrew Madoff said that his mother’s hand shook as she lit a cigarette, and asked, “What’s a Ponzi scheme?”

Andrew Madoff, who has a bachelor’s degree from the Wharton School of the University of Pennsylvania, said he defined the term for his mother.

He also said when his father told him he had “fifty billion in liabilities” he interrupted his father and asked “Fifty million?”

According to the book, in the days before he confessed to the scheme, Bernard Madoff directed his wife to move $15 million into an account under her control to make cash payments. During the meeting with his wife and sons, Bernard Madoff proposed paying out a list of redemptions to certain clients.

“I’m doing my best,” Madoff told them. “I have a list of people. At the end of the day, the amount of money I’ve taken in and paid out over the years is about a wash.”

Last Meeting

Andrew Madoff said his brother erupted angrily, telling his father, “This is bulls--t!” and both brothers left the penthouse apartment. Mark Madoff never saw his parents again, and it was the last time Andrew Madoff spoke to his father, according to the book.

Mark Madoff committed suicide on Dec. 11, 2010, two years to the day after his father’s arrest.

The brothers both worked for the legitimate, market-making side of their father’s business. After his arrest, both said they had no knowledge of the fraud he ran for decades until the day he confessed it to them.

That day, the brothers sought legal advice from Martin Flumenbaum, a lawyer at Paul Weiss Rifkin Wharton & Garrison LLP, and a colleague of Mark Madoff’s father-in-law.

The lawyer closely questioned both brothers and asked if they had been aware of their father’s scheme, as both had worked for their father since leaving school, according to the book.

‘Completely Blindsided’

“We had no idea,” the brothers told Flumenbaum. “None whatsoever. We were completely blindsided.”

Flumenbaum advised both brothers to immediately report the crime to the U.S. Securities and Exchange Commission as well as the FBI and federal prosecutors.

“Yes, let’s do it,” Andrew said.

“Let’s do it,” Mark said.

“We’re doing the right thing,” Andrew replied.

Almost three years later, Andrew Madoff described his and his brother’s decision to report their father, saying, “I would love to say that Mark and I were waving the flags of justice in the air, but the bottom line is that we were absolutely terrified. We knew that what we were doing was going to send our father to jail, and the feeling was awful, absolutely awful.”

Andrew Madoff said he and his brother were later grilled by federal authorities about their knowledge of the fraud. Afterward, agents allowed both brothers to leave.

Trustee, Prosecutor

In the book, Andrew Madoff said he wants to settle with Irving Picard, the trustee for the bankrupt Madoff firm, and “would also like a declaration by the U.S. Attorney’s Office that he is no longer under suspicion, adding, “And that’s going to have to be enough. I’m not going to get more than that.”

Ellen Davis, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, declined comment on the book or Andrew Madoff’s desire for a statement from prosecutors.

An irreparable rift occurred between parents and sons when Ruth Madoff called and asked the brothers to co-sign their father’s $10 million bond, according to Andrew Madoff’s account in the book.

“You have to sign your father’s bail! You have to!” Ruth Madoff told her son, who describes his mother as “apoplectic” with rage.

In the book, Ruth insists she didn’t yell or get angry at her son, saying, “Angry? No. I don’t recall that.”

Ruth Madoff, who now lives in Florida, said she does volunteer work with the elderly and shops at Costco Wholesale Corp. supermarkets. She explains why she risked alienating her sons.

Lives ‘Unbearable’

“I have not chosen Dad and not you,” Ruth Madoff is quoted as writing to Mark Madoff. “Clearly our lives have been destroyed. What we are going through now is unbearable and would be no matter what choice I made,” she said.

Ruth Madoff said that on Dec. 24, 2008, 13 days after her husband’s arrest, the two of them made a botched suicide attempt by taking an overdose of the sedative Ambien. They awoke after sleeping for 15 hours, she said.

It was only after a woman named Sheryl Weinstein published a memoir saying she was Bernard Madoff’s mistress, that Ruth Madoff said she finally stopped seeing her husband.

“I feel a little embarrassed that the thing that stopped me from going to see Bernie was not a fifty-billion-dollar fraud but an affair that he didn’t tell me about,” she said in the book. “After the terrible crime he committed, I wonder why I would care about an affair. But I do. It’s so shameful.”

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