Bernie Madoff: ‘I Always Wanted to Please Everybody’

Madoff Fund Pays Administrator But Not Victims

Bernard Madoff has had eight years in prison to think about what went wrong. He’s concluded that a few of his investors were partially to blame for his fall from a legitimate securities trader to the biggest Ponzi schemer in U.S. history.

He blames the “Big Four,” his earliest and richest clients. They were Norman Levy, a New York real estate broker, Jeffry Picower, a Florida accountant, Stanley Chais, a Beverly Hills money manager, and Carl Shapiro, a Boston philanthropist. Shapiro, 104, is the only one still alive.

Madoff Clients Fighting for Fortunes Get Help - From the Con Man

In April, Madoff was questioned for three days as part of a lawsuit that seeks to force a group of his investors to return their profit to his firm’s receiver. The cases hinge on Madoff’s claim that he was an honest trader until 1992, when the alleged greed of the Big Four forced him into a Ponzi scheme. Madoff went into great detail about his rise and fall and his relationship with The Big Four. The deposition testimony, a transcript of which is in court records, shows how Madoff sees things now:

On his relationship with the Big Four:

"I had a...very special relationship with the Big Four clients, all right, particularly, you know, with Carl Shapiro and Norman Levy and Stan Chais. Picower was a little bit different...And all of these clients, I was like a son to them and they were like surrogate fathers to me."

"I was a little guy with nothing...Carl Shapiro always tells this story famously. When he gave me $100,000, people thought he was crazy. I was this little kid from Brooklyn, didn’t go to Harvard."

He risked $1 billion covering the Big Four’s shorts:

"I’m not proud that I did what I did, you know. I spent a lot of hours with a psychologist here trying to analyze why I did what I did."

"They didn’t want to give up their returns and I made the mistake. What I should have said to them was look, this is the agreements you have."

"In hindsight now it looks like a stupid thing to do and it was ... I always wanted to please everybody.”

On whether the Big Four knew his secretary backdated trades:

"They were aware of it. They instructed her to do it."

On whether it was fraud not to report short positions:

"Well, depends upon how you define fraud."

On whether he sought victims to cover redemptions:

"No. The firm was in a position that we were always turning away investors. We never -- never solicited, you know, new monies coming in. As a matter of fact, we tried to return monies at times but met resistance with clients."

On his lack of concern for European investors:

"...first of all, they really weren’t my customers. They were customers of hedge funds."

On convertible bonds trade windfalls during ’87 crash:

"So the guys that were doing convertible bonds, they thought I was a goddamned codified genius."

On the Big Four’s offer to indemnify him:

"They didn’t want to screw me either, generally, because number one, we had a close, family-type relationship. And also I made them a lot of money. They didn’t want to kill the goose that laid the golden egg."

On losses in Big Four trading accounts from 1987 to 1992:

"I don’t know how many billions of dollars it was at the time, but you have to take that into consideration, you know.”

"So when the crash came in ’87 and these guys panicked on me, which is not a surprise in hindsight because the one thing every one of them was, which is everybody in the industry is, they’re greedy. All right. So they all panicked."


On honesty in the securities industry:

"I know it sounds strange coming from me, all right, but when I went into business the first thing I learned from both Cy Lewis (former Managing Partner of Bear, Stearns & Co.) and Gus Levy (former senior partner at Goldman Sachs) is they said to me, Bernie, whatever you do, you know, in this business, never break your word because there was no such thing as written contracts in the securities industry."

"In 50 years that I was in business, I never, ever had anyone not honor their contract. You never thought about it. It was something that, you know, if you’re in this industry, your word was your bond literally, and that was it. You trusted everybody. And that’s the way the industry operated and for the most part still operates that way today, but not as much."

On why anyone should believe he was honest until 1992:

"I have nothing to lose now."

William Zabel, the Picower family’s lawyer, said Madoff wasn’t truthful, offering “up one more self-serving lie about someone who passed away eight years ago and cannot defend himself." Attorneys for the other three didn’t return calls.

The Big Four, or their estates, paid settlements to a trustee for Madoff’s firm ranging from Levy’s $220 million to Picower’s $7.2 billion. None of the four were accused of criminal wrongdoing.

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