Madoff with the Money (8 page)

After Bernie was branded the “Ponzi King” by the tabloids, two other classmates, John Avirom, who was on the swim team with Bernie and became an immigration lawyer, and Peter Zaphiris, who became a businessman, got in touch and reminisced about the Bernie they remembered.

“When the shit hit the fan,” says Zaphiris, “I e-mailed Johnny to chuckle about what happened with Bernie, because we'd carry on in school about how he was the dumbest white man we ever met in our lives—excuse me for the pejorative. It's not fair to say he wasn't bright. The guy was a
dummy
in high school. If you said, ‘Hey, Bernie, how are you?' his head would tilt to the side—he had a nervous tick—he'd squint, one eye would flutter, and he'd grunt,‘Hello.' He was rather laconic, didn't have much to say, never told a joke or said,‘Look at her—she's some piece of ass,' or anything like that. That was pretty much Bernie. He was just no place.”

Or so it seemed.

Fast-forward to one afternoon in the summer of 2008, as Bernie was scrambling to raise big money in a last-ditch effort to avoid getting caught. Zaphiris ran into him strolling in Manhattan's Central Park.“I said, ‘Bernie, how're you doing?' And he pulled up his sleeve and he's got two gold Rolexes on his wrist—the same wrist—and I said,‘Bernie, how come you're wearing two watches?' So he still blinks like hell and he leans over and he talks out of the side of his mouth and he says, ‘I gotta know what time it is in my London office.'Think about that. He couldn't do the addition and the subtraction” to determine the time difference across the pond.

In the sleek offices of Bernard L. Madoff Investment Securities, where Bernie often boasted of the computerized high technology with which he supplied his traders, he barely knew how to Google, or send and receive e-mail. He thought a BlackBerry was a dessert. It was hard to believe, but true. This was the same self-proclaimed Wall Street wizard who had always claimed he came up with the idea for computerized trading. A former employee who helped co-workers with computer problems set up Bernie's PC as if for a newbie: It was always turned on, it gave him only limited business news that any stay-at-home-mom day trader had access to, and if a minor glitch occurred that a computer-savvy seven-year-old could easily have fixed, Bernie acted as if the World Wide Web had been knocked out by the Taliban. He'd get stressed, and would call for immediate help.

All of which caused friends who thought of Bernie at Far Rockaway High as a “dumb schmuck” to wonder years later how in the world he was able to pull off his amazing fraud all on his own—as he claimed when he pleaded guilty.

“That's what Bernie disdained most. He didn't
want
to be a schmuck, but he really was,” observes Cynthia Greenberger Lieberbaum's younger brother, John, who years later as a screenwriter, novelist, and software entrepreneur changed his last name to Maccabee. After Bernie was busted, Maccabee wrote an article for
New York
magazine in hopes, he says, of getting a deal to write a memoir or a novel about his family—an article that angered the Greenbergers and the Lieberbaums because he revealed that the two families clearly had connections to the world's biggest crook.

“Obviously my sister and my brother [Washington, D.C.- based former
Wall Street Journal
Supreme Court reporter Robert Greenberger] are not responding well to the piece,” he notes. “They are furious with me. They feel as though I have made something public about their involvement with Bernie. It's rather laughable, but it's wreaking havoc with my family. The Greenbergers believe that there are only three times you should be mentioned in a newspaper—your birth, your marriage, and your death—and that's what they're about. We prided ourselves on being a perfect sort of family, and I guess the article throws some chinks in the works.”

The article was entitled: “Mom and Dad and Ruth and Bernie—Our Friend the Swindler.”

Bernie's extracurricular high school activities consisted of being a locker-room guard and a member of the school's swim team, the Sea Horses—dubbed the Mermen, according to team captain Fletcher Eberle.

Bernie, who joined the team in his sophomore year, “swam butterfly, and I was very often the anchor—freestyle anchor—in the medley relay,” says Eberle, who grew up near the Long Island beaches and had joined the Mermen in his freshman year.

Always thinking about ways to make money, Bernie parlayed his swimming ability into a job in his junior or senior years as a lifeguard at the exclusive Silver Point Beach Club in Atlantic Beach, an affluent oceanfront community. Bernie's swimming had impressed the Mermen coach, Richie Sierer, an ex-Marine, who recruited him to work at the club along with others from the team. The pay was about $65 a week. The private club, which had opened in 1938, had some 60 acres of white-sand beachfront, and its well-to-do members rented luxurious oceanfront cabanas for the summer. They were Bernie's kind of people, the kind he would later target.

Eberle considered Bernie “sort of devil-may-care. He didn't take anything overly seriously. When we had a very important meet, we tried to get him hyped up, but he never really cared. But when he had to get in the pool and swim, he did.”

Eberle and Bernie had different physiques. Eberle was extraordinarily strong though he stood only five feet five—“everything a swimmer shouldn't be. But I beat out guys who were six feet tall because I had very strong arms, a very strong physique like Johnny Weismuller [an Olympic gold medal swimmer who played Tarzan in the movies]. Bernie never swam the 100-yard breaststroke or butterfly. He always swam the 50-yard event. He was not overly muscular, but muscular enough that he could pull himself out of the water doing the butterfly stroke—a strenuous exercise. Once he got in the water he was pretty driven and ambitious to win.”

Indeed, Bernie was a strong swimmer with apparent ice water in his veins. When John (Greenberger) Maccabee was 10 years old he had gone swimming in the Atlantic with Bernie and his future brother-in-law, Mike Lieberbaum, off the Greenberger family's beach in Neponsit. Starting out strong, the Greenberger boy began losing momentum and was near the point of flailing. He looked over at Bernie to signal that he was in possible trouble. But Bernie, eyeing the boy, offered no help. The return swim was even tougher for Maccabee, who recalled Bernie in his “Noo Yawk accent” telling him, “Take longer strokes. Reach. Trust yourself.”

He wondered years later whether that was Bernie's credo.

During Bernie's stint as a Merman, and despite his abilities in the water, his team never won a championship, but did rank in the top three or four among New York's public school swimming teams, according to Eberle. A 1954 issue of the Far Rockaway school newspaper,
The Chat
, reported that the team had a 4-4 record for the season, and stated that the medley team on which Bernie swam had won their first two meets.

Unlike most of the others in Bernie's circle at school, Eberle didn't go to college after graduation, but instead went into the Coast Guard for four years and stayed in the reserves for more than three decades, retiring as a chief warrant officer. He hadn't follow Bernie's career. But when he read about Bernie's arrest, he contacted another classmate, Carol Solomon Marsden. “I said, ‘Is that
our
Bernie?' I couldn't believe it. If you told me that guy that I knew in the pool was into all this high finance, let alone major crimes, I wouldn't believe it. I don't have any transcripts to go by, but I know he was not a brain in school. I never thought he was super intelligent.”

As a locker-room guard—his only other extracurricular activity—Bernie usually sat around kibbitzing or playing roughneck, macho games such as punch-for-punch, which Bernie felt was idiotic but still participated to avoid being labeled a sissy. The game consisted of one boy slamming his fist into another boy's fist or shoulder.

“We would see Bernie with his knuckles bruised,” recalls Jay Portnoy. “He didn't want the others to think he was chicken, or afraid to do it. But he said it was a stupid game, and referred to the other locker guards as ‘a bunch of dummies.' He went along because, again, it was a case where [if he didn't participate] he would stand out as somehow not being sufficiently manly, or having enough testosterone.”

Bernie was always looking for a way to make a fast buck between semesters.

When he heard that two classmates, 15-year-old Eddie Heiberger and Sheldon “Shelley” Fogel, had formed a company called Shedwin—for Shelley and Edwin—and were raking in good money installing sprinkler systems for new homeowners moving from the crowded New York City boroughs to the tract house suburbs of Nassau County on Long Island, Bernie tried to shoulder his way in on their action—with the help of his tough-talking father.

“For kids, we made five or ten grand for the summer,” says Heiberger. “Bernie's father wanted him to be involved. His father was very aggressive, and he wanted Bernie to go into partners with myself and Shelley.”

The whole lawn sprinkler business would become part of the Bernie Madoff myth. To impress clients years later, he boasted that he bankrolled his 1960 start-up stock and investment business with money saved from installing lawn sprinklers and working as a lifeguard—all of which made for a good story, but was not exactly true. But it honed his image as the quintessential boy from Queens who pulled himself up by his bootstraps and became a multi millionaire and a financial wizard.

At one time lawn sprinkler systems were complicated affairs, requiring expensive copper pipe that had to be cut and fitted and welded; installation was difficult, costly, and labor intensive, and few but the very well-off could afford to buy such systems. But by the early 1950s, when Bernie was in high school, inexpensive sprinkler kits made of flexible polyethylene pipe had become available, along with cheap plastic sprinkler heads.

“As a high school kid I thought installing these things was a good business. Nobody's doing it. We were entrepreneurial,” says Heiberger, a lawyer's son, who was in Bernie's class of 1956, and his future wife in Ruth's. “Rockaway,” he notes, “had a pretty aggressive group.”

A lawn sprinkler kit cost as little as $59, but Heiberger and Fogel charged a homeowner as much as $500 for materials and labor.

“Bernie heard what I was doing installing sprinklers,” says Heiberger, “and his father said, ‘Go in with Eddie and Shelley—they're raking it in.' Shelley was an entrepreneur like myself hustling a business that made money.”

Like the characters in the film
Tin Men
, who used creative tactics to lure customers into buying aluminum siding for their homes, Heiberger and Fogel sometimes used shrewd ploys themselves in order to make a sale.

“It was the beginning of tract homes in Nassau County, on Long Island, and people were putting a lot of money into landscaping, and we were able to convince them not to water their lawns by hand with a hose,” says Shelley Fogel. “I'd see a guy watering his lawn, and I'd stop by and start smacking my arms and smacking my legs like mosquitoes were biting me, and I'd show them their shoes were getting all muddy. We'd get them that way. We were getting all these young couples moving to the island from Brooklyn. We gave landscapers stickers with our name and number to hand out to their customers when they mowed lawns, and we'd give them 10 percent of the job.”

In order to get cheap labor, he says, they recruited help in black neighborhoods. “They would think we were cops when we walked in,” he says. “We used to pay $1.50 an hour when we needed guys.”

In the end, Heiberger, who became a successful home builder on Long Island, and Fogel, who went into gaming in Las Vegas, decided against a third partner, which would have reduced their profits. As a result, Bernie went off on his own, a venture he would continue through his college years on a much larger and better-financed scale, and use even more creative tactics to lure customers. However, his brother, Peter, when he was in high school and a student at Queens College, worked for Heiberger and Fogel for a few summers.