In the end, it’s impossible to quantify the damage Madoff’s lies did, not just to his immediate victims but to an already fragile financial system or to stock prices, which plunged to new lows in the months after his arrest. By December 2008 the economy was already in recession and stock prices were falling precipitously. But Madoff’s lies further shattered public confidence in the stock market, which surely cost investors untold billions in additional losses. His crimes also undermined public trust in financial institutions and the government’s ability to regulate them, an incalculable loss that is still being suffered by us all.
Madoff hasn’t given any press interviews since entering prison.
New York
magazine reporter Steve Fishman interviewed numerous inmates for glimpses of his life there, finding that Madoff was a celebrity among the prisoners and blamed his victims for pushing their money on him. “I carried them for twenty years, and now I’m doing 150 years,” Madoff complained to another inmate, Fishman reported.
After prison authorities informed Madoff about his son’s suicide, his lawyer said Madoff wouldn’t seek permission to attend any funeral “out of consideration for the family’s privacy.”
Conclusion
P
erjury clearly poses a threat to the judicial system and the administration of justice. But the importance of truth–and the risks posed by perjury–transcend even an institution as vital as the judicial system, as I hope the stories of Martha Stewart, Scooter Libby, Barry Bonds, Bernie Madoff, and their victims make clear. False statements have a direct, immediate, and often devastating impact, not only on those who make them but on those closest to them, their friends and families; on their colleagues, allies, and supporters; on all who rely on their word; on the ideals of fair play, integrity, and trust to which people of goodwill everywhere aspire; and ultimately to the very moral fabric of the society in which we live.
There are, of course, circumstances in which lying, even lying under oath, is not only justified but morally imperative. Surely no one would expect the Dutch family that concealed and protected Anne Frank from the Nazis to answer truthfully that a Jewish family was living in the attic, even if lying to the Gestapo was a crime. But such occasions are extraordinary. As Harvard distinguished fellow Sissela Bok demonstrates in her penetrating philosophical analysis,
Lying,
such cases are probably even more rare than most of us realize. Lies and deceptive practices “are not immutable,” she concludes. “In an imperfect world, they cannot be wiped out altogether; but surely they can be reduced and counteracted. . . . Trust and integrity are precious resources, easily squandered, hard to regain. They can thrive only on a foundation of respect for veracity.”
To the extent that any of the characters in this book offered any justification for their lies, the most common was loyalty. Peter Bacanovic told Douglas Faneuil that he would never betray Martha Stewart. Scooter Libby may have lied to protect a White House besieged by criticism. Greg Anderson initially lied, and then refused to testify, even after being jailed, to protect Barry Bonds. Even Bernie Madoff lied after his Ponzi scheme collapsed to protect his collaborator DiPascali and, perhaps, his wife and family members. They evidently expect to be admired for this behavior. There’s no question that close kinship of whatever sort–father and son, employer and employee, professional and client, even trainer and athlete–can promote deep and lasting bonds. But do they justify lying under oath? Surely not. To elevate loyalty over truth is to revert to the rule of the tribe or clan, where power and brute force decide all conflicts. It seems fitting that a group of prison inmates would give Anderson a standing ovation for his silence.
And shouldn’t loyalty be reciprocal? What concern–let alone loyalty–did Peter Bacanovic or Martha Stewart show toward Douglas Faneuil, whose life to them seemed to be little more than collateral damage? What loyalty has Barry Bonds shown Greg Anderson, who went to jail on his behalf? Why hasn’t Bonds publicly demanded that Anderson testify and tell the truth instead of insisting that Anderson is to blame for the fact that he unwittingly used creams that turned out to be steroids? And what favors did Bernie Madoff do for Frank DiPascali, who came to him an impressionable eighteen-year-old and now faces the prospect of life in prison?
Troy Ellerman never offered any justification for deceiving the court about leaking grand jury testimony to the press, but perhaps he could have appealed to a higher cause, which was the public’s right to know about steroid use and cheating in professional sports. But that confuses the act of leaking information with lying about it. Ellerman didn’t have to answer whether he was the reporters’ source. He certainly didn’t have to submit a sworn affidavit. If pressed, he could have invoked the Fifth Amendment, which is every citizen’s right. If he truly believed in his cause, he could have acknowledged that he defied the order of confidentiality and taken his case to the public. Instead, having done the deed, he took the cowardly approach, which was to lie about it, and place two reporters at imminent risk of jail. Ellerman could have been speaking for many of the characters in this book when he told the judge, “Once you lie you have to continue to lie.”
T
o return to the question I posed at the beginning: Why did these accomplished, celebrated, successful, wealthy leaders and role models risk so much by lying under oath? Why did they do it?
It’s possible, as clinical psychologist Martha Stout argues in
The Sociopath Next Door
, that highly successful people are in fact
more
likely to lie and take risks than average people. The American Psychiatric Association defines “deceitfulness” and “manipulativeness” as essential elements of an antisocial personality disorder as well as “lack of remorse after having hurt, mistreated, or stolen from another person.” Sociopathic personalities “have a greater than normal need for stimulation, which results in their taking frequent social, physical, financial, or legal risks,” Stout writes, and many succeed. “Characteristically, they can charm others into attempting dangerous ventures with them, and as a group they are known for their pathological lying and conning, and their parasitic relationships with ‘friends.’ ” It doesn’t take a sociopath to manifest many of these same traits, as some of these examples make clear.
Other people are also more likely to assist successful, famous people in lying under oath. In each of these examples, enablers played a significant role. David Marcus, the in-house lawyer at Merrill Lynch, had every reason to be suspicious of Bacanovic, whether or not he had the mistaken belief that the government would “look the other way” if they delivered the Waksals on a “silver platter.” Perhaps he and other Merrill officials were simply unwilling to confront a successful broker, let alone their office’s most celebrated client.
In another glaring abdication of responsibility, if Libby can be believed, he tried to tell Vice President Dick Cheney the full details of his interaction with reporters on the subject of Valerie Plame, and Cheney held up his hand, indicating he didn’t want to hear about it, embracing a “don’t ask, don’t tell” policy. Cheney should have gotten the facts and immediately ordered Libby to disclose the full story to the Justice Department, thereby sparing the administration a far worse scandal–Libby’s trial and conviction–than the Plame affair, which would have soon blown over. And President Bush, when confronted with evidence that his top aide Karl Rove had lied to
him
–did nothing.
Barry Bonds’s alleged use of illegal steroids seemed obvious to trainers in the Giants organization, to management, and should have been obvious to team owner Peter Magowan and baseball commissioner Bud Selig. No one wanted to confront him or jeopardize the box-office appeal of a home run king. Even now, after a perjury indictment against Bonds, Selig claims he needs more evidence before restoring the crown to its rightful owner, Hank Aaron.
Madoff benefited from a bevy of enablers who were only too happy to reap the hundreds of millions in fees he generated for them while his lies persisted. Any doubts were evidently overwhelmed by Madoff’s reputation, his track record, and above all, his sure and steady returns. Fairfield Greenwich’s managing director, Amit Vijayvergiya, conferred with Madoff two days before his testimony and then followed the party line, failing to mention that Madoff began by stating “this conversation never happened.” Nor did he volunteer the document indicating that options actually were part of the model, or at least had been until Madoff said otherwise. Fairfield had the detailed trading records indicating that Madoff moved in and out of the market with extraordinary timing, yet never seriously challenged Madoff’s vague, even ludicrous, explanations for his success. A Fairfield spokesman counters that Vijayvergiya “respected–worshipped might be too strong a word–Madoff,” which was understandable based on Madoff’s reputation, stature in the industry, performance record, and the thousands of trading records Vijayvergiya had reviewed. “He believed everything Madoff said,” and had no reason to suspect otherwise, the spokesman said.
Other feeder funds should also have known what was obvious to Markopolos, Renaissance, and others, which was that Madoff’s returns were too high and consistent to be true and there wasn’t enough trading volume to support his purported strategy. Even the Renaissance officials, who were skeptical of Madoff and withdrew their own investment with him, failed to take their suspicions to regulators.
These cases also illustrate that criminal defense lawyers have much to answer for. To his credit, Rove’s lawyer Robert Luskin promptly revealed a damaging e-mail and had Rove amend his earlier testimony that he didn’t speak to
Time
’s Matt Cooper. But other defense lawyers allowed their clients to lie in circumstances where they knew or should have known they were doing so. Lawyers are ethically bound to withdraw from representing clients they know are lying under oath. But the prevailing standard seems to be that unless defense lawyers know to a 100 percent certainty that their clients are lying, they are free to turn a blind eye.
A society that depends only on prosecutors and the judicial system to curb perjury will never succeed. It must be stopped when it happens, by others who recognize it for what it is and condemn it. It requires a capacity for moral outrage. We need more Harry Markopoloses.
But the ultimate responsibility for lying rests with the liar. In Martha Stewart’s case, despite thousands of pages of testimony and exhibits, we still don’t know whether lying was Stewart’s idea, or whether she was going along with a scheme proposed by Peter Bacanovic, or some combination of the two. They both had motives–Bacanovic to protect his job, Stewart to avoid insider trading charges–but the penalties for perjury were far worse. Bacanovic lost his job, Stewart her trading profits, and they both went to jail. Morvillo’s argument that the conspiracy amounted to a “conspiracy of dunces” may have lacked legal force, but it rings true. It’s not only abundantly clear that Bacanovic and Stewart lied and obstructed justice, but they weren’t very good at it.
“There’s no doubt in my mind that it was Peter who had the idea to lie and cover up,” Faneuil hypothesized when I asked what he thought. “The very first time Judy [Monaghan] confronted me, I called Peter immediately. My impression is that I was the one who told Peter there was an investigation that was beginning. Right when I told him, he freaked out and started lying. ‘Tax-loss selling.’ This was right after Judy confronted me. Was the trade solicited? Was it? Peter freaked. He lied. By the time he talked to Martha, he’d already lied to Merrill and to me. My guess is Peter lied from the start.
“Of course, Martha had an inclination to lie, too. It’s very hard for people to understand how high-powered, super successful people could be so brazenly off base. How could they have had such bad communications about something so important? But for me it’s easy, knowing Peter, to picture them freaking out, and talking at one another, and not listening. I wouldn’t be surprised that at their breakfast, and over the phone, they were confident they were on the same page and had come up with a plan. But neither one of them ever listens. I can picture them so easily. The way Peter spoke, nothing could penetrate. Even if she interrupted him, Peter would just bite his lip until he could get the next word in. It’s not hard to imagine how they blew it so badly.”
Why would Scooter Libby have lied? Libby was clearly a successful, hardworking, and highly intelligent person. Perhaps he could have reasonably counted on reporters refusing to testify, even Russert, although they weren’t speaking in confidence when he called to complain about Chris Matthews. Libby knew he wasn’t a source for the Novak column, and if that’s all the investigators were looking for, he could have deflected them long enough for Novak’s sources to be exposed. Then he would have been in the clear.
But he knew the investigators were looking at other leaks–a
Washington Post
clip about the scope of the investigation was in his files. Even if Russert remained silent (and by his second interview, he and his lawyer Tate both knew that Russert had contradicted him), Libby had to assume that other administration officials would undermine him–even his closest aide, Cathie Martin. Was it simply too late at that point for him to admit he was wrong?
The letters to the judge urging leniency for Libby paint a detailed picture of his personality: someone intensely hardworking, with routine fourteen- and sixteen-hour days; someone well organized, even-keeled, unfailingly civil and polite. They also suggest someone who is a workaholic, a perfectionist, sensitive to criticism. The zeal with which he sought public exoneration from the White House press secretary indicates how important his reputation was to him. For Libby to tell the truth–that he knew Plame’s identity and leaked it to Judith Miller and confirmed it to Matt Cooper–after he told the vice president he hadn’t, and had gotten the press secretary to publicly exonerate him, would not just have cost him his job and his credibility in the White House. It would have cost him his self-esteem.