The Wizard of Lies: Bernie Madoff and the Death of Trust (2 page)

T
UESDAY,
A
UGUST 24, 2010

Glimpsed through the glass double doors at the end of a long prison hallway, he is not recognizable as the impassive hawk-faced man who was marched incessantly across television screens around the world less than two years ago. He seems smaller, diminished—just an elderly man in glasses talking deferentially to a prison official and looking a little anxious as he waits for the locked doors ahead of him to click open.

Escorted by an associate warden, he steps from the sunshine of the prison’s sealed courtyard into the dim, cheaply paneled visiting room. The room would have fit easily into a corner of his former penthouse in Manhattan. Its furnishings consist entirely of faded plastic lawn furniture—red armless chairs around low tan tables—and it is illuminated today only by light from one large window and a row of vending machines.

On most of his occasional visits to this room, it had been filled with prisoners and their families. But as he enters with his escort on this Tuesday morning, the room is empty except for his lawyer, a guard, and the visitor he has finally agreed to see. As the rules require, he sits facing the guard’s desk, where the associate warden settles down to wait. He unfolds a single sheet of ruled paper; it appears to be some handwritten notes and a few questions for his lawyer. He spreads the sheet out on the table in front of him.

The creases in his tan short-sleeved shirt and trousers are knife-sharp, despite the humidity of this late summer morning. His hair is shorter, but it suits his slimmer frame. His black leather sneakers are gleaming. Aside from a small spot where the brass plating on his belt buckle has worn away, he is as carefully groomed as ever. Even though he does not much resemble the heavier, better-dressed man shown so often in the news reports after his arrest, he still has a quiet magnetism that draws the eye.

For more than two hours, he answers questions, sometimes with a direct gaze and sometimes with eyes that shift to the empty patio outside the window beside him. He is soft-spoken and intense, with occasional flashes of wit. He loses his composure just once, when he talks about his wife. Throughout, he seems unfailingly candid, earnest, and trustworthy.

But then, he always does—even when he is lying. That is his talent and his curse. That is what enabled him to pull off the largest Ponzi scheme on record. That is what will enable him to spin the facts and obscure the truth about his crime for as long as he lives, if he chooses to do so.

Bernard L. Madoff—Inmate Number 61727054—is the best-known prisoner currently held at the sprawling Federal Correctional Complex on the outskirts of Butner, North Carolina.

The Butner-Creedmore exit on Interstate 85 does not announce that the prison is located here. There are no clearly marked signs within the little hamlet, just a few narrow black-and-white painted pointers at intersections, old-fashioned and easy to miss. The prison is not on the local map in the telephone book, so visitors have to ask the motel clerks for directions.

The twisting route from the interstate involves urban-sounding byways like Thirty-third Street and E Street but is lined mostly with vine-blanketed trees and weed-strewn fields. The prison complex looms suddenly out of the pine woods on the right. It consists primarily of four large buildings set in a floodlit clearing among the lowland forests and fields.

To the right, set slightly apart on the eastern edge of the property, is a minimum-security prison, the color of manila folders and distinctively free of walls or fences. Almost hidden from view behind a thick stretch of trees to the left is a large modern prison hospital, whose separate entrance is farther along the two-lane road that meanders past the complex. And just visible up on a small wooded hill at the center of the complex is a multistory medium-security prison clad in corrugated gray stone.

Madoff is housed in a fourth facility on the Butner grounds, another medium-security prison to the left of the main entrance, down a short drive lined with flowering white crepe myrtle trees. The low gray-stone building is laid out like a giant game of dominoes. Except for its entryway, it is completely surrounded by a double row of towering chain-link fences taller than the building itself. The encircling fences are lined with shimmering swirls of shiny razor wire. A watchtower stands at one corner of the large, nearly treeless exercise yard, and guards cruise the narrow roads winding through the complex, constantly alert for wandering prisoners or too-curious visitors.

The unit’s cinder-block entryway is a low-ceilinged maze of security screening equipment, lockers for visitors’ belongings, pay phones, and offices. A set of locked doors leads into a sort of double airlock; the rear doors of each section are sealed before the doors ahead swing open. The last pair of doors opens into a wide white hallway leading to the visiting room. The corridor is immaculately clean and decorated, incongruously, with black-and-white Ansel Adams posters of big skies and wide-open spaces.

The sense of impenetrable isolation descends as soon as the last set of doors thud shut. Cell phones are out of reach, left in the lockers by the entryway. No written messages can be handed to the prisoner, who is constantly watched during visits. Without permission, not even a notebook can be carried into the visiting room; no tape recorders are allowed. Like laboratory rats or ants in a glass-walled colony, these prisoners are under constant scrutiny in a way few Americans can fathom. Phone calls—collect calls only—are rationed and monitored. Letters are opened and read. Every human interaction is policed, regulated, constrained, limited, fettered—including this one.

All media visits require the prisoner’s invitation and the warden’s approval. After nearly a month of paperwork, the green light from the warden came with barely a week’s notice. The time allowed is limited, and that limit is politely enforced. (A follow-up visit will be authorized in February 2011. In the interval, Madoff will send along a note promising to mail his responses to any additional questions. He keeps his promise, sending several lengthy handwritten letters over the next few months and arranging to send short messages via the restricted and closely monitored prisoner e-mail system.)

Until today, Madoff’s only visitor, apart from lawyers, has been his wife. Until now, he has not answered any independent questions about his crime except when standing in a courtroom, responding to a judge.

Amid that continued silence and mystery, Madoff’s time in prison has been the subject of several speculative magazine and television specials—the latest one will air this week, in fact. In it, a former prisoner will claim that the guards here act “starstruck” around their infamous prisoner from Wall Street, although there is no sign of that today. That television program will also portray Butner as “Camp Fluffy,” a gentle white-collar jail compared with harsher state prisons that house murderers and other violent criminals. Madoff’s victims may feel that he deserves nothing more comfortable than a Vietcong tiger cage; if so, they will be disappointed at the roomlike two-man cells, the exercise equipment, and the television rooms available here.

But Madoff is unquestionably in a medium-security prison. It is not a steel jungle of brutal, barely restrained violence and depravity, but neither does it resemble a comfortable “Club Fed” with a golf course and tennis courts and casual visits from friends and family. These inmates do not wander beyond the towering razor-wire fences for a leisurely smoke. With his 150-year sentence, Madoff will live and die under lock and key.

It is unwise to trust the information about Madoff that leaks out of this sealed world. Besides an early tabloid report that he was dying of pancreatic cancer, there have been other reports, in more credible venues, that he was beaten up in an argument with another inmate. One report said he told a visitor he “didn’t give a shit” about his sons.
New York
magazine reported that, after being provoked by an inmate, Madoff blurted out, “Fuck my victims.” And the
New York Post
reported that he told unidentified inmates that he had hidden away billions of dollars during the course of his long-running crime.

What is the truth? The prison firmly denies that Madoff, who is now seventy-two years old, has pancreatic cancer or any fatal disease—he concurs, and he shows no sign of illness today. The prison and Madoff also deny that he was ever attacked or involved in a fight; the minor injuries that prompted the rumor were sustained when he fell after becoming dizzy from some blood-pressure medication. And Madoff denies that he ever said anything contemptuous about his sons or his victims or claimed to have a secret fortune stashed away. On those last points, someone in this self-contained world of lies is telling the truth. It might be him.

Bernie Madoff’s name is recognized and vilified around the world, a universal shorthand for a selfish, shameful era. He has been deplored in Switzerland, discussed on radio programs in Australia, whispered about in China, fretted over in the Persian Gulf. His face has been in every newspaper in the country, slapped onto the covers of magazines in a half-dozen languages, caricatured in editorial cartoons everywhere.

Even in an age of hyperbole, the story was beyond belief: a multibillion-dollar Ponzi scheme that lasted for decades, stretched around the globe, and ensnared some of the richest, wisest, and most respected people in the world. Thousands of ordinary people were caught in Madoff’s web, too, and were utterly ruined.

In the aftermath of the economic meltdown of 2008, with dishonesty and chicanery exposed throughout the world of finance, no villain put a human face on the collapse the way Madoff did, perhaps because his crime encompassed far more than just the financial crisis. It was a timeless drama in itself, a morality play as ancient as human greed, as poignant as human trust.

The Madoff scandal struck a chord deep in that part of our imagination that responds to folktales and endows them with so much emotional power. A staple of such tales is instant transformation. In the blink of an eye, the ugly frog is a handsome prince. With one kiss, a sleeping princess is awakened, still beautiful after a century. With the sweep of a magic wand, a rolling pumpkin and a half-dozen scurrying mice become a golden coach and six gray horses.

Instant change was the core experience of Madoff’s downfall. Suddenly, rich people were poor, admired people were scorned, smart people were exposed as fools, reasonable people were consumed with rage. The handsome prince became an ugly toad. This one man, Bernie Madoff, had made the life savings of tens of thousands of overly trusting people all around the world disappear in an instant. Thousands of times over, people were shattered by that stroke-of-midnight moment. Just an eyeblink, and it was all gone—their money, their status, their easy confidence in the future, the first-class travel, the secure retirement, the college fund, the peaceful sleep, the charitable pledges. In a single moment in their busy lives, while they were sleeping or having their hair cut or driving home from a meeting or waiting in line for a movie, their wealth simply vanished.

And there stood Bernie Madoff, the evil wizard who had waved his hand and, in one broken heartbeat, taken it all away.

For decades, Bernie Madoff lived at the center of an expanding web of lies.

In his long silence after his arrest, parts of that web became hopelessly knotted with misinformation and malicious gossip. In the pages ahead, many of those knots will be untangled, with the help of fresh information and new analysis about his relationships with his family and with key investors, and their relationship to his crimes.

More significantly, the chapters ahead will explore parts of his original skein of lies that have never been made public. They can be detailed here, for the first time, because Bernie Madoff himself agreed to meet with me in prison and talk with me about them, the first on-the-record media interviews he granted since his shattering arrest.

He deflected my numerous earlier requests with flattery and promises. “I have followed your distinguished career and reporting for many years,” he said in a letter from prison in September 2009. “I will certainly consider your request at the appropriate time, which could only be after the open litigation and inquiries are concluded. You can rest assured you are at the top of my list. I know you will continue to be the professional journalist you have always been and understand my position.”