*This show was originally broadcast February 3, 2018. *It’s been ten years since former NASDAQ chairman Bernie Madoff was arrested for committing one of the largest financial crimes in U.S. history. For decades he ran a Ponzi scheme from a secret office in New York, duping thousands of investors out of billions of dollars. Many of them lost everything when the house of cards fell.
How did Madoff pull it off? And what steps have regulators taken in the past decade to ensure that it doesn’t happen again? For this week’s episode, we teamed up with Steve Fishman, a reporter based in New York City who’s followed the story for years. He produced and hosted a seven-part podcast for Audible called “Ponzi Supernova.”
Through interviews with financial experts, federal agents, Madoff’s cellmates and Madoff himself, Fishman explains how the $60 billion con worked, and why Madoff was able to elude regulators for decades. Fishman says that while Madoff was the mastermind of the scheme, it was banks and other financial institutions who “weaponized” him, turning him from a “local swindler” into an unstoppable force.
Madoff will spend the rest of his life in prison, but no one from these institutions faced similar consequences. And even though some precautions have been put in place since Madoff’s arrest, financial experts warn that for the most part, investors are still on their own.
Don’t miss out on the next big story. Get the Weekly Reveal newsletter today.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Hey. It is your favorite host in all of pod custom. Now for the rest of the year, I'm gonna be asking you to join us by becoming a member of reveal reveal is all about going deep, pulling on threads telling stories that matter for more than three years now reveal has been fighting a lawsuit. That's been jeopardizing our very existence of over. We
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From the centre for investigative reporting, p r hex, this is reveal a reality, and today we take you back to his show. We first brought you in February of this year, where we found ourselves and Streets Brooklyn New York going into a bar, so it s a
Friday, its grey outside. We are not far from prospect, part endorsing the boil down to earth on pigment. That's my producer, Fernanda come arena and you heard right we're going to abort, not because I need a drink. I mean I'm not opposed to it, but that's not why I've come to meet the owner began. Aims deficient right here,
however, our good, oh, are you you'd I'd be from behind a ball nicely knows. What do you got you out of here? Well, I got you shouted bourbon. Obviously, that's the way you start all your cheers. Steeds bore is a cosy little hang. It took into what used to be an old laundromat in three story: brick apartment building, the blue, largely met sign, still hangs in the front herbs.
Specializes in handcrafted cocktails. It has machine that makes perfectly square ice cube to drop into drinks. The bar is named after Sidney's Father earth. He passed away last year two days and you feel like a millionaire and sees not pouring drinks he's working as a journalist, a magazine
In a pot gas make a journalist owning a bar seems like a scary combination,
by making our journalists there drinking. I say they like we're drinking, how to do it.
Oh, a bar has been a long time as a journalist, eggs, entrapped at college and became a journalist or small new, sparing Connecticut. The newspaper bought a bar smart newspaper, so we would go right tankers at work, the three to midnight shift and then we would go right down to the bar
Until closing in on let's face it, you sit down with them a beer or raw. I shot and start talking ended it just great to hear stories Steve his taste a lot of stories through the years, but I'm here to talk to him about one did captivated him more than any other the story
Bernie made off. Remember him, the New York financier who ran a scheme that cost investors tens of billions of dollars,
Just what would you say to them? Everyone sharply
do people into trusting him with their money and then put it into.
Make investments in doled out fake returns their money.
A burning and a handful of others rich, and then the market crashed in two thousand and eight and expose his scale.
It was one of the largest financial fraud. In U S, history with accounts, the Bernie cleaned
worth more than sixty billion dollars. It was a lie and win. The bottom dropped out. It raised, be questions about the safety of investments, any
they'll. Bernie made off is a fading memory for most Americans. Steve says his story has lessons for us too
We are now living in an era that very markedly proclaims itself to be not only pro business but anti regulation. It say it,
I need administration that really lives on in and offers us the proposition that business banks financed does not need to be regulated,
It needs to be unregulated,
To my mind, that's exactly what led to somebody like made off.
Steve remembers the market crash. In the day he first heard about Bernie Barony gets arrested its headlines.
Editor comes over to me and says you know this might be a story for us, let's wait and see if it lasts the weekend and I kind of plunged into it. It was great journal
export everybody in the world as after bernie- and I thought you know- I gotta find this guy he's the poster boy for the financial crisis and I'm thinkin. I understand burning, I'm gonna understand the financial crisis, unlike pretty much everyone else who covered burning, Steve, stop with the story. Long after it disappeared from headlines, he produced a podcast series for audible or made of scam. Called Ponzi. Supernova Steve wanted to understand, really understand
how Bernie got away with his scheme and what made him take as a person he talked to investors. He track down regulators and people who knew him and he was determined to talk,
Bernie himself serving a hundred fifty year sentence in a federal prison in blood
North Carolina after Bernie got locked up like refused, refused adopted media Steve Strategy was to get to Bernie by connecting with people who had access to
his prison, makes two years all areas think so varies like us. Superhero did I mean supervillain.
Super heroded them a superior assume,
criminal hero. Here I mean this is Casey. Why a bank robber, who is that
prison made of burns who Steve connected with he had please
in prison with Bernie he's gotta Taffrail, really lovely smile, not a whole lot of teeth in that smile, but it s a really friendly guy.
It. Storyteller possesses a man.
Still more money than anybody else. We talk about anybody else.
One all took body. He can be
a record on by he then went to the top of the list in criminality everybody's in
for money. The majority of cases is about money,
you got a man, I don't get, it done
took it all. He is even more important
K new inmates were still behind bars with burning its model, the list of them out of the prison and gave it to see. For me, please
the people who could get me. So I take that list and I write up all a hundred and fifty people on that list
but the real break for me come said because there's this
This guy in prison named Robert Rasa and Robert Roscoe, comes upon one of my letters and he
for me that you were a writer, I'm sure with nice, for you that Ireland, Jack Robber
became a writer and prison while serving a life sentence for dealing. Meth, Stephen rotted bonded can one days
you said Robert Letter asking him to headed to burn
They have. I really want to talk to anybody and I walked
rob. What do you think of him, and I, like that, one,
like a great deirdre. He goes out. Local go, take a look at them and then leaning back in January of twenty Elizabeth, my home phone rings it's an evening
the jet serving the public office? I remember that- and I get this
courted voice. You have a collect, call from Bernard made off I've been trying to get to this guy for by two years.
Right and there he is on the phone.
In the background, my kids, a shout and screaming my reaction shut up. It's
Bernie made off of upward, and here's the strange thing about the phone call. From early it's like a guy, I could meet at a bar mitzvah.
I mean this guy we're both from the New York area. I recognise the action I problem.
We have a similar, accept calls from this. Prison are cut off after fifteen minutes and Steve. Couldn't move fast enough to record that first one, but then
would you say was great to talk to you because you know:
Talking to you in person is so different than reading about you or the caricature out there in the house,
you is being
there's one dimensional person.
Failure to do so.
Mediately comfortable. You know, and I think, burning comfortable too. I mean that was burning gift. You know he was comparable with everybody and instil confidence in everybody. So maybe this is just Bernie being Bernie, but you know we.
This kind of report and it leads into a very easy conversation, but I have to tell you that
that was stunning to me Bernie wants to talk,
ok, it was, it was absolute. There was a nightmare only for me
I bet debate here. You gotta knew it would end up here.
Where you are now sooner or later,
I bear imagine nothing ever tell anybody destroyed the family
Why do I don't know?
Maybe that's what I try and figure out at once. A week
well. That's that's! That's great.
The prison were burnt.
Serving his sentence is known for having great medical facilities, and that includes therapy for inmates is listed by Forbes as one of America's ten cushy s presence. Sti became Bernice first interview with the media since Lynn there, but it wasn't a standard q and a Steve almost became like a second therapies for Bernie who opened up about his life
You talked about spun, I bought a compass party, could open the door to sporting goods and there will be able to agree what it still short. You could deal style
So you know I let you watch that happen. You bother
Oh yeah idolize, you told a big business and in whose everything about happening- and he talked about the policies you know Bernie said to me: do you think I woke up one day and decided to steal everybody's money?
you're wrong. I didn't need it. I woke up one morning. I want to give it a by applying what it gonna do. More money support
my lifestyle headway light. I didn't need to do this that Bernie,
already had a legitimate start trading business and he was a former chair of NASDAQ, so he was
I heard hurdle for money, but he started this game anyway and once you get started, he couldn't stand.
The Treasury go. Let me tell you, said yourself or at all these banks, which would be the type of gay covered, all the willing to give you a billion dollars or major bags coming down the training me
trip in some of those conversations Bernie sounds like a confident master manipulator at other times, like people are taking advantage.
Him really wanted to go on, and I just went along with it and he talked about the day. His keen came crashing down December tenth, two thousand and eight he had to come clean to his two sons. He says they didn't have a clue
I've gotta, get my boy
and nobody gets
angry at that point, it
you're gonna die duly adopted,
Don't worry about me.
I might add,
I told all
it all. I am delighted you gotta turn your father. It away.
I never saw him again. The family would never recover
on the two year anniversary of his father's arrest mark made off committed suicide, hang himself and his Soho Loft later Bernie youngest son Andrew, that of cancer Andrew Blame, the return of the disease on his father's crime. Do you think ferny expect
his children eternally. You know, I don't know if he expected it, but he tells it entails. It is moving story.
A lot of people who won't be moved by it. I will say this about Bernie, I kind of believe Bernie got like bone tired. He just couldn't support the lie anymore.
There was something about him that was relieved to finally see it.
Ten minute phone calls he spoke round a dozen times and then prison officials cut them off, but that in stop you from piecing together the story of burning made us ponds escape and how he was able to full financial
from piecing together the story of burning made us ponds escape and how he was able to food
financial regulators, thousands of investors for years, that's coming up on reveal from the centre for investigative reporting and p r exe.
From the centre for investigative reporting and p r ex this
reveal I'm outlets
so what are we gonna take gonna grab the beat
right here at a softball grow from prospects are to deal with it
quarter and bar owners deficient. He traced the rise in
all of burning made off in the audible package series Ponzi Supernova Bernie Scammed investors for ten.
Billions of dollars and we know exactly how we got away with it.
Right now, we're on our way to the place where it all went down. The lipstick building
midtown Manhattan burns off
this in this building and we want to see if we can get inside Steve spent two years talking to investigators, auditors and experts about how Bernie ran his skin.
We leave the subway climb up onto the sidewalk and walk from the cold crowded streets, air- it is ass. Lipstick building twice in one eye, looks like lipstick,
this year, the Red one thing I think he's looks like a lips they came here.
The building is made of Auburn marble and steel, and the edges rounded yeah from the right angle. It does look like a lipstick case with lipstick popping through at the time we entered the love, so beautiful, so quiet here, Bernice Fraud when undetected for at least two decades, Steve explains the one of burnished tricks for hiding. His ponzi operation was to put it on a separate floor from his legit business
a floor for his legitimate business, the marking, making business and then floor that really nobody could get to the seventeen floor where the ponds
We're coming here everyday to get. The word you come in here, delivered by the car, probably lived what mile uptown from hearing his driver dropped? A mafia went.
This land, which is kind of you know it's gorgeous. Serenest, must be led, was anything but
when the scandal first broke back in December. Two thousand and eight Steve remembers interviewing. The FBI. Agent was assigned to investigate burn, so he was told to God to seventy four and it comes through this lobby. In our girls, backing down was gone. I here that's agents, Steve Garfunkel, whose now retired from the FBI. There are alot of people trying to get
upstairs the seventeen floor and they won't let him in the in the lobby, and he tells a story about just out of investors just screaming.
We want our money where's. Where were you
I am thinking. Oh boy, some people a pistol
somehow in this kind of serene almost empty lobby, can a man
kind of filled with her,
angry hoard like something out of the year, the outer. Thirdly, the depression, air authorities, when
thanks, are failing in people turn grab as much as they can get. It say we hit out the door and, as we stand outside
red Marble Tower Steve takes a last summer.
It's so respectable. Looking itself serene and calm it. Like you look at it, you see security guards.
Suits and you feel like worker.
We know that there are times when that respectable facade,
it just melted away. I sat down with Steve defined.
Out how Bernice Party Scheme work and how he got away with it for so long one key the people Bernie hired. You can't really put an add on Craigslist, saying looking for somebody to help sustain three decades old ponzi scheme, which meant that you had a appeal to a select group. The first person that Bernie Hired- and this has gone back three decades- was a net Bonn Giorno
and that was a high school graduate. Who was very like a ball. She was known in the office as the grandmother she brought food every day to feed her her colleagues,
One of those colleagues was a guy named Frankie, Pascal eleven.
The Scottish any didn't know much about trading, but he knew a net. She was his childhood neighbour and babysit
She introduce Frank to Bernie and he eventually became burning right hand. Man his lieutenant
who really ran the fraud branded day to day knew how it works and
soon is Paul Hell,
broke loose. He came running in and wanted to play as they say in the field he wanted to play for tee. Mama
playing for team America MID telling authorities exactly how Bernice abolition worked. Frank was interrogated by assisting you.
The attorney for the southern district of New York. At the time Matthew Shores Matthew, is tall, clean cut.
Members, Bernie story with sharp detail. Matthew says for months the F B. I would start the day by picking up frank at his mansion in Jersey, even though Frank was still living in a fancy house after the bus
whose broke he always packed his lunch. We would all go out by solid or something and he couldn't afford,
you that he would always bring a sandwich and he oh his bride,
sleeve of Orioles. There are a few times where I brought my kids in on the weekend that sometimes the areas would be left over and they would they would have one of what they called back.
Cookies. I think that that really startling thing that Frank de Pascal reveals, through these daily interrogations, is how
rickety this machine was I mean these guys are dawned that this this
she had followed the world for a couple of decades.
Is being run by a handful of people without Advance
The greens who were using this vintage anti technology, it's crazy. It was crazy and ridiculously simple. Bernie and his cronies had us,
somehow convince investors that their money was generating big returns, so they pick a stock and walk backwards. Yeah! Well, that's our findings can works right. That's Matthew! Schwartz again,
So how do I get ten dollars to appreciate fifteen dollars used to keep boxes of
The Wall Street journals and they will take
Stock tables start prices that were published every day at the time, and they would just lay him out.
To end on the floor so be- and I can't imagine but ten, twenty thirty feet of newspapers sides aside, and so you,
Sidney off his chair, the had wheels a wheelchair and user
slide, left and right to pick the right day with the right start with the right price. Matthews is a net in particular became ways at making numbers work at reversed.
Engineering these trades, so it seemed like money was being made. The issue a test out different
permutations. I would if I do it on Tuesday now the return isn't good enough. I do not use it would. If I would, if I,
hey that it was perched on Monday. Instead, ok, that doesn't impartial circle and to underline it she's very expressive in her writing once they had the numbers figured out. Matthew says they made a fake statements to send the customers. They showed that stocks have been bought and sold and made money, but the trades never happened. The statements were made using software
It was written just for burmese operation. It was the machinery through which the entire fraud was perpetrated made up. All the fake records must have always automated to computer programs Joyce, whereas in Jerry O Hara role
the software and at first they didn't realize that it was all a scam. It starts
dawn on them, maybe slowly, but certainly they come
the realisation that their involved with this criminal enterprise, they walk into Bernie and they say hey. You know we don't want to do this and made after ok, fine, don't write. Those programmes anywhere and
then, right afterwards, he turns to deep ass galley after they have gone and said, do them whatever they want and according to Frankie
ES galley burns right hand, man the programmers think about it, then come back and say they want more money.
They wanted in a certain way. What can you pass and diamonds,
that way, there won't be a paper. Trail can pass diamonds depressingly says. Thirdly, what are you talking about? What am I gonna get a big time, so nothing you diamonds. They eventually scrap the idea of diamonds and settled for raise hush money and kept on making those fake count statements, but the trades never happened and burning crew was paying old investors with new investors money. He had clients, big and small, which he talked about in a deposition he gave in prison a few years ago. I had,
for prime, be clients Jeffrey Pick, our Norman Ledy call Shapiro,
the chase commonly referred to as the big for these are for older
jewish men, whom are really kind of Father figures to Bernie. They were great friends. In addition to being big investors, I mean there's the famous story about levy on his death bed telling his children, Trust, Bernie, Trust Bernie, and they come to him. He starts investing for them,
claims that at first he was making them legitimate money. But at some point, certainly by the early ninetys he's is a full blown ponzi scheme and they are
taking out hundreds of millions of dollars, they're taking up billions of dollars in some cases and for Bernie. That was an enormous pressure. Is at this point that the party scheme starts to slip out of burning
True Steve talk with a lawyer named David Chin, who spent the past ten years, trying to recover money for people who invested with burning and basically
the modus operandi of Airbus, hey. I know what you're doing
So allow money, that's what did it desperate people know about tat? No, I don't think that's. Why do you know
I don't think people thought of Bernie being back back, has probably everyone thought, or least they all maintain the posture. If I didn't know anything about it, I think settling the public perception, Baroness, the powerful one he's kind people, but you say exactly the others guy. I think he was to ascertain the tour.
People go? She may so loud as party, but I think they helped him perfected
So how do you withdraw now how to extract yourself without somebody? Some
the house subtly implicitly saying Bernie the games, not over till I say it's over,
but framing it. That way makes pirnie sound like a victim here which which
maybe in some sense he is, but also he he had to come up.
With this scheme, like that, the top for the big banks dating come up with scheme buried it yeah Bernie, is clearly the author of this policy scheme and
There's no con man more talented and Bernie. Let's face it, he was favoured by circumstance by luck, but Bernie is incredibly skilful and talented flyer. No other way. To put it at the same time, Bernie could not have done this with out
in this cooperation
A number of institutions and investors, one of the bank's accused, was the spanish Bank Bunco Santander, which controlled a company called optimal investment services. Now many of their clients
were small time investors who had gone with their life savings. Banks are supposed to make sure that the funds they sell, their customers are stable and safe, and that's where achieve gently comes in, I was in a half. A regime was hired by optimal to do. It's called due diligence on burning fun, but immediately there was pushed back receive, wanted to take a closer look at Bernie but says his boss did want him making waves. I think he was concerned. I would spoil a very good relationship, a relationship that was making the bank a commission on every dollar it delivered to Bernie Rajiv met with Bernie in February of two thousand and six and one of the things you want to do with sea, a trade from beginning to end, and you can see I was entered into the system.
Might have appeared on the statements from the brokers and so on, and I would just all the time that you simply must happen. I should raise it receives. Left me, wood burning with well no answers. He went back to his office to raise report but didn't feel he had enough information. So he s one of his colleagues
verify the trades when I then rang out does not to see how this guy he's,
We have done that and he said, look really.
We all know you're a difficult guy. You know we had to calm you down at the time that particular points that we agree to. It
but here is really no need to do. It were all over this. We understand the investment strategy,
it doesn't need this receives, as you typed up a report, but it wasn't,
going and it wasn't what is bosses we're looking for? They ordered a junior analyse to draft a new one at the
is very beginning, says that SAM
Their view was that made up was a well run and efficient organisation to which my response was on what basis one evidence do we have for it. This was receives last straw hat,
it worked for optimal at the recent I resigned was because I felt that optimal when serious about risk, and so I decided to approach me to leave the jeez boss was eventually process.
You did for mismanaging his clients money. He was found guilty of the other people whose job it was to uncover scams.
By burning whether regulators in New York, I mean
It was under examined.
Asian or investigation for four years.
Here was the amazing dynamics of that situation. Bernie is
standard a lion of Wall Street.
They send in the Securities and Exchange Commission the SSC, the body that is supposed to read
laden and watch dog people like Bernie. They send in investigators examiners, but they are
extremely junior, their young there
recently out of school David,
run by David cuts. I was only the second Spectra General in the history, the SSC previous inspector general
He wanted to know wise people never caught on, so it conducted an internal investigation. It was run by David cuts. I was only the second Spectra General in the history. The SSC previous inspector general had been there for eighteen years. David did more than a hundred interviews over the course of seven.
Even talk to Bernie, who told him about one encounter with an S, easy examiner, sort of acting like
tough guy and you know, yeah. He leaned back with his hands behind his head, like Lieutenant Colombo, and you know asking these tough question said he wore it ass. He see jacket with the word enforcement emblazoned across the back. Now he wasn't in enforcement enforcement. Is the attitude that essentially sues people? He was an examiner and that he sort of acted like a jerk and was acting really tough and like a big shot yet made of pointed out that, while he serve acted like a blow hard and made off words, he never really ask that he tough questions so was all show made up, was able to see through it really quickly, but there were a couple.
Times when examiners came close to exposing Bernice fraud. I mean it's actually not that difficult to uncover applies. It came of your the federal government. There are ways that you can go and see where trade are clear when
Estimates are bought and sold. Money goes from the buyer to the seller. Clearing is up,
there were two accounts are updated to reflect the transaction. The buyers account shrinks
sellers goes up, is proof that the money is actually change can sounds pretty basic right. That's what the Depository trust company is for their something called. The DE tease
in burmese account. If the allegation is the guy is in trading, then you can go to this place and you can see whether these trading they asked me where
there should be tons of money in Burmese account if the allegations
is the guy is in trading, then you can go to this play.
Then you can see whether these trading- yes,
Where are the securities for the climate, and I said at the positive worry trust,
Bernie from a deposition taken from behind prison walls. Some agents wanted to verify the burning transactions were real, so they asked him. Do you have an accountant? Did he see? He said? Yes, ask him his account number six, forty six, that's my account. Then he gave him the account number and when I left that meeting, I think that's it then
he thought Monday morning he be going to jail. I lied to them is that they were at the depository and I think it was sure they gonna call them the positive.
On Monday morning and find out securities weren't there. Somebody at the SSC does call the de tc and asks about Bernice Account, but all that
person asks is, does Bernie have an account once he gets the yes, the person moves on
now? The next question they should ask is
how much money is in that account what Bernie should have had
billions of dollars in that account, and he had
Maybe a few million tens of millions.
Ponzi scheme would have gone down, it would have been exposed had they asked that one further question
but these guys are junior their inexperience and their intimidated their intimidated by burning and they are intimidated. It seems by the functioning of the financial system. They just they just don't know
Did you see the s? He see miss their chains and it wasn't just
as you see they were private auditors sniffing around to find out how Bernie was making his money. The returns were impressive and they wanted to know more.
So you have auditor sitting down and wanting to see report specific report reports that
he doesn't happen, have because hey guess what
he's not really investing money, Matthew, shorts, the former. U S
system attorney says varies right hand. Man, frank, deepest galley. Remember one close call. They had with honors T Pascal
justifies that he's gonna sing in a conference room with the orders they ask for this. This report called us. I act ass, a sea report well
Bernie doesn't have it but Frank makes a phone call.
Hey can you bring up the sack reports and the guy says basically sire
for it? He told us we didn't need the sacrifice Wilhelm. I gotta get asylum report, as is
I'll see in ten minutes your frantically, putting together a printing out this report, which is you know, it's it's half a foot thick of this being paper,
thought Matrix paper a man, it's supposed to be a reply
It's been lying around for a month and instead it's hot off the presses. So first they stick it in.
A refrigerator heads down and the investment advisory business to call it off.
And then they literally play football with
their tossing it around the room to one another to make it look, weathered
and then they run up to the deep Pascal, an unbelievably it worked. They fall the auditors.
Bernie tricked auditors in investigators into believing his lie in the meantime, is parties keen grew bigger in
like an enormous flew into the.
Session and investor panic to eventually pocket Bernie should have been cut,
many times over, says as easy Inspector General David cuts, but investigators missed every clue along the way, as we showed them
The documents as we showed them the information as we showed them- how easy it was for them to uncover it. All these defence is sort of
did away and they were themselves sort of Estonia
There were some who were crying
During the interview we had to take a break because they were crying there, so emotional, and so as we are going through
there's their realizing. How easy it would have been for them
to do and how many mistakes that were made and the consequences for those mistakes. The consequences ruin fine
This is an up and lives of the people who trusted burning made off after short break.
We're gonna find out what happened to made offs victims and try to understand
if we're safe from another point.
The scheme like this. That's coming up next on reveal from the centre for investigative reporting and pr eggs from the centre for investigate reporting in p R. Ex. This is reveal analysis. It today were giving another listen to a show. We first brought to you back in February about criminal mastermind Bernie made off. We ve heard how he pulled off his party scheme for decades. Fooling many of the people work, form regulators and investors.
But it all king crashing down with the financial crisis of two thousand and eight people were panicked. They wanted their investments back, but the money was gone. It was the worst thing that ever happened to us everything that we work for years down the great this can't be real Bernie.
You can almost eighteen billion dollars of their money now for some investors it was there in
higher life savings in retirement, according to Bernice, fake investment statements that money had grown to more than sixty billion, but it was all
by we have lost everything, I have lost everything and you ve lost everything. I manage our stance on the end of the month,
I gotta go downstairs and usually buoys.
It doesn't seem to understand how much damage he did to people who trusted him with their money. His way told reporters deficient
prison there will be looking at adopts vision era.
They don't have any body it's on its orbit and actual traumatic experience. The thumb.
I made a lot of money for a lot of people and he claims they
what they were signing up for when they invested with him.
A high level of training topic. They they had doubts even if they had.
The question? Now is what the ever
see their money again. I thought Steve about that and he told me over the past ten years they ve been a couple efforts to recover and return as much of the money as possible, including something called the made off recovery initiative, its run by a quarter point trusty, who works with a team of lawyers,
They act like a clean up crew searching for those investors who took out more money from Bernice Fund, then they put in then they saw them to get the money back
So I say I invested a million dollars with
Bernie made off, but I had taken out two million dollars because that's what my statement said I had
Well, along comes the made off trustee and says you know why
you put in a million years took out two million. You owe us the difference. It was a very complicated and hardware
situation for lots and lots of people. So far the trustees
gotten back more than seventy percent of the money about thirteen billion dollars, but there are still thousands of people who may never.
Their money. What happened is that it that the agencies in charge of trying to recover this ran into a war, because a lot of the funds were registered
overseas? Well, their money could not be claimed by the people
trying to recover the money. It was in some kind of
safe haven, it was like it was behind. It was behind a fortress, so the question I have for you Stevens is about accounting
lady. No. Obviously, this was burning idea anyway.
People that were running it and a lot of them are paying the consequences of it. But there is another side to it where you have all these big banks, the big for investors that we talked about earlier in and they haven't been held accountable for anything. You know once you get to the end
solutions that essentially took what was a local swindler, I'm going by Bernie made off and weapon eyes him
and brought him around the world and made him the biggest ponzi scheme in history. I'm talking about the financial institutions there, the hedge funds, the bank's none of those people,
are held accountable. No one from those institutions has
put on handcuffs
so we have is that leave people like you and me, people who want to save for retirement but are not financial whizzes. Are we saved from the next Bernie made off to answer that question? We decided to call a couple financial fraud experts who know the made off case. Well, ok, so, whenever Stephen Richards, so what can I tell you about party schemes? Stephen is: what's call the forensic consultant investigates financial fraud years back. He worked at as he see and later for private firms that investigated made us fraud. Stephen led a team whose job it was to figure out how much people put into the parties game
and how much they took out, but I think a lot of things have happened since the days of made off at the regulators in the civil environment. That would make the likelihood of a large scale. Financial fraud like what Bernard made, often much harder to do. Stevens is that's bigger
after Bernie the SSC made some changes in its enforcement division and revive the way it handles complain.
Then tips from whistleblowers. Many of these changes come under the Dodd Frank ACT which
written to protect consumers and Reform Wall Street
It was signed in the law and twenty ten, but is it enough? The fact is that we
live in a savage world, a place where nothing protects you except yourself.
There's no cavalry coming over the hill. That's Jim Mints, ceo of the Minsk group. Lawyers, hire him to investigate cases their working on engagement,
doing this for thirty years. Jim knows the maid of case inside and out and says that, even with Dodd Frank in place, investors need to be sceptical of anything. That sounds too good to be true.
I M here to tell you that out in out in fraud land
I do my investigative work there. Doesn't she
to be any protection or new seat belt that the government has given us. In fact, Jim thinks we're more at risk. Today the opportunities for fraud have grown since two thousand eight and burning made off because of the internet and because of the flattening out of the world, so that there are opportunities,
that seem attractive for us to put our money, and there are thousands of miles away gives is all you need to do is look at the headlines about Bitcoin and other crypto currency everybody's talking about crypto currency.
If you listen carefully to how regular people talk about it, it's almost as if they start to speak a little faster or a little with.
It's like having troubled breathing while they're talking about it and those are the signs
you're entering a danger zone. The has all the hallmarks of a place where you could have ponzi type schemes more easily. That's forensic consultant, Stephen Richards again so, for instance, we know the environment Bitcoin, going from ten thousand nineteen thousand and everybody seeing that wealth.
The generation so quickly wants to be a part of it. You also have a situation where most people do not understand what a crypto currency is. How is created, how they work. Crypto currency isn't the first investment the people didn't understand but bought into anyway in humans have an inherent biased that want to believe that other people have their best interests in mine and they don't, and the other thing is the advancement of technology and a lot of other things have created this most simple access to people the fraudsters have ever had and if they have access and they can create trust they have the up.
To to do a policy burns ponzi scam might seem like it happened a long time ago. But if U S, report is deficient, who followed the burning made off story for years. He says it's history, worth remembering made offers was a huge deal. It affected tens
thousands of people. It also served kinder as a cautionary tale for the
geez I mean we live now in an era where deregulation is the watchword. Wealth Bernie is the poster boy for what happens in a world in which deregulation is. The rule
Bernie made off plead guilty to a level fellows and is still serving a hundred and fifty year sentence in federal prison. The only other people who were convicted was
burns immediate circle of fraudsters, including his accountant, the woman who calculated the phoney start trades and the computer programmers who made the fake statements burns right hand, man, frank to pass galley plead guilty to several charges, but I've cancer. Before his
Many thanks to Steve fishermen for reporting on Bernie made off and the financial crisis is complete. Six car podcast series is called Ponzi Supernova and was produced by audible. You can hear it at audible, dot, com or wherever you interpret gas
should also check out another five from Steve called empire on blood produce by monopoly. It's a greedy story about murder and justice in the Bronx
today show was produced by Fernando Commagena withheld from Michael Schiller and edited by talk. You telling me this big thanks to Ellen
Kelly. Prime producers of the audible series, also Todd Whitney calling Campbell and Amanda Remus reveals Cathy Miss Gower Ski help with facts.
Some of the music for this week show was from pair blossom music, Grand Coachee daring gray and my crews operate.
She manager is more windy and host are sound. Design team is the Justice League J Breezy a k, a gym brain,
and Fernando my man, Yo Aruba, are ceo- is crystal sharper. Amy powers are editor in chief executive producers, Kevin solving our theme, music is by Colorado. Life support
four reveals provided by the River and David Logan Foundation. The John D in Kathmandu Macarthur Foundation the job,
a thin Logan Family Foundation, the Ford Foundation, the Housing Simons Foundation and the ethics and excellence in journalism foundation reveal
is a co production of the centre for investigative reporting and p r x, amount lesson and remember. There is always more to the story
These are last few shows of the year and let me tell you in twenty twenty we are bringing the fire launching some of our most ambitious projects we ve ever done. I can wait for you to hear them reveal is all about going deep, pulling on threads
telling stories that matter and this kind of investigative journalism. Well, it takes time and it costs money. These are the final weeks.
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Transcript generated on 2019-12-20.