No One Would Listen: A True Financial Thriller (39 page)

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Authors: Harry Markopolos

BOOK: No One Would Listen: A True Financial Thriller
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We had decided at this point not to name the other members of the team, although Zuckerman had spoken to both Neil and Frank.
 
The article continued, “The SEC’s documents indicate the agency had Mr. Madoff in its sights amid multiple violations that, if pursued, could have blown open his alleged multibillion-dollar scam. Instead his firm registered as an investment advisor, at the agency’s request, and the public got no word of the violations.
 
“For Mr. Markopolos, the arrest a few days ago of Mr. Madoff was something of a vindication after his long campaign. At a certain point, he says, ‘I was just the boy who cried wolf.”’
 
Zuckerman’s lengthy story covered the entire eight-year-long investigation, from the day I got Madoff’s returns through all my dealings with the SEC. He quoted me as saying, “Some people play fantasy sports; that was how it was with us—Madoff was our fantasy sport. We wanted him nailed.”
 
As for the response from the SEC, Zuckerman wrote, “An SEC spokesman wouldn’t comment on the agency’s communication with Mr. Markopolos.” And later in the story, after describing my final submission to the director of risk management, he added, “Mr. Sokobin, through an SEC spokesman, declined to comment.”
 
Well before dawn the next morning, I quietly left my home and took the first train into Boston. I didn’t want to be at my house, because I knew the media would have it surrounded shortly after daybreak. It was an emotional day for me. I’d just lifted the world off my shoulders, and I spent the day moving around the city simply thanking all the people who had contributed to the investigation—my lawyers; friends like Dan DiBartolomeo; Andre Mehta at Cambridge Associates, the most prestigious consulting firm in the world; and the staff at the Boston Security Analysts Society. It was a victory for all of us.
 
The one person whose hand I really wanted to shake was Ed Manion’s, but I figured I probably wouldn’t be welcome at that particular office.
 
We’d won the biggest battle, but we hadn’t won the war. I believed the SEC remained a serious danger to the American people. It was obvious that it was no longer capable of regulating the financial industry, and unless it was completely transformed it would never be able to do that. It wasn’t just a few cosmetic changes that were necessary. It wasn’t just a few scapegoats who needed to be replaced. The SEC had to be fundamentally changed if investors were ever going to be able to rely on it again.
 
The damage done by Madoff was reverberating throughout the financial markets of the world, as well as in millions of homes. In an instant, thousands of people had been financially devastated. Their investments were wiped out. Within days stories began appearing in the media about elderly people who had been living on their regular returns from Bernie who were left with nothing. Houses were going up for sale in an already distressed real estate market. The entire hedge fund industry was shaken.
 
The media coverage was insatiable. They were reporting how many people had been wiped out, which we had totally missed. We had never realized that Madoff was accepting individual accounts. I didn’t know he was taking Jewish charities and Jewish endowments to the cleaners, just wiping them out. We were tracking the feeder funds, and as finance professionals, Neil, Mike, Frank, and I couldn’t conceive of anybody putting 100 percent in a single investment. That’s just not in our vocabulary. We thought by tracking the feeder funds we were tracking Madoff. We weren’t dealing with individuals; we were focused on large funds. And maybe that was the luckiest break in our investigation, because if we had found out it might have gotten us killed.
 
The problem for reporters was that there were few people other than the victims to speak to. They couldn’t get to Bernie Madoff or any members of his family. That pretty much left me. I was getting what seemed like hundreds of requests every day. I turned down every offer; in fact, a Hollywood-based agent called and told me a producer had offered me $1 million to appear on
Oprah.
I don’t have the slightest idea if that was a real offer or what other rights it might have included. It certainly seemed like too big a number to be real but I never pursued it. “I’m not interested,” I said. “It’s not appropriate.” I didn’t want to be seen as profiting from my work; and
Oprah
certainly was not the right forum. I made the decision that I would tell my story on only one TV program; and if I was going to do only one show, I wanted it to be a serious investigative program with the most extensive coverage possible. So I accepted an invitation to appear on
60 Minutes.
 
But because I wanted to keep control of the story, I asked the members of my team, as well as friends like Dave Henry and Dan DiBartolomeo, to do the interviews. Frank Casey, in particular, was deluged with requests. He did numerous interviews; and as he quickly discovered, many of the reporters covering this story had no background in finance; they didn’t know the difference between a split-strike conversion and a two-point conversion. But he patiently answered their questions.
 
In addition to all the invitations from the media, I was also contacted by several government agencies, including the House of Representatives Financial Services Committee. This committee, which is chaired by Massachusetts Congressman Barney Frank, had already scheduled hearings into the incompetence of the SEC and invited me to appear. To me, this seemed a little like a Frank Capra movie, Harry Goes to Washington, but there was no humor in this story. Somebody needed to warn the public that the SEC was an out-of-control agency that served no obvious purpose other than to fool people into believing it was actually offering investors protection. The hearing was scheduled for early January, and I’d agreed to meet with a senior committee staffer on December 24 to discuss my appearance.
 
The day before that meeting, I was in my office catching up on some of my other cases when Frank Casey called. He didn’t even say hello. “Hey Harry,” he said in a weary voice. “I just heard Thierry committed suicide.”
 
“Oh my God, no,” I said. “Thierry?” At that moment all the emotions I’d been holding inside for the past 11 days erupted. I started crying and I couldn’t stop. I was devastated. Why didn’t I call him? I kept asking myself. Why didn’t I call him?
 
Thierry de la Villehuchet was a man of honor, truly a noble man, and apparently he felt that this was the only way he could really show his contrition to his family and friends and clients whose money he had lost. Thierry was also my friend, and I believed Bernie Madoff killed him.
 
Access International had lost about $1.4 billion, including investments from the royal families across Europe, Thierry’s own $55 million personal fortune, and the fortune of his partner, Patrick Littaye. As I later learned, for several days after Madoff’s Ponzi scheme had collapsed Thierry believed he would be able to get at least some of that money back. But when he realized that wasn’t possible, he sat down in his office, wrote notes to his wife, his brother Bertrand, Littaye, and one other person, swallowed some pills, then rested his feet on his desk and slit both of his wrists with a box cutter. His life bled out into trash cans, no doubt placed there by Thierry so he would not inconvenience others with a mess.
 
As Patrick Littaye revealed, the letter that Thierry left for him “assured me of his friendship and asked me to look out for his wife.” While so many other people were running away from their own responsibility, desperately looking for someone, anyone else, to blame, Thierry accepted responsibility and acknowledged what he had done. His family was once so wealthy and respected it had lent money to the Sun King, Louis XIV, but Bernie Madoff had wiped out that fortune. Thierry had trusted Madoff completely. He’d led his friends and clients into a catastrophic situation. For him, committing suicide was a positive act of honor.
 
His widow, Claudine, put it simply, telling reporters that Madoff was “a murderer.... He killed my husband.”
 
I hadn’t been sleeping much before this, and after everything else that had happened Thierry’s suicide was almost too much to bear. Frank, too, was crushed. Investigating Madoff had been an intellectual pursuit. We had kept our emotional distance, and none of us had been touched personally by him. No more. Thierry de la Villehuchet was a man we liked and respected. I considered him a friend.
 
I cried on and off for three days. Once I’d let loose my emotions I just couldn’t stop. I had a terrible time sleeping for many nights after that. And truthfully, I’ve never stopped wondering if I could have saved his life. What if I had called him, if I had offered him some encouragement—would it have made a difference? Maybe Bernie Madoff was the reason he was dead, but the SEC had a role in it. Apparently Access International had about 30 percent invested in Madoff when Rampart first got involved with them, but that increased gradually until by early 2008 as much as 75 percent of its assets were committed to him. If the SEC had done its job and stopped Madoff years earlier, Thierry might have been able to survive that loss. That certainly wasn’t my only reason for wanting to bring down the SEC, but I knew that the lives of many, many thousands of other investors had been changed drastically because these arrogant people failed to do their jobs. I admit it: I wanted them to pay.
 
I was exhausted and depressed when I met with the special counsel of the House Financial Services Committee, Jim Segel, on December 24. Diane Schulman, a False Claims Act fraud investigator similar to myself, was very close friends with Jim and she had set up this meeting. We met at my favorite pub in the West Roxbury neighborhood of Boston, and Jim Segel explained that the committee wanted me to appear before them as a friendly witness. I sort of laughed at that, pointing out to him that I might be friendly to Congress, but when the executive branch heard what I had to say they certainly wouldn’t consider me very friendly.
 
“That’s fine,” Segel said. “We just want to hear the truth.”
 
“I’m only going to tell the truth.” The committee asked me to appear the first week in January. Too soon, I told them. I intended to take on the SEC at this hearing, so I wanted plenty of time to prepare. I wanted to be strong and healthy for this battle. I’d been waiting years for this opportunity—years—and I intended to take advantage of it.
 
I had one favor I asked in return. I asked Segel if Congressman Frank could make sure that Ed Manion wouldn’t be fired for helping me press this case within the SEC’s ranks for the past eight and a half years. I was very worried that the SEC would extract retribution from him for assisting me with the case. Ed was ill and needed to retain his government health insurance for three more years until he reached retirement age. Segel assured me that nothing would happen to Manion. He and Ed had been friends for a long, long time, he told me, and Barney Frank also knew and respected Ed. That made me feel a lot better. The last thing I wanted was to see a man I considered a hero retaliated against for doing his job, for standing up for investors.
 
I also explained that I did not feel comfortable testifying before President-elect Obama took office in just a few weeks. I knew that what I was going to say would reflect very badly on the Bush administration, and an administration in its dying days was prone to do anything to avoid being embarrassed on its way out the door.

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