About 160 people, including Dan Rather, Georgett Mosbacher, and the Daily Beast's Tina Brown, packed the 21 Club for the breakfast meeting moderated by Joanne Lipman, Condé Nast Portfolio editor in chief.
Wiesel was joined on the panel by former SEC chairman Harvey Pitt and well-known short seller Jim Chanos, both of whom had suggestions on how to prevent future fraud—and both of whom believe major financial institutions may be next to face criminal charges for misleading investors.
Pitt also decried understaffing and "a lack of real sophistication" at the SEC.
Wiesel said he met Madoff only twice, introduced through a friend who had known Madoff for 50 years and also invested with him. Wittingly or not, the intermediary played up Madoff's aura of exclusivity by telling Wiesel, "It's true, you are not rich enough." But he agreed to make an introduction.
Wiesel ultimately shared two dinners with Madoff and was impressed. Madoff "presented himself as a philanthropist," Wiesel said. The men spoke, ironically, mostly about ethics and education.
Madoff gave the impression that he was making an exception by allowing Wiesel to invest with him. "It was a myth that he created around him ... the myth of exclusivity," Wiesel said. "He gave the impression that maybe a hundred people belonged to his club. Now we know thousands of them were cheated by him."
Wiesel first gave Madoff personal funds to invest, he said. "And because we thought we did so well, we said, come on, we have so many projects.... Everybody we know in the field of finances, they told us, come on, you can do much more, more projects because of Mr. Madoff the savior."
Asked if he could forgive Madoff, Wiesel paused for a very long moment. "Could I ever forgive him?" he asked, almost to himself. Finally, he said firmly "No," to a burst of applause.
Wiesel did, however, come up with an imaginative punishment: "I would like him to be in a solitary cell with a screen, and on that screen ... every day and every night there should be pictures of his victims, one after the other after the other, always saying, 'Look, look what you have done.' ... He should not be able to avoid those faces, for years to come."
He added, "This is only a minimum punishment."
Also during the panel discussion:
- Wiesel rejected the idea that Madoff preyed on Jews, and that the scheme was some sort of affinity fraud. "It's not the Jewishness in him, it's the inhumanity in this man.... The man is, was not only a liar, a swindler, but he was—not a crook—he was somehow always more than that. More. Once you enter evil, it's not static, it's dynamic.
- Charities that were scammed by Madoff should be bailed out by the government, Wiesel believes. 'Just as we bail out banks and car agencies, bail out charitable institutions...I think it would be a great gesture that the Obama administration should show that we really think of those who are helpless."
- Wiesel sees parallels between Madoff and his Holocaust experience. Although he emphasized that "Madoff is not the greatest story of our lifetime," he added that in recent years, "Madoff is one of the greatest scoundrels, thieves, liars, criminals. How did it happen? I have seen in my lifetime the problem is when the imagination of the criminal precedes that of the innocent. And Madoff had imagination...We have no idea that a person is capable of that, but then I should have learned, of course, that a human being is capable of anything."
- Donations to the Wiesel foundation have come in unsolicited: "Literally hundreds of people that we have never known sent us money though the internet.... Just as in 9/11, you remember 9/11 of course was the greatest tragedy, but it also brought out the best in the American people."
- Pitt, the former SEC chairman, estimates that despite Madoff's claim that he lost $50 billion, the actual number is probably between $10 billion and $17.5 billion. The larger number "was supposed to indicate how much money had passed through his portfolio.... However big it is, it's larger than it should be, and it's an incredible amount of money."
- To prevent future frauds Pitt advocates a new audit system, overseen by the SEC. "What is needed is a system in which everyone who takes money from the public should be inspected every year, or, for smaller firms perhaps every other year, by a completely independent, wholly outside expert entity." The audit would determine whether there were "actual assets" behind financial statements.
- Pitt also believes "people who invest money should be required to deal through a non-affiliated entity" to prevent self-dealing.
- Chanos, the fund manager, believes that "if Bernie Madoff had been public, he probably would have never gotten as far" because of scrutiny by journalists, short-sellers or internal whistleblowers.
- Both Pitt and Chanos said they believed there is criminality among some of the major financial institutions hit by the financial crisis. "There was criminality going on in the executive suites of these firms ... because they were materially misrepresenting the financial shape of these firms as they were raising tens of billions of dollars from new investors," Chanos said. "The level of accounting chicanery that is going on in these major institutions is stunning." Pitt agreed there was criminality, though he added that "I can't say whether it was the executives suite or not."
- Pitt said the SEC isn't properly staffed to ferret out fraud. "You can't take young people, two, three, four years out of college, pay them $50,000, $60,000, $70,000, and expect them to have the sophistication to assess a $20 billion hedge fund," he said. Later, he said there is "a lack of real sophistication" at the SEC. "I can say this as a lapsed lawyer ... the SEC is overlawyered in the sense that it's heavily dependent on lawyers. There aren't enough economists, there aren't enough MBA, there aren't enough market specialists in the agency providing the kind of additional sophistication" that the SEC needs.