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Madoff Points Finger Of Blame At Banks

Bernie Madoff
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Bernie Madoff

, Bernie Madoff explained how—and why—he defrauded his investors out of billions of dollars. His account certainly sounds credible—but one doesn't perpetrate the largest Ponzi scheme in recorded history without the capacity to make dubious information sound legitimate.

Aside from the fascinating psychological insights one may (or may not) take away about the man himself, the most striking part of the interview is Madoff's continued insistence of major banks complicity in his fraud.

To wit:

"He is also profoundly cynical about the rest of Wall Street, pointing out that the large banks not only handled his cash, but also marketed his funds. 'UBS and HSBC are going to have big problems—Picard is suing all of these [banks] and he thinks he can get $50bn or so. HSBC sat up there twice and set up and looked over my books and records, for two weeks, and missed things. The big difference between the big banks and funds, and regular clients, is that the banks and funds have all the information from the regulatory filings—but the regular clients did not have. Price Waterhouse came up to my office once a year and checked things out.'"

And Madoff is even more specific in his imputation of culpability to JPMorgan Chase :

"In Madoff’s eyes, JPMorgan is also tarnished by association. Before JPMorgan and Chase Manhattan merged in 2001, Madoff had his accounts with Chase. So did some of his first clients, such as Levy. But the bank never raised alarm bells. 'Look, I am not a banker but I know that billions of dollars going in and out of a bank account is something that should alert you to something. [They] got all the financial statements. [They] could have seen—I was using them as custodian, and they never questioned it,' he insists."

Madoff makes clear in the interview that he believes that Irving Picard, the attorney in charge of recovering money for Madoff's victims, should continue to go after the banks—and go after them hard.

"I said at the very beginning when I met with the SEC and Picard that my hope is that everyone will receive their principal [which amounts to $20bn]. Back then, everyone laughed. But [Picard] has already recovered $10bn and he will cover $20bn easily."

But perhaps Madoff—even in this—has a selfish motive. At the very least, he certainly seems to find it difficult to break himself of the habit of keeping score:

"If he [Picard] is successful, he may get $50bn. That means that there will be $30bn profits to go around, which would make me one of the greatest money managers in modern history.”

Apparently, Mr. Madoff still retains a salesmanship skill set of the very highest order.

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