Former Assistant U.S. Attorney Marc Litt recalls sitting in Bernard Madoff's office in New York's famed Lipstick Building, soon after it had been turned into a federal crime scene. Madoff had been arrested Dec. 11, 2008, having confessed to running the largest Ponzi scheme in history. As the lead prosecutor, Litt was responsible for making some sense out of the massive, still unfolding fraud.
"There were pictures of his boats on the wall and they were all named 'Bull,'" he said in an interview.
Sitting across from Madoff's desk, where countless clients sat over the years, Litt also noticed a small sculpture, but it took a moment to figure out what it was.
"I saw that it was a sculpture of a wood screw, and it all of a sudden hit me that here I was, the prospective investor, surrounded by bull and getting screwed, but I didn't know it," he said.
Ten years later, Litt is in private practice as a partner at Wachtel Missry in New York, where — from an office that happens to overlook the Lipstick Building — he advises the types of institutional clients that might have invested with Madoff back in the day. He says the scandal forced the financial industry to become far more careful. For all the signs of progress, however, no one seems willing to rule out a Madoff-size financial fraud happening again.
"By all accounts, the amount of money that's gone into compliance at the major financial institutions in the United States is astonishing," he said. "It's probably the fastest-growing employment component of financial institutions."
JPMorgan Chase, the nation's largest bank and Madoff's primary banker, was forced to overhaul its compliance systems and pay $2.6 billion in fines and penalties under a deferred prosecution agreement with the Justice Department. Prosecutors alleged that the bank failed to employ adequate controls that might have caught the Madoff fraud. In 2016, prosecutors told a court that the bank had paid its fines and adopted the agreed upon reforms, and they dropped the charges.