| Madoff with the Money |
| Jerry Oppenheimer, Wiley, 2009, 256 pages, £16.99. |
| In the history of business cycles, it has not been unusual for frauds to be uncovered as the boom turns into bust. The collapse of the exquisitely-named Madoff hedge fund in 2008 is a case in point. The bald facts are that it involved $64.8 million missing from client accounts, including fabricated gains. About $36 billion of real money had been invested, of which $18 billion was withdrawn before the collapse. The liquidator is currently trying to recover the remaining $18 billion. These are just numbers, but the consequences for some of the victims have been dire and at least two have committed suicide. |
| The revelation that the Madoff hedge fund was in fact a gigantic fraud has naturally provoked a torrent of questions. How long had it been going on? How many people knew about it? How were so many people taken in, including many professionals who might have been expected to know better? Above all, how could it get so big before it was detected? Where were all the people who were supposed to protect investors against this kind of thing – boards of directors, compliance officers, auditors, regulators etc.? Not surprisingly, the answers to these questions are currently being sought urgently in the United States. |
| Anyone interested in these questions will find much useful information (including the numbers quoted above) on the internet, for example in the transcript of the CBS ‘60 minutes’ interview with Irving Picard, the court-appointed trustee, or liquidator, of the Madoff empire. |
| Unfortunately, they will not learn all that much from Mr Oppenheimer’s book, which is a kind of celebrity bio, based on the unreliable assumption that the life story of the world’s biggest fraudster is necessarily a matter of great interest. The author has assiduously interviewed all of the friends, relations, acquaintances and employees of Bernard Madoff whom he could find, and who were willing to talk to him. The book is largely devoted to a record of the interviews, with linking passages in a breathless and inelegant prose style. He tells us that Bernie was not regarded as being very bright at school, that Bernie and his wife Ruth had very refined and expensive tastes in clothes and furniture (now there’s a surprise!), and that Bernie suffered from obsessive-compulsive disorder. He tells us a lot about Bernie’s family history. None of this is really very interesting. He also tells us that Bernie was pretty indiscriminate in choosing his victims. Friends, relations and charities were all regarded as eligible to finance his lifestyle. |
| Whatever the outcome of the numerous inquests currently under way, and whatever regulatory reforms are implemented, it is impossible to believe that frauds of this kind will never happen again. It also seems likely that, when they do happen, the fraudsters will turn out to be as undistinguished as Bernard Madoff. |
| Bill Allen |
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