Author: Jim Campbell
ISBN No: 9781260456172
Review date: 16/04/2024
No of pages: 352
Publisher: McGraw Hill
Year of publication: 17/05/2021
Brief:
price
£-
The business reporter and radio host Jim Campbell begins the story with Wall Street hedge fund man Frank Casey, who comes to hear of Madoff in 1999. Casey smelt a rat; that what Madoff was offering was too good to be true; it had to be a fraud. As the author bluntly puts it: “What had taken Frank Casey about four minutes to sniff out would take the financial regulators 40 years to miss.”
As that suggests, the book is about more than the criminal and the crime, large though the losses were, affecting perhaps hundreds of thousands of investors. People took their own lives as a result, including one of Madoff’s sons. The book also details how the United States federal regulator the SEC (Securities and Exchange Commission) failed to listen to whistle-blowers. Campbell calls that chapter ‘systemic failure’, and lays into ‘an alphabet soup of regulatory incompetence’.
Campbell spoke to Madoff’s family and others around the story, such as Madoff’s secretary (‘an invaluable source’). It was something carried out over a long time; a Ponzi scheme, ‘where more cash must come in than is going out, since new investors’ money is used to pay current investors — and where no real investment activity is occurring. The unquenchable thirst for cash means Ponzi schemes are inevitably destined to fail.’ Campbell writes not only about the how of the fraud, but the why: “He [Madoff] didn’t do it for greed. He did do it for a lot longer than he admitted. Madoff’s path to Ponzi was short. Madoff’s trip along the Ponzi path was long.”
Campbell also places Madoff in the world’s financial system, which makes sense as he was there for a working lifetime. Campbell sets out how Madoff fitted in. He was fed funds by managers who kept doing so because of the ‘mouthwatering’ fees. Where was the due diligence? Campbell points to ‘the toxic mix of greed and wilful blindness of those that fed off Madoff’s trough’. Madoff took advantage of ‘unsuspecting and often unsophisticated investors, many of whom were friends and family’, besides charities and universities, American and international, investors all, to the sum of tens of billions of dollars.
The author shows how there was a ‘legitimate Bernie’, who built a respected billion-dollar business without any Ponzi scheme; and Madoff was a victim of extortion by investors, controlled and bailed out by them.
To recap, Bernie Madoff was arrested for fraud in 2008 – during the depths of that year’s financial crisis – a 70-year-old investment advisor, and former non-executive chairman of the NASDAQ stock market. It turned out he had made the largest Ponzi scheme in history. Campbell communicated with Madoff in prison, who died in captivity (during a 150-year sentence) in April 2021.
The book ends with advice for investors, and governments, such as; make it easier for whistle-blowers. The reader who’s a counter-fraud specialist, rather than a general reader interested in learning more about the story than the media headlines, will see all the tell-tale signs, the ‘red flags’, of a fraudster. Such as, the secrecy – many investors never even knew that they had trusted their savings to Madoff. And how the sums just didn’t add up, unless it was a Ponzi.
But rightly the book centres on the human story of the fraudster, that the author describes as ‘a Greek tragedy of hubris’. At the start, on Madoff speaking to him, Campbell writes: “He was seemingly more able to open up to me than to his own family, as his one-sentence apology to his son sat side by side with multi-page, handwritten letters to me rationalising his story. I respected his brilliance. I wanted to believe his rationalisations were true. Sadly, his fatal flaws overcame his brilliance, and truth was the casualty.” Inside the book Campbell concludes: “He was a King of Wall Street. He is the king of lies.”
More at http://madofftalks.com/Madoff-Talks-Press.htm and .
