What made Bernie Madoff, a man who helped revolutionize Wall Street and built a completely legal billion-dollar business, perpetrate the greatest fraud in history? And what led Ezra Merkin, born to immense privilege, to enable him?
By Steve Fishman
• Published Feb 22, 2009
• NY Magazine
Illustration by Riccardo Vecchio
A little more than a year before he blithelyconfessed to masterminding the largest Ponzi scheme in history, Bernie Madoff attended the wedding of his niece. That Saturday evening, September 29, 2007, Shana Madoff, the daughter of his younger brother, Peter, his partner for almost four decades at Bernard L. Madoff Investment Securities, married a former official at the Securities and Exchange Commission, an irony that Bernie couldn’t quitekeep to himself. He tossed an arm around the neck of one young guest and directed the young man’s attention across the dance floor, toward a clean-cut group sipping cocktails. “See them,” Madoff said, pale-blue eyes flashing incongruously in his kindly face. “That’s the enemy.”
There were a hundred guests at the Bowery Hotel, some of whom had their life savings invested with Bernie. Tables wereset with tasteful linen and beautiful flowers. The event commingled business and family—for the Madoffs, business was family. Bernie Madoff liked to brag about what he’d built over nearly 50 years, disquisitions that often began with the phrase “We Madoffs.” His sons, Andy, 42, and Mark, 44, ran the trading floor on the nineteenth floor of the company’s multistory offices in the Lipstick Buildingon Third Avenue and 53rd Street, two floors above where Madoff supposedly managed billions of dollars of other people’s money. Peter Madoff, 62, was chief compliance officer and his inseparable right hand. The bride, Shana, 38, was a compliance lawyer. Bernie’s wife, Ruth, once his bookkeeper, still maintained an office there.
As the toasts began, Bernie headed to the terrace. He isn’t atoast-maker. He has a tic, a nervous schoolboy’s double blink, as if cleaning a windshield, and occasionally a stammer.
Outside, the night air was crisp with the first hint of fall. Bernie sat down and lit a cigar, his favorite, a Davidoff. He wore a black tuxedo and one of his antique watches, a Patek Philippe or a Rolex no doubt, fastidiously matched to one of his several wedding bands. He sat at thecenter of a small cluster of well-wishers, big shots themselves who were paying their respects to an unlikely Wall Street titan. Unassuming Uncle Bernie, as people called him, was a legend. In the seventies and eighties, he’d helped revolutionize how stocks were traded. Along the way, with apparent effortlessness, he’d turned money manager, rising to become, by the evidence of detailed statements heregularly sent to his legions of investors, one of the more successful ones in the world. On paper, he’d built fortunes for some of the admirers who now crowded around him and for much of the guest list. Bernie basked in the praise. He loved that wealthy people counted on him, loved the adulation. “It ennobled him,” one friend says. At the same time, he sometimes let slip a hint of contempt forthose he took care of, as if they didn’t appreciate him enough. After all, he was the one who paid the kids’ tuitions and the country-club dues of the fancy guests who now drank his booze—Bernie’s labors had indirectly financed that too.
On the terrace, blue smoke drifted in the air. Bernie, meditative for once, told a guest that he couldn’t quite believe he was at a wedding at the Bowery Hotel.His grandparents had made their lives on the Lower East Side, a stone’s throw from where he sat with his tux and his multi-thousand-dollar watch. He’d lived with them for a while, and that evening, he recalled how poor and run-down their neighborhood had looked. He gestured in the direction of the Lower East Side. “I fought my way out of there,” Bernie told a guest. “I had to scrape and battle...