His story is yet to be told. Madoff himself has said hardly anything publicly, and I have a feeling he hasn't said much privately either. No one really knows whether he had accomplices, though my gut feeling is that just about all the big financial firms funneling money to him were accomplices, in the sense that they had to know something was fishy -- but so long as the profits were rolling in, they chose to look the other way.
What interests me more is Madoff himself, why he did what he did, what motivated him through all those years when he was getting away with what has to have been the greatest scam of all time. Sorry, but the guy doesn't look like a con artist. I know, I know, the most successful cons are the types that don't come across as crooks, the ones that inspire trust. But still, in just about every case I've ever seen, there's a certain unmistakeable sleaze factor that can be spotted a mile off. Sure, in principle a con has to be able to convince you he's on the level. But in fact your typical con comes across like a con anyhow, a bit too smooth, a bit too slick, probably because most suckers either deep down want to be conned, or else they're conned into thinking they're being let in on something just a wee bit illegal. Madoff just doesn't come across as the type.
His lawyer said it best yesterday, in a remarkably astute observation predictably ignored by the media: if he were a real crook, then he'd have been in the airport with a ticket to some exotic island instead of confessing that he'd been conducting a Ponzi scheme -- and then sticking around to face the consequences. The guy had access to billions. As soon as the financial system began to collapse last summer, he would have realized it was just a matter of time before the game was up. Time to pay off the appropriate officials, arrange for the hideaway, pay a visit to the Swiss banks, reserve the hotel rooms, book the airline tickets, etc. Instead, he meets with his sons, tells them what he's been up to and patiently waits in his apartment for the FBI to show up. As I see it, this part of the story is every bit as fantastic as all the rest.
Here's what I think happened. I think Madoff must have started out perfectly legit, doing what your typical novice financier in the making does, enticing relatives and friends to invest with him in some deal that would have looked like a sure thing. And I think at a certain point something must have gone very wrong. A big, heavily leveraged investment must have gone sour. Put yourself in his place. You've managed to convince your closest relatives and dearest friends to place their life savings in your care, you feel confident you are investing all this money wisely -- and then suddenly the bottom falls out. You are ruined! But more important, your relatives and friends have lost everything. How do you tell them? What do you say?
I really don't think Bernie Madoff was ever a con man, a swindler, a ruthless manipulator, not at least in the sense of someone who starts out with such intentions. I think he's someone who got caught up in something beyond his control. Not out of greed, but, like so many of the "smart operators" who got us into our current mess, simple naivete, lack of imagination, a sappy uncritical faith in what was once known as "The American Dream." Like any true believer in the essential benificence of the "free market," he must have gotten carried away by his own ambitions without seriously considering the consequences -- until it was too late. Faced with two really bad options, either confessing to friends and family that, thanks to him, all their savings were gone -- or sucking other investors in as a way to cover their losses -- I think he chose what, for him, would have been the lesser of two evils. As he might well have seen it (and of course I am totally speculating at this point), the only truly compassionate thing to do was to find some way, any way, to avert disaster for himself and those closest to him.
This story might or might not have some grain of truth, as far as Bernie Madoff is concerned. But there is a larger lesson to be learned, nevertheless. Because the "Great American Dream" that is "free market" capitalism is far too vulnerable to exactly this sort of dilemma. When things go well with the market, then all is well and everyone is happy, but when something goes wrong, it's not always that easy to accept. And all too easy to caste about for some way, any way, of averting the inevitable disaster. This may be the answer to the enigma of Bernie Madoff, I'm not sure. But there's no doubt it explains what's happened just now to the world economy as a whole. Very sadly, it's what is still happening, as the powers that be float more Ponzi schemes on top of the old ones, in a futile effort to get us all out from under the latest, greatest, disaster. Purely out of compassion, of course.