October 29, 2020

Scenes From the Madoff Masquerade

IT is Wednesday, Dec. 12, 2007, the first day of the last year of Bernie Madoff’s epic fraud.

The paperwork has been completed for a $9 million unsecured loan from his company to Peter Madoff, whose titles at the firm now include senior managing director, chief compliance officer, head of the options department and — since a few years ago — chief compliance officer for the private money management business that Bernie runs on the 17th floor of the distinctive oval office tower known as the Lipstick Building in Midtown Manhattan.

Still, the Madoff firm is casual about titles — Bernie almost seems to make them up as he goes along. Peter’s primary title has always been “Bernie’s brother.” And this latest loan, to finance a real estate investment, reflects this reality.

At most big firms these days, an executive’s request for a $9 million insider loan with a gentle interest rate would be coldly and firmly denied as inappropriate. Despite growing worries in the financial markets, longtime employees of Bernie Madoff’s firm have no trouble borrowing cash when they need it. Bernie rarely says no.

But this loan to Peter — like all the insider loans that have come before and that will follow in succeeding months — is sucking out cash that Bernie Madoff will need when the turmoil bearing down on Wall Street finally hits.

Tonight is the firm’s holiday office party, and employees are enjoying the margaritas and Mexican beer at Rosa Mexicano, a popular bistro on First Avenue, a few blocks from the office.

The party might almost be a family reunion. Beyond his own family ties, Bernie Madoff’s employees work with their fathers, their cousins, their nephews, their stepsons, even their neighbors. Some of them — notably the staff on the 17th floor — were hired right out of high school and have never worked anywhere else.

The traders may joke about Mr. Madoff’s nearly obsessive demand that they keep their desks clear and tidy, and they may roll their eyes at his crude humor, but the firm still seems like a great place to work. Besides being generous with insider loans, Mr. Madoff also manages much of the money his relatives and other senior employees have saved: their deferred compensation and retirement savings. Although he is prickly and secretive about it, everyone knows that giant hedge funds and wealthy individuals are constantly jockeying to get him to manage their money. Employees feel lucky that he is looking out for them, too.

There may be a hint of edginess in the air tonight. Madoff traders exchange jokes with traders at big Wall Street outfits, and lately, behind the laughter, they all are hearing faint rumbles from the approaching storm. Perhaps it comforts them to reflect that Mr. Madoff has seen rough weather before — from the shaky markets right after the terrorist attacks in 2001, all the way back to the glut of unfinished stock-trading paperwork that nearly choked Wall Street back offices in the late 1960s. He’s seen it all and survived it all.

Wednesday, Jan. 23, 2008

On Mr. Madoff’s calendar, this evening belongs to the New York City Center, the innovative cultural institution that he and his wife, Ruth, have supported for years and on whose board he has served for more than a decade. The center’s performance tonight is a tango tour de force perfectly suited to its distinctive Moorish-style auditorium on West 55th Street. The faded building, constructed as a Shriners temple in 1923, needs an enormous amount of renovation work, and a major fund-raising campaign is already being planned.

As the Madoffs slip into their seats, Wall Street’s growing anxiety about an approaching recession probably seems like a faint distraction. Mr. Madoff has at least $5 billion in the bank to sustain his Ponzi scheme, small bits of it contributed by people seated around him in this auditorium and giant slabs of it deposited by his global collection of hedge fund clients.

In theory, that cushion should see him through even a bad recession. But hedge funds hurtle into a trend, stampede out again and swerve at unexpected moments like a herd of wild beasts. If they all panic at some clap of economic thunder, Mr. Madoff will be lucky to avoid getting trampled. And if he goes down, many of the rich donors that City Center relies on will go down with him.

Thursday, Feb. 14

Mr. Madoff catches a night flight to Palm Beach, Fla., where hundreds of his investors live. Among them is Carl Shapiro, the retired garment industry entrepreneur who has been a client since the 1960s. Mr. Shapiro is celebrating his 95th birthday with a gala organized by his daughters. The Madoffs are invited.

Article source: http://feeds.nytimes.com/click.phdo?i=8953bde6f120a00f20de976c166f5c7a

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