Bernard Madoff, mastermind of the biggest investment fraud in U.S. history, ripping off tens of thousands of clients of as much as $65 billion, died Wednesday. He was 82.
His death at the Federal Medical Center in Butner, North Carolina, was confirmed by the federal Bureau of Prisons.
Madoff died apparently from natural causes, the AP reported earlier, citing an unidentified person familiar with the matter. He would have turned 83 on April 29.
Madoff was serving a 150-year sentence at the prison, where he had been treated for what his attorney called terminal kidney disease. His request for compassionate release from prison was denied in June.
Bernard Madoff leaves federal court in New York on Tuesday, March 10, 2009.
Jin Lee | Bloomberg | Getty Images
He pleaded guilty in 2009 to a scheme that investigators said started in the early 1970s and defrauded more than 40,000 people in 125 countries over four decades by the time Madoff was busted on Dec. 11, 2008 — after his two sons turned him in. Victims included the famous — director Steven Spielberg, actor Kevin Bacon, former New York Mets owner Fred Wilpon, Hall of Fame pitcher Sandy Koufax and Nobel Peace Prize winner Elie Weisel — and ordinary investors, like Burt Ross, who lost $5 million in the scheme.
Madoff insisted the fraud did not begin until the early 1990s, when, he said, “the market stalled due to the onset of the recession and the Gulf War.”
In a 2013 email to CNBC from prison, Madoff claimed the break in the market that started the Great Recession led to his scam.
“I thought this would be only a short-term trade which could be made up once the market became receptive,” he wrote. “The rest is my tragic history of never being able to recover.”
In fact, investigators said, Madoff did not execute a single trade for his advisory clients for years. Rather than employing a so-called split-strike conversion strategy as he claimed, he simply deposited investors’ funds in a Chase bank account, paying off new customers with funds from earlier customers — a pyramid investment strategy — and providing his clients with falsified account statement. The investment “returns” shown on those statements — some $50 billion in all — were pure fiction.
The scandal at Bernard L. Madoff Investment Securities shattered investor confidence, which was already damaged by the financial crisis. And it led to sweeping changes at the Securities and Exchange Commission, which missed the fraud for years despite repeated warnings, including from independent investigator Harry Markopolos, who set out to analyze Madoff’s improbable returns and pronounced them fraudulent as early as 2000.
An illustration of Ponzi scheme mastermind Bernard Madoff, portrayed as the “Joker” from Batman, is seen on the cover of New York Magazine at a newsstand February 24, 2009, in New York.
Timothy A. Clary | AFP | Getty Images
A subsequent investigation by the agency’s inspector general, H. David Kotz, found that rather than following up on clear evidence of fraud, SEC enforcement staffers decided to take Madoff’s word that his operation was legitimate.
“When Madoff provided evasive or contradictory answers to important questions in testimony, they simply accepted as plausible his explanations,” Kotz wrote.
In early 2020, Madoff asked a judge to release him from prison, saying he was in the end stages of kidney disease and was too old for a transplant.
“You know there hasn’t been a day in prison that I haven’t felt the guilt for the pain I caused on the victims and for my family,” he told The Washington Post at the time. He said his goal was to explain his actions to his grandchildren.
“You know I lost both my sons, and my wife is not really well. So it’s horrible,” he told the Post. “I was very close with my family. I made a terrible mistake. And you know I suffer with it. I’ll suffer with it when I get out.”
But about four months later, a judge denied the request, saying Madoff committed “one of the most egregious financial crimes of all time,” and that “many people are still suffering.”
Bernard Lawrence Madoff was born in Queens, New York, on April 29, 1938, the son of Sylvia and Ralph Madoff, a plumber who became a stockbroker.
For more than 50 years, Bernie Madoff was renowned on Wall Street, a big money manager who founded his own firm at age 22 and became nonexecutive chairman of the Nasdaq in 1990. He was credited with helping develop some of the systems and market structures that moved the stock market beyond the trading floor and gave rise to modern, electronic trading.
But Madoff’s life came crashing down in 2008, during the depths of the financial crisis.
Bernie Madoff walks out of Manhattan federal court in New York, U.S., on Monday, Jan. 5, 2009.
Jin Lee | Bloomberg | Getty Images
Flooded with redemption requests from his clients, Madoff could not keep the scam going any longer. On Dec. 10, 2008, he confessed to his sons, Mark and Andrew, that the investment advisory business was all a lie. Madoff had hoped to buy some time to distribute hundreds of millions of dollars in bonuses to employees, then wind down the firm. But Mark and Andrew, who were senior managers in the firm’s trading operation — which operated separately from the fraudulent advisory business — would have none of it, and alerted authorities on the spot.
A day later, on Dec. 11, 2008, the FBI raided his offices in the Lipstick Building on Midtown Manhattan’s Third Avenue.
On March 12, 2009, Madoff pleaded guilty to 11 federal crimes and admitted to operating the largest private Ponzi scheme in history. He was sentenced three months later to the maximum sentence: 150 years in prison with restitution of $170 billion.
In court, he insisted that it was all his idea — that his family knew nothing — even though his wife, Ruth, had once kept the books, his sons were senior officers, and his younger brother, Peter, was chief compliance officer. Charles Spada, an attorney for Peter Madoff, declined to comment Wednesday.
Andrew Madoff sits between his girlfriend, Catherine Hooper, and his mother, Ruth Madoff, while appearing on NBC’s “TODAY” show in 2011.
Peter Kramer | NBC NewsWire | Getty Images
But a trustee appointed to track down funds for investors did not buy it. Irving H. Picard sued dozens of people and entities, including Madoff’s family members, alleging they either knew about the fraud or turned a blind eye, while reaping millions of dollars in benefits.
For older son Mark, the suspicion was too much. In 2010, two years to the day of his father’s arrest, he became the third suicide linked to the fraud. He was 46. Four years later, Andrew died of lymphoma at age 48.
Picard eventually reached settlements with the sons’ estates, and with Ruth Madoff, who has continued to deny any knowledge of the fraud, and is reportedly living modestly in Connecticut.
In the end, in addition to Madoff, more than a dozen individuals, including Peter Madoff, were convicted of federal crimes, but none of the others was accused of knowing about the fraud. JPMorgan Chase, Madoff’s primary bank, paid $2.6 billion to the U.S. government and Madoff victims in 2014 to settle allegations that it did not maintain adequate controls. After Chase instituted some unspecified reforms, prosecutors dropped charges against the bank.
Medical examiners remove the body of Mark Madoff from his New York apartment on Dec. 11, 2010.
Emmanuel Dunnand | AFP | Getty Images
As of Wednesday, the Madoff Victim Fund has paid nearly 37,000 victims, with most recovering 80% of their losses, according to former SEC chairman Richard C. Breeden, special master of the fund. That’s a figure normally unheard of in a Ponzi scheme.
“Beyond the loss of tens of billions of dollars, the human consequences of the crime were almost incalculable,” Breeden said in a statement. “Many victims could no longer live independently, meet healthcare needs for themselves or a spouse, care for children or grandchildren, or otherwise provide for basic needs. Many victims were not wealthy, and for many the loss of all or a significant portion of their life savings had a brutal impact.”
“The pain experienced by the victims of Mr. Madoff’s fraud is not diminished by his death, nor is our work on behalf of his victims finished,” Picard said in a statement Wednesday. “My legal team and I are committed to continuing to identify and recover Mr. Madoff’s stolen funds and return them to their rightful owners.”
From prison, Madoff repeatedly tried to take credit for the recoveries, claiming he pressured his biggest investors to return some of their money.
“Those parties were well aware of the incriminating evidence I possessed about their complicit activity, and wisely came forward with settlements,” he wrote in 2013.
But Picard and federal investigators said Madoff never provided them any meaningful help. The remorse he claimed in every message was suspect as well. At his 2009 sentencing, Madoff turned to his victims. “I’m sorry,” he said. “I know that doesn’t help you.”
Cheers erupted as federal Judge Denny Chin ordered the maximum sentence for “extraordinarily evil” crimes.
Ross, a former mayor of Fort Lee, New Jersey, who testified at the hearing, told Chin: “Commit Madoff to prison for the rest of his life. May Satan grow a fourth mouth where Madoff can spend the rest of eternity.“
In an email to CNBC on Wednesday, lead Madoff prosecutor Marc Litt said: “It is unfortunately fitting that he died in jail.”
“I think I speak for the team that prosecuted Mr. Madoff and his associates when I say that his passing closes a dark chapter of deception and greed that irretrievably damaged the lives of tens of thousands of victims,” said Litt, now in private practice. “From start to finish, this episode has brought nothing but devastation to everyone he touched.”
Bernard Madoff’s former defense attorney, Ira Lee Sorkin, on Wednesday called his death the culmination of “a great tragedy, and there are no winners.” Sorkin negotiated Madoff’s 2009 guilty plea and represented him through his sentencing that year, and has remained in touch with his former client.
Sorkin told CNBC he last spoke with Madoff between one and two months ago. He said Madoff was lucid and “sounded good,” despite the fact that he was terminally ill. He said Madoff expressed remorse to the end, but said it was tempered in recent years due to the fact that much of the investors’ money — more than $14 billion out of $17 billion in lost principal — has been recovered by Picard.
Madoff’s attorney in recent years, Brandon Sample, said in an email Wednesday that his client “up until his death, lived with guilt and remorse for his crimes. Although the crimes Bernie was convicted of have come to define who he was — he was also a father and a husband. He was soft spoken and an intellectual. Bernie was by no means perfect. But no man is.”
Said Breeden: “Sadly, no one can eliminate the anguish victims suffered, or restore the years in which their lives were horribly affected. It is vital that we never forget what Madoff did, lest it be allowed to happen again.”
— CNBC’s Jim Forkin contributed to this report.