Bernie Madoff, Ponzi Schemer, Dies in Prison at 82
By CBS News
Craig Warga/NY Daily News Archive via Getty Images
Bernie Madoff, the financier who pleaded guilty to orchestrating the largest Ponzi scheme in history, died in a federal prison Wednesday, the federal Bureau of Prisons confirmed to CBS News. Madoff, 82, died at the Federal Medical Center in Butner, North Carolina, the bureau said in a statement.
The bureau said Madoff's cause of death would be determined by a medical examiner.
Last year, Madoff's lawyers filed court papers to try to get him released from prison in the COVID-19 pandemic, saying he had suffered from end-stage renal disease and other chronic medical conditions. The request was denied.
Madoff admitted swindling thousands of clients out of billions of dollars in investments over decades.
A court-appointed trustee has recovered more than $13 billion of an estimated $17.5 billion that investors put into Madoff's business. At the time of Madoff's arrest, fake account statements were telling clients they had holdings worth $60 billion.
For decades, Madoff enjoyed an image as a self-made financial guru whose Midas touch defied market fluctuations. A former chairman of the Nasdaq stock market, he attracted a devoted legion of investment clients — from Florida retirees to celebrities such as famed film director Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax.
But his investment advisory business was exposed in 2008 as a multibillion-dollar Ponzi scheme that wiped out people's fortunes and ruined charities and foundations. He became so hated he had to wear a bulletproof vest to court.
Madoff pleaded guilty in March 2009 to securities fraud and other charges, saying he was "deeply sorry and ashamed."
After several months living under house arrest at his $7 million Manhattan penthouse apartment, he was led off to jail in handcuffs to scattered applause from angry investors in the courtroom.
"He stole from the rich. He stole from the poor. He stole from the in between. He had no values," former investor Tom Fitzmaurice told the judge at the sentencing. "He cheated his victims out of their money so he and his wife ... could live a life of luxury beyond belief."
U.S. District Judge Denny Chin showed no mercy, sentencing Madoff to the maximum 150 years in prison.
"Here, the message must be sent that Mr. Madoff's crimes were extraordinarily evil and that this kind of irresponsible manipulation of the system is not merely a bloodless financial crime that takes place just on paper, but it is instead ... one that takes a staggering human toll," Chin said.
The Madoffs also took a severe financial hit: A judge issued a $171 billion forfeiture order in June 2009 stripping Madoff of all his personal property, including real estate, investments, and $80 million in assets his wife, Ruth, had claimed were hers. The order left her with $2.5 million.
The scandal also exacted a personal toll on the family: One of his sons, Mark, killed himself on the second anniversary of his father's arrest in 2010. And Madoff's brother, Peter, who helped run the business, was sentenced to 10 years in prison in 2012, despite claims he was in the dark about his brother's misdeeds.
Madoff's other son, Andrew, died from cancer at age 48. Ruth is still living.
Madoff was sent to do what amounted to a life sentence at Butner Federal Correctional Complex, about 45 miles northwest of Raleigh, North Carolina. A federal prison website listed his probable release date as November 11, 2139.
Madoff was born in 1938 in a lower-middle-class Jewish neighborhood in Queens. In the financial world, the story of his rise to prominence — how he left for Wall Street with Peter in 1960 with a few thousand dollars saved from working as a lifeguard and installing sprinklers — became legend.
"They were two struggling kids from Queens. They worked hard," said Thomas Morling, who worked closely with the Madoff brothers in the mid-1980s setting up and running computers that made their firm a trusted leader in off-floor trading.
"When Peter or Bernie said something that they were going to do, their word was their bond," Morling said in a 2008 interview.
In the 1980s, Bernard L. Madoff Investment Securities occupied three floors of a midtown Manhattan high-rise. There, with his brother and later two sons, he ran a legitimate business as middlemen between the buyers and sellers of stock.
Madoff raised his profile by using the expertise to help launch Nasdaq, the first electronic stock exchange, and became so respected that he advised the Securities and Exchange Commission on the system. But what the agency never found out was that behind the scenes, in a separate office kept under lock and key, Madoff was secretly spinning a web of phantom wealth by using cash from new investors to pay returns to old ones.
Authorities say that over the years, at least $13 billion was invested with Madoff. An old IBM computer cranked out monthly statements showing steady double-digit returns, even during market downturns. As of late 2008, the statements claimed investor accounts totaled $65 billion.
The ugly truth: No securities were ever bought or sold. Madoff's chief financial officer, Frank DiPascali, said in a guilty plea in 2009 that the statements detailing trades were "all fake."
His clients, many Jews like Madoff and Jewish charities, said they didn't know. Among them was Nobel Peace Prize winner and Holocaust survivor Elie Wiesel, who recalled meeting Madoff years earlier at a dinner where they talked about history, education and Jewish philosophy — not money.
Madoff "made a very good impression," Wiesel said during a 2009 panel discussion on the scandal. Wiesel admitted that he bought into "a myth that he created around him that everything was so special, so unique, that it had to be secret."
This story was originally published by CBS News on April 14, 2021 at 10:34 a.m. ET.