The Wizard of Lies: Bernie Madoff and the Death of Trust

by Diana B. Henriques

The inside story of Bernie Madoff and his $65 billion Ponzi scheme, with surprising and shocking new details from Madoff himself.

Who is Bernie Madoff, and how did he pull off the biggest Ponzi scheme in history?

These questions have fascinated people ever since the news broke about the respected New York financier who swindled his friends, relatives, and other investors out of $65 billion through a fraud that lasted for decades. Many have speculated about what might have happened or what must have happened, but no reporter has been able to get the full story -- until now.

In The Wizard of Lies, Diana B. Henriques of The New York Times -- who has led the paper's coverage of the Madoff scandal since the day the story broke -- has written the definitive book on the man and his scheme, drawing on unprecedented access and more than one hundred interviews with people at all levels and on all sides of the crime, including Madoff's first interviews for publication since his arrest. Henriques also provides vivid details from the various lawsuits, government investigations, and court filings that will explode the myths that have come to surround the story.

A true-life financial thriller, The Wizard of Lies contrasts Madoff's remarkable rise on Wall Street, where he became one of the country's most trusted and respected traders, with dramatic scenes from his accelerating slide toward self-destruction. It is also the most complete account of the heartbreaking personal disasters and landmark legal battles triggered by Madoff's downfall -- the suicides, business failures, fractured families, shuttered charities -- and the clear lessons this timeless scandal offers to Washington, Wall Street, and Main Street.

Genres: Nonfiction, Business, True Crime, Biography, Finance, History, Audiobook

465 pages, ebook

First published April 26, 2011

About the author

Diana B. Henriques is the author of 'The White Sharks of Wall Street' and 'Fidelity's World.' She is a senior financial writer for The New York Times, having joined the Times staff in 1989.

A Polk Award winner and Pulitzer Prize finalist, Henriques has won several awards for her work on the Times' coverage of the Madoff scandal and was part of the team recognized as a Pulitzer finalist for its coverage of the financial crisis of 2008. She lives in Hoboken, New Jersey.

Reviews

[The Pfaeffle Journal (Diane) · Rating 4 out of 5]

I am continually baffled by people whom seem to have no conscience. I am bothered by my own digressions to the point of losing sleep. How is it that people can delude themselves to think that what they are doing or what they did is not a problem. How the human mind works is just amazing. Bernie Madoff for over thirty years ran a multi-billion dollar Ponzi scheme. He fooled thousands of people and a large part of the financial sector with his scheme.

Henriques details how Madoff had a shadow business running on another floor of his company, where he faked everything from stock trades to account statements. She further details how she feels that some of Madoff's wealthier clients may have understood what Madoff was involved in and withdrawn money because they knew they could. How Madoff was able to fool the SEC several times, mostly because I think they really didn't want to believe that this could happen. The book deals with the efforts made to recover some of the funds that investors lost. Overall, it is an interesting read.

The author also refers to Harry Markopolos No One Would Listen who spent 10 years trying to get the SEC to really investigate Madoff. I would suggest reading this book also, Markopolos is at times a little over the top but he was spot-on when it comes to Madoff. This review was originally posted on The Pfaeffle Journal

[Foteini Fp · Rating 4 out of 5]

Ισώς το καλύτερο απ' όσα έχω διαβάσει για το περιβόητο Ponzi scheme. Δεν τελείωσα ομως. Περιμένω μερικά ακόμη στο ταχυδρομείο. Νομίζω ότι έχω βρει το πάθος μου για το 2019. Να μελετώ τα πάντα γύρω από μεγάλους απατεώνες.

[Lobstergirl · Rating 3 out of 5]

It's distracting for me when the author repeatedly reports on the appearance and hair of women characters, particularly blond women.

"her pale heart-shaped face framed by sleek blond hair"
"young and accomplished colleague Nicole De Bello, a stately blonde..." (does stately here mean dignified, or magnificent? Why do I think it means stacked?)
"a fragile blond model in a pale summery dress"
"his slender, blond deputy"
"tall, thin, and pale, with a short bob of strawberry blond hair"
"her lanky dark blond hair pulled back"
"Enrica Cotellessa-Pitz, a petite brunette in her early fifties"

[Donna · Rating 4 out of 5]

If this book isn't a bright neon sign that yells, "Don't Put All Your Eggs in One Basket," I don't know what is. This was a sobering read, especially since I'm not far from retirement. It is so sad that many lives were affected by this.

I listened to the audio and the narrator did a great job. She set the right tone for this that kept it from being textbook-y. The author covered Bernie's early years, right onto his arrest. I liked that it covered how thorough and deep this deception was and how all the checks and balances in place were an EPIC fail. This was more entertaining than I thought it would be, so 4 stars.

[thewestchestarian · Rating 5 out of 5]

A fascinating view into the ultimate confidence man. Diana Henriques delves into exactly the correct questions about Bernie Madoff and his epic $64 billion (with a "b") ponzi scheme. First, how does someone live with such a complete betrayal? Madoff raised two boys, sent them to good American schools, has them return to his Wall Street brokerage and money management business and leads them to believe they would inherit the operations on his retirement. He does all this knowing full well the scheme will be discovered and they will all eventually go to prison. He also steals not just from wealthy strangers but members of his Jewish community, friends, family, children and even his grandchildren. Again he does this knowing fully well some of these people will be destitute when his scheme eventually collapses. How does he live with this? After a few years in prison working with a counselor Bernie eventually faces the question himself although he lacks a good answer.

She also extensively delves into the question of how a crime this big is kept going over more than 20 years although Madoff's initial foray into duping investors turns out to be in the early 1960's. Rightly so, the Securities and Exchange Commission is played as the Keystone Kops as they launch one ineffective investigation after another. Henriques is a smart enough writer to realize when their bungling makes Madoff seem like the rebellious anti-hero. To keep Madoff in perspective for the reader, she inserts stories about how he indulges his boys' whims for multi-million dollar Manhattan and Long Island real estate by digging into the money investors gave him to manage.

The author also does a thorough job of answering the question "who knew". She makes a convincing case that only Madoff, his lieutenant and a small number of operations personnel knew of the fraud. It seems clear that his wife, brother and boys were fooled along with some of the most powerful and wealthy people. Henriques fully covers the pain they are subjected to - in Bernie's brother Peter's case a lengthy prison sentence and his son his suicide - because of the assumption that they knew about the scam. She also looks into whether any of his wealthy client collaborated on it concluding, along with Bernie, that one figured it out and took advantage of it to the tune of $7.2 billion (with a "b").

Henriques also does a nice job over laying out the mechanics of the fraud. Madoff and the small group of operations people who assisted with the deception built false computer systems that mimicked real trading systems well enough to fool government investigators and others. The scenes of the SEC watching his fraudulent handiwork would make for compelling movie scene.

While Henriques's is not a great storyteller, her prose represents the clean, crisp word choice and vocabulary of a seasoned journalist. She brings an objective and savvy perspective on this most slippery of subjects.

In short, pick up this fascinating and amazing epic story is well worth your time.

[John McDonald · Rating 5 out of 5]

"Good regulators believe in skepticism, but most investors crave simplicity. If regulators run
across someone claiming to have a safe, high yield investment that always goes up even
when everything else goes down, [regulators] want to take him to court. Investors want to
take him to dinner. . . . That need for something simple always seems to strangle
skepticism before it can speak up."
Diane Henrique, "Wizard of Lies", pages 341-42.

When Bernard Madoff's crimes were revealed, little time was lost in proclaiming the enormity of his scheme and that wealthy, savvy businessmen and investors could have been taken in. The public wondered how such a crime could have been committed by a secret so-well kept, so simple in concept but complicated in operation that no disclosure occurred over the 30-year period of the scam even after regulators investigated Madoff's trading three times and even after at least two insightful securities analysts questioned publicly his ability to generate yields that never experience a losing month even during periods when the market swooned, sometimes for a year or more.

Henriques captures the answer better than anyone else I have read or listened to: Madoff's investors--hedge funds, pensions, retirement accounts, members of a closely knit group of rich individuals who lived near each other, joined the same clubs, attended synagogue together on holy days and Sabbath--threw off their skepticism about how consistently positive returns displayed on their periodic account statements (after all, the yield they wanted was there) could recurr without interruption. More to the point, regulators and public authorities (NY State attorneys general, for example, and US Attorneys) lost their skepticism, too, about the unrealistic possibility an investment genius who virtually created electronic capabilities for the NASD and who was respected in New York financial and charitable circles, could have devised a scheme that the Trustee Irving Picard believed took in at least $60Billions in cash over the life of the crime but failed to do the simplest of auditing tasks--verify the assets said to be held in accounts.

Madoff's scheme to his investors was built upon fictitious trading, but to professionals in the securities and legal businesses verification of assets is a routine procedure learned early and used often. Anyone familiar with the IOS scandals propagated by Bernie Cornfeld in the 1960s understands the importance of verification of assets. I remember reading a book by Michael Lewis where he wrote about how Cornfeld's funds reported owning vast amounts of real estate. But, when a young accountant conducing an audit for the funds and who took seriously the rule about verifying assets couldn't find the real estate assets, Cornfeld's fraud immediately fell apart. [When I was conducting financial investigations in the 1970s' payola investigations, revenues reported from concerts performed by the artists were checked against ticket stubs as a verification method, for example, and then compared to deposits in bank accounts. One of my senior investigators, a man who had worked for ATF, the IRS, and the FCC, as an investigator, told me the key to investigations is to always "follow the money" until it stops walking, and if verification can't be found, then something is wrong. The SEC and other public agencies charged with enforcing the law did not employ this verification procedure in regard to Madoff's "trades". Had any of these investigators simply checked with the NASD's clearing corporation--the mechanism used to clear trades and allocate the distribution of monies--it would have found that Madoff never exectued a trade for his investors' accounts, the dead bang piece of evidence that would have doomed Madoff' scheme as early as the mid 1990s. But no one asked DTCC and so the crime continued, weathered a few bumps, and collapsed by circumstance when, in December, 2008, Lehman Brothers and Bearn Stearns caused a run on deposited monies from banks and securities firms, liquidated stocks, and investors, including Mafoff's demanded withdrawals in cash to preserve their liquidity. By December, 2008, Madoff's jig was up and the biggest financial crime known in history was revealed.

The SEC's Inspector General concluded that the SEC simply seemed uninformed about how one goes about detecting Ponzi schemes in the securities industry. But that answer is naieve at best since even Madoff recognized that his fraud was about to be uncovered after 2 SEC inquiries were conducted only a couple years apart. But nothing happened because, SEC investigators even after obtaining Madoff's DTCC account number, the NASD clearing account through which every trade had to pass, never took the conclusive step of securing DTCC records to verify the trades Madoff said he had made.

Furthermore, Harry Markopolous, a brilliant securities analyst accurately told the SEC that there weren't enough options available in any exchange or the OTC markets to cover Madoff's supposed hedging strategies, proved to be a pompous, personally obnoxious asshole who personally attacked individual SEC investigators and managers publicly to the point that his complaints and the supporting information he turned over to the SEC were simply blown off by regulators and others who had been listening but who began to doubt his sanity.

Uncovering the fraud was only one-half the problem. The first question is how was Madoff able to create a Ponzi scheme so massive, so convincing, and so long-lived, and then nourish it over the years through his public demonstrations of charitable contributions, publicly reported positive results, and using his acquaintances and unique knowledge of securities markets gained through leadership of the NASD to create trust in those who later became investors in his funds? Here's what I think after reading Henrique's and others accounts.

1. Cash. Investment funds, like commercial enterprises require a steady stream of cash to meet daily redemptions, liquidations of accounts, and operating expenses. Until December 2008, this was a problem for Madoff twice, once in the 1990s which was overcome and then in December 2008 when redemptions, liquidation of accounts, and cascading securities markets made investors non-existent and current investors including hedge funds simply unwilling to commit more to Madoff, leading first to the downfall of the funds he managed and then to uncovering the massive fraud perpetrated over the years.

2. Trust. Every con man and swindler peddles trust, knowing that central to the operation of any fraud is that good people who happen to be rich and mostly smart mostly are willing to accept a belief that someone who says he can provide them with something they want and appear to prove it will accept what the con man requires. (Donald Trump is a very good example and when you study it, you will find a similarity of purpose and technique the two share). In other words, where trust is the underlying cause of people handing over money to invest, be skeptical that of anyone who asks another to trust him for and then quickly verify that the trust has been well, or ill, placed. As Henrique points out (page 347), Madoff was so much like his investors, that they perceived him as being "better" when it came to investing their money.

3. Marketing. How do you market a fraud. Get them to trust you. Madoff understood some necessary conditions very, very well, which he marketed in convincing hedge funds, the so-called feeder funds, and wealthy individuals to invest with him. He understood what investors expected as a consistent rate of return. He understood how regulators operated since he had been a regulator himself as the head of the NASD. He understood that investors would tolerate even the worst opaqueness if their returns were positive, consistent, and enabled them to perceive that they were sailing the investment seas with a brisk wind at their backs. And, most importantly, he understood how rich and prosperous people wanted to believe that they had found a successful and exclusive way to make more money. Madoff understood greed and he understood elitists.

4. Securities Markets. Securities markets, despite periodic swooning, had been relatively calm over a 40 year period from the 1970s through the date the fraud was exposed. There were notable exceptions during this time: the 1987 panic, the unwinding of derivative accounts of an overexposed firm in the 1990s, the tech bubble which burst in 2000-2001. As long as he could ride through or over these anomalies, he could make a plausible argument that his trading strategies generated profits to his investors. 2008 was not only a challenge to Madoff, it was catastropic because the problems the markets encountered were not limited to the markets only. The problems were systemic to the economic and fiscal systems: banking, credit extensions, immediate and enormous job losses, and most important, I think, the uncertainly surrounding all transactions and all markets because the clearing systems in banking, securities, and external trading had stopped working momentarily and the economy was forced to stand still. Even the most sophisticated were astounded to learn that large, integrated international investment firms such as as Merrill, Goldman, and the others, and international commercial enterprises like GM and GE were absolutely dependent on a system that allowed them to borrow 10s of million of dollars overnight every night repaying the overnight loan before banks opened in NY the next morning, and when that system of clearing trades and borrowing overnight faltered, every firm in the world came to a momentary standstill--something that creates its own inertia--and disrupted every aspect of these organizations lives.

5. Promise Consistent yields. Madoff understood that investment decisions by funds, individuals, retirement and financial planners and others were absolutely dependent upon consistent rates of return, just as insurance companies were. Showing this meant investors would not raise questions.

6. Robbing Peter to pay Paul when more cash becomes necessary to perpetuate the scheme. Madoff did have a legitimate business clearing trades for brokerages, and it made money consistently because it charged fees for every trade cleared by the business. It was licensed and fully compliant with securities regulations. When Madoff encountered liquidity demands that could not be raised by "new cash", he "borrowed" from surpluses in the clearing business, a big violation of the rules. However, his ability to repay the "loans" quickly virtually eliminated risk of discovery.

7. Compliant, knowing Employees and Investors. None of Madoff's fraud would have worked on a large scale if a few number of employees did not work smartly and assiduously to perpetuate the Madoff fraud. Certainly, Frank Di Pascali and Annette Bongiorno, actively assisted in preparing documents in perpetuating the fraud. Sonja Kohn, and perhaps Patrick Littaye and Rene-Thiery Magon de la Villehuchet, knew that Madoff's reported fraud existed and cooperated in it.

8. The myth of "the Orderly Exit". Above all else, in his interviews with Henriques, Madoff confirmed that his entire scheme was a fraud, that the trades were made up, and that an orderly exit, for him, was an unnecessary fiction. So he just continued to make bigger and bigger bets because he seemed to be wearing a financial bullet proof vest that simply caused problems to richocet away from him for 30 years.

9. No One Asks, No One Verifies. "No one presses [Madoff] or challenges him to explain why he can trade when no one else can" (page 200). This is critical. See, Trust, number 2, above.

Henrique has written a wonderfully researched and readable account of the Madoff swindle, although I must say that I am a sucker for books about financial and accounting fraud. She could just as well as used this as the centerpiece for almost all the financial frauds I have studied. The author also makes a contribution to understanding the difficulties faced by conned investors as well as the difficulties faced by Irving Picard, the Trustee appointed by the bankruptcy court to gather in the assets and pay off the investors, and the stable bankruptcy judge, the Hon. Burton R. Liflin, who faced impassioned and implacable advocacy from the Trustee and the victims, but who had to issue legal orders so the work of compensating victims of the fraud could move forward. Henrique's description of the "net winner-net loser" rule, which formed the basis of compensation to the investors, is the best explanation of the many explanations I have read and is a model of clarity in financial reporting.

The Madoff lesson is this: be grudging in granting trust, verify before you believe, and never invest money in anything that states it is never wrong and can never to be questioned, a repeated Madoff routine engaged in with his investors and potential investors whose questions he spurned and who acted with disgust when investors' questions persisted.

What is learned here: always question, always verify, don't believe that something that looks too good to be true is somehow true, and be skeptical even as you do all these things. There is nothing in this wonderful universe that we can have that is too good to be true.

[Victoria_Grossack Grossack]

As if I could not get enough of the Madoff scandal, I read this book right after the one by Markopolos, No One Would Listen. You can tell immediately that this writer, actually a reporter, is far more professional. The writing itself is much better. She also presents a much more complete picture of what happened. Of course, Markopolos is narrating a different story: what it is like to be a frustrated whistleblower, and so perhaps the comparison is unfair.

Henrqiues warns that Madoff is obviously an accomplished liar, and so that anything he tells her, and through her, us, may not be true. Some of his statements are likely false. First, he denies that others knew anything. He may be trying to keep them out of prison. Second, he states that the Ponzi scheme did not begin until 1992. Many think it began earlier – he certainly was guilty of borrowing his clients’ money back in the early 60s, although it was paid back - but there’s no proof. Why would he insist on the later date of 1992? To protect what his family owned before then.

Henriques also gives a more nuanced view of some of the people and organizations that were vilified after the scandal. The behavior of Madoff’s wife and sons has been consistent with complete innocence, so it seems likely that they really had no idea. The SEC, which certainly screwed up royally, was an organization whose budget and hence staff had been gutted by Congress. In fact Henriques is rather hard on Markopolos, who certainly has flaws but at least was trying to do the right thing. She mocks him for being afraid for his life. Well, it was a lot of money. People, including those in our government, have killed for far less.

It was also interesting to read about the attempts to get the money back. The fellow in charge of the process, Picard, was not loved by anyone but he has apparently done a terrific job. One thing that must be done is to convince the defrauded that they could not put any faith in the statements provided by Madoff, which of course were completely fictitious. The most they could hope for was to get their money back. In most cases you get ten cents on the dollar but Picard was able to clawback considerably. This is an incredible achievement.

This book ends up being a worthwhile read, giving some interesting perspectives. It does feel rather too much like an apology for the establishment at times.

[Doriana Bisegna · Rating 3 out of 5]

I don’t know the first thing about the stock market, trading, the NASDAQ or a hedge fund from a stock option...hell, I have trouble balancing my cheque book! So why read this book on the Madoff Ponzi scheme? Well, besides being curious about how someone could swindle over a billion dollars from so many investors from all areas of the world, I wanted to learn more about the stock market, the crash of 2008 and the world of Wall Street. This book does not disappoint. There was way too much Wall Street lingo in this book for me to understand all the intricacies involved in trading but I still found it immensely satisfying and interesting. I do feel that I have a better understanding of what took place and how it didn’t just happen overnight...this swindle took decades to build up and crash! Henriques does a marvellous job of constructing the evolution of Bernie Madoff and his Ponzi scheme...believe me this is no small task! The research involved must have been tremendous since this man had been on Wall Street since the 60’s. I envy all those readers that do understand all the ins and outs of the trading world and feel they would find this book fascinating and a true financial thriller! It sure read like one!

[Pam · Rating 5 out of 5]

This is a must read for anyone in the finance world including business students. I always wondered exactly how Bernie Madoff pulled off his Ponzi given the various safeguards in place in the investment world. Not only did this book "tell the story", but it also brought in the human elements of what happened...really laying it out as an engaging and intriguing story.

I "read" this as an audio book and the narration was well done as well.

[Coleccionista de finales tristes · Rating 4 out of 5]

En mi opinión tanto la esposa como los hijos sabían lo que Bernard estaba haciendo

[SAM · Rating 4 out of 5]

"He is ready to stop now, ready to just let his vast fraud tumble down around him"

So begins the tale of Bernie Madoff and his epic Ponzi scheme. I have previously read two financial crime books - The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron and Den of Thieves. Both of those, especially the latter made for tough reading in places due to the complexity of the crimes and the financial jargon. Mostly i could use www.investopedia.com to better understand the terminologies but i was still bamboozled in places. After these i'd decided to leave the financial crime books because a) i became frustrated with myself for not being able to fully grasp what was going on, b) i'd much prefer to read about murder and c) i realised finance crime wasn't really that interesting. But there was something different about Madoff in that his crime was a simple one. As is repeated throughout the book he robbed Peter to pay Paul. Although this is a very simple analysis of his crime it is the bare truth and because of the ineptitude of the various American government agencies he was allowed to get away with it for far too long.

I first heard about him in the Harry Markopolos documentary 'Chasing Madoff', which is well worth a watch. He's also written a book but due to the poor reviews i avoided it. Then came the recent film 'Wizard of Lies' with Robert De Niro playing the fraudster to a tee. This reignited my interest in the Madoff case, which led me to buying this superb book. Unlike the film the book is the complete story of the Ponzi scheme going back to it's roots up until the collapse in 2008. There's a great deal of financial jargon but the author writes in laymen terms so the uninitiated can understand and keep track of what went down. It's a sad story and Diana B. Henriques perfectly conveys this in every single page especially the aftermath when so many peoples worlds came tumbling down. But I couldn't help thinking 'why the hell did some of these people give all of their money to him!'. To me it defies logic to trust one man with everything.

This was a 3 star book up until the final few chapters where she describes the fallout of the Ponzi scheme. She puts aside the finance and talks about the damaging effect Bernie Madoff had on all his victims including his family who were oblivious up until his confession. The epilogue is also one of the best I've ever read.

[Nancy · Rating 4 out of 5]

Even if you've been following the Madoff story in the news and and think you know what happened, this is a book worth reading. Ms. Henriques presents the story in an interesting and accessible fashion.

I knew from newspaper articles that regulatory agencies had missed discovering this Ponzi scheme, but I did not realize that the investigators were such incompetent bunglers. Madoff was investigated several times without the regulators taking effective steps to verify that he actually had the money he was supposedly investing for his customers. Inexperience and high turn over really tip the scales toward the crook. With the drive for "less government" and "fewer regulations" there is every reason to believe more Ponzi schemes will be allowed to grow for years. Do you understand your investments? Do you know where your money really is? Are your savings just a sheet of paper with numbers on it? This book gets a gal to wondering.

[Sarah · Rating 3 out of 5]

3.5 stars. I learned a lot (realized I really knew very little about the Madoff scandal and Ponzi scheme) and enjoyed the many different discussions with friends and family that sprung from this book. I enjoyed the financial history and analysis of what Madoff could or could not have been doing with investments from the 1960s to today. At times I wanted a bit more depth and a stronger narrative thread, especially related to non-Madoff personalities floating around the story (early investors, the Madoff trustees, the Madoff sons), but I realize the author could only work with the material she had at her disposal!

[Florence Millo · Rating 5 out of 5]

For years I have been fascinated  by the Madoff ponzi scheme.  Kind of like not being able to look away from the train wreck.  I have read several books and many newspaper articles about it but this is by far the best.

Diana Henriques is a senior financial writer for the New York Times and has covered the story from the very beginning.  What I appreciate most in this book is that it puts this the biggest and longest running Ponzi scheme in history in context of the times and gives insight as to how so many, many people came to be taken in by Bernie Madoff.  While this book helps me understand the people who believed in him--his family, the people who worked with and for him, the people who trusted him with the savings of a lifetime--and were finally betrayed by him,  I am still completely unable to understand how someone could betray everyone, literally everyone in his
life.

[Judy · Rating 4 out of 5]

Pretty horrifying to think how one man and his Ponzi scheme could fool so many people for so long. Investors big and small, regulators, auditors, friends, family, and coworkers. The amount of money involved was mind boggling. I have to give the author credit, if I can trust anyone after reading about Bernie's lies, for getting enough facts together to publish an account of such a long and complicated swindle. Quite an eyeopener on how trusting investors are and how no one takes the time to read the fine print. I liked the very last sentence of the book: "In a world full of lies, the most dangerous ones are those we tell ourselves."

[Sara · Rating 4 out of 5]

I enjoyed this book - I learned a lot about Bernie Madoff. A lot of court cases were still pending when the author wrote this book, so I might have to google a few names. I picked it up at the library to read as a company I used to work for is mentioned in the book. We handled quite a few Madoff accounts. (Won the lawsuit, though, not guilty!)

[Brian · Rating 3 out of 5]

The first half of the book details the entire Ponzi scheme by Bernie and has some really good detail. The second half is filled with court filings and author opinions that does not help much and feels
more like a filler to make the book longer. I still enjoyed the book but just note the first half is much more enjoyable then the second half.

[Nat · Rating 5 out of 5]

A true financial thriller, it gave me goosebumps upon learning how much Madoff's victims had lost, the trust broken, the heartbreaks, the hopelessness and the suicides. This scandal and tragedy all started with one thing- greed. And it continues to plague the financial markets to this day.

[Caren · Rating 3 out of 5]

If only we knew for sure how much was true. Well written and thorough, but I'd hoped for more of the human/emotional stories that were part of the scandal.

[Alicen · Rating 5 out of 5]

This book is extremely well researched and written, and was absolutely terrifying to read.

[Book Shark · Rating 5 out of 5]

The Wizard of Lies: Bernie Madoff and the Death of Trust

"The Wizard of Lies" is the fascinating story of Bernie Madoff and his infamous $65 billion Ponzi scheme. Acclaimed author Diana B. Henriques masterfully narrates one of the most absorbing accounts of fraud in the history of our country. This engrossing 448-page book is composed of the following sixteen chapters: 1. An Earthquake on Wall Street, 2. Becoming Bernie, 3. The Hunger for Yield, 4. The Big Four, 5. The Cash Spigot, 6. What They Wanted to Believe, 7. Warning Signs, 8. A Near-Death Experience, 9. Madoff's World, 10. The Year of Living Dangerously, 11. Waking Up in the Rubble, 12. Reckoning the Damage, 13. Net Winners and Net Losers, 14. The Sins of the Father, 15. The Wheels of Justice, and 16. Hope, Lost and Found.

Positives:
1. A page-turner of a book in the hands of a master story teller.
2. A non-fiction book that reads like a great mystery novel.
3. Accessible book for the masses.
4. The cast of characters. Thank you.
5. Satisfying conclusion, should be "Madoff" into a movie.
6. Everything you wanted to know about Madoff and then some.
7. The enormity of the Ponzi scheme, about $65 billion worth and how it came to that point.
8. Ms. Henriques does a wonderful job of delineating what we do know versus what we don't know while maintaining the flow of her narration.
9. The struggles of the Securities and Exchange Commission through the years.
10. An accessible introduction of financial terms.
11. The rise of Bernie Madoff and how it happened. His techniques illustrated.
12. How Madoff survived Black Monday, October 19, 1987.
13. An inside look at Madoff's biggest clients and their interesting backgrounds.
14. The theory about hedge funds.
15. The skeptics come out...and how Madoff is able to deflect them.
16. The great "quant" Markopolos on the attack.
17. The impact of Jeffry Picower in this whole story...
18. Madoff's accomplices.
19. The impact of a reeling financial world.
20. The fascinating realization that the end is near and how it really happened.
21. Ms. Henriques provides compelling arguments of who she thought knew and didn't about the Ponzi scheme.
22. The celebrity victims.
23. The utter tragedy of it all.
24. The impact of Piccard and Sheehan and how they applied the law to Ponzi schemes.
25. A basic explanation of bankruptcy law.
26. "Net Winners" versus "Net Losers".
27. The impact to Madoff's immediate family members.
28. Negotiations, negotiations, negotiations.
29. The ever-growing list of defendants.
30. Lessons learned.
31. The human side of the story.
32. Satisfying conclusion to a real-life financial tragedy of global implications.
33. Great read from cover to cover.
34. Great notes section.

Negatives:
1. No links to speak of.
2. The long list of people involved can be a bit overwhelming at first but you will get the flow of the book.
3. A list of Madoff's clients in a chart would have added value.


In summary, what a fascinating book to read. It is truly an insightful book that covers the story of Madoff and his victims. One of the most interesting true-life stories that I have ever read. An engaging, well written book. I couldn't put it down. I highly recommend you get this 5-star book.

Further suggestions: "The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America..." by Michael W. Hudson, "Perfectly Legal..." by David Cay Johnston, "Screwed: The Undeclared War Against the Middle Class" by Thom Hartmann, "The Fifteen Biggest Lies About the Economy" by Joshua Holland, and "The Looting of America..." by Les Leopold.

[Kathleen · Rating 3 out of 5]

Of course, I'm fascinated with the Madoff Ponzi scheme. Unbelievable how many people he fooled. Okay the imposter, "Clark Rockefeller" fooled a lot of people, but he did not steal from thousands of people. This book was more financial than biography - learned more about the SEC (Securities and Exchange Commission) - inept, but maybe the problem was being understaffed. Obviously, many people losing all of their money is sad, but sadder were the loss of lives - people committing suicide - even his son, two years after his father disclosed his Ponzi scheme. This book also helped me to understand the complexities of the claims/lawsuits to recoup some of the money lost. Of course, some people had withdrawn lots of money before the collapse and made lots and lots of money because of the bogus gains Madoff was claiming on their paper statements. Others never withdrew any money and they lost all their money. I believe the resolution to recoup money was the money they put in, was the money they got back. Not exactly sure. Those who made BIG BUCKS from Madoff - Picower (Jeffrey - he died of a heart attack in Oct. 2009 - a year after Madoff was arrested). His widow, Barbara Picower agreed to return $7.2 billion....to help those who have suffered most....(p. 329). The numbers are staggering. The interesting twist is that many who did make BIG money with Madoff investments, heavily invested in many, many charities. So, some of the bogus money helped many charities. I watched a Frontline Special on netflix. One of the investors spoke to PBS Frontline. The interviewer asked, "Didn't you think it was strange that you could not look at your statements online?' Well yes, she said, but didn't put too much thought into it as Madoff often communicated the exclusivity of the people who were investing with him. He didn't like to be advertised. There were a few people who knew something was WRONG, but Madoff was never charged with illegal activity. It was only the economic downfall of 2008 that finally toppled Madoff's Ponzi scheme. This book did make me think of MONEY - obviously. Of course, I think will I have enough to retire, money for a nursing home, etc. But, there seemed to be an attitude from some people (not all) - the American way - I deserve to live the American dream at retirement - travel, etc. And, I do like to travel. Glad I'm doing now and not waiting for retirement. But makes you think of valuing not the dollar sign. How do live simply and give generously? It's a question that haunts me. The criticism of this book is that it fails to unveil why Madoff chose to live this lie. Minor details - once he started, he couldn't stop, but the book really fails to describe in much detail the psyche of Bernie. She does warn us that one of the traits of a Ponzi scheme is TRUST. Many people just trusted Bernie. People want to trust. But, sometimes they are BURNED - big time. Even though Madoff's Ponzi scheme finally failed, there are others thinking of other Ponzi schemes. It will happen again. Hopefully laws/checks and balances in the investment firms/government have improved because of Bernie Madoff.

[Peter · Rating 3 out of 5]

This was a well-written book, but to be honest, it was a bit disappointing. I don't know what I was hoping for, but the simple truth is that compared to other books about fraud and hubris, the story of Bernie Madoff was uniquely boring. He just lied to people and they believed him - compared to Enron, or Long Term Capital Management, or even Theranos or WeWork to some extent, the story of Madoff isn't all that interesting.

The interesting parts of this book come from the falling action, the legal questions about how to get money back from people who may or may not have known that it was a ponzi scheme, whether to reclaim money from hospitals and charities, and how to provide a "fair" outcome to people who, on paper, had lost everything. It also makes you think a lot about how funds work, the process of investing, the layers of middlemen and intermediaries, and who actually knew, and whether knowing or not knowing really matters.

Overall, no one really looks all that good in this story:
1. The SEC really comes out looking pretty bad - the case was handed to them on a silver platter, and they just totally dropped it.
2. Harry Markopolos comes out looking pretty bad - his self-righteous and obsessive inability to work with the SEC is pretty damning.
3. The programmers who programmed the fake stock exchange come out looking pretty bad - there was an absurd thing where the Madoff company had built out an entire fraudulent trading desk that traded with fake traders. The complexity of this was quite high, and whoever was building it almost certainly had to know what was going on in order to build something which was so obviously fake.
4. The family ends up looking pretty bad - there's some deep lack of curiosity that results in you never actually knowing what goes on behind the scenes at your company, and while I trust that they didn't know, it's absurd that they didn't have the drive to figure it out.

Some misc notes:
- Madoff victims were really generous and donated lots of money
- There was a very strange of wealth transfer from ultra-rich to semi-rich as different groups pulled out different amounts of money
- Insight about culture class between regulators and investors: safety and yield are the things investors care about, regulators believe in clarity and liquidity.
- Made me think a lot about WeWork; there's just such a fine line between a story and a lie.

[Nancyjd · Rating 4 out of 5]

This was a very good, in depth analysis of the Madoff scandal, but it needs to be updated again. The most recent update was in the winter/spring of 2012. Frankly, it made me feel a little bit sympathetic towards Bernie Madoff and his wife Ruth, who do not seem as greedy as some of the hedge fund principals - the ones who ran the "feeder funds" that funneled money into Madoff's investment business and reaped billions of management fee "profits" from him. The author, a NYT reporter, interviewed Bernie several times and corresponded with him while he was in prison. However, a big gap with this book is the lack of interviews with employees of the Madoff company. (The author did interview Bernie's private secretary who claimed she knew nothing of the Ponzi scheme.) Bernie told the US gov't and the author that no one else was involved, which is impossible to believe. Since the book was published, approx. 5 - 10 employees have been charged criminally, including Bernie's main helper, Jeff DiPasquali. I was interested to know more about the inner workings of BLM and more about what the feeder fund managers really knew. Update: 8 former employees, including Peter Madoff, plead guilty. Peter Madoff was sentenced to 10 years. The other 7 are awaiting sentencing - which will prob. occur AFTEr they testify in the upcoming criminal trial (scheduled for Oct. 2013) against 5 other former employees. So, a total of 12 employees have been charged by the feds with crimes related to the Madoff ponzi scheme.

[David · Rating 2 out of 5]

There's some interest value in the underlying story of course, and it is somewhat interesting for a while to contemplate how many savvy, competent people were taken in by what seems in retrospect an obviously untrustworthy scam. I like to think that even if my best lifelong friends were involved I would still want some basic legal assurances, contracts, etc. before handing over all my money, but clearly Madoff had a lot of skill in duplicity.

Beyond the obvious, and maybe some additional understanding of how stuff like this does or doesn't get to the attention of the SEC, the book can't tell you much beyond what was in all the papers. Madoff gave her a couple interviews from jail, but over and over she falls back on "of course we don't really know if [self-serving, blame-shifting, minimizing statement from Bernie] is true, because there are no records, and he is a known liar". Ok, but then what else is there to say with any confidence beyond he was a greedy, deceitful guy who perpetrated a massive scam and kept it going as long as he could?

[Steve · Rating 3 out of 5]

Of course I heard about Bernie Madoff's Ponzi scheme when the story broke, but I really didn't pay much attention to any details. (At that time I was managing a non-profit that served the residential construction industry, and thus was spending full-time trying to keep the doors open. Ultimately, it had to be taken out and shot.) So, when I came across this book, it seemed to be a chance to learn what really went on. And generally, the book was very good at unraveling the story. There is a lot of detail here, though some of it is repeated in multiple chapters. I do feel the book could have used a bit more editing to eliminate some repetition. Also, it could not have been written earlier that 2011, but so many of the narrative threads were left incomplete. I wish there would be some mechanism for bringing the story up-to-date for readers who come to the book nearly ten years after the fact!

[Rick · Rating 3 out of 5]

Solidly informative, but a little confusing with all the names. Then it got like weirdly, hugely philosophical for like 90 pages at the end, which I mean, I guess, yeah, there's a lot to be philosophical about Bernie Madoff, but I don't think you need to read a book about that. Incredibly well researched, though, and the first 80% of it is really really informative. I kind of wish she could add a chapter every month or quarter to keep up to date on Picard's collection progress (which is SUPER interesting, btw).

[Amy Wolf · Rating 4 out of 5]

This is a must-read for anyone interested in the darker machinations of business, particularly Wall Street. I had followed the Madoff story in the NY TIMES & THE NEW YORKER, but this book reveals the entire sordid enterprise, from how Madoff managed to fool sophisticated investors, hedge fund managers, movie stars, lawyers, and the SEC to the devastating effect on his own family.

My only caveat is that we are not showed too much of Madoff the Man, but rather Madoff the Swindler. Still, a riveting tale from a superb business writer!

[Khairul Hezry · Rating 3 out of 5]

Bernie Madoff is such a sociopath that even author Diana Henriques freely admits that she doesn't know how much of the information he is telling her is true and how much is made up. She had to double check the info with independent research and interviews of other witnesses but there were still gaping holes left in the story, the biggest one being: WHY? Why did Madoff cheat his clients, some of whom were his family and close friends, of their money?

[Kirsti · Rating 4 out of 5]

Very detailed, interesting account of the creator of the biggest Ponzi scheme the world has seen--so far. Some insight into the psychological makeup of a Ponzi schemer. I liked learning more about the employees who knew about the fraud and the ones who didn't. I still find it hard to believe that the wife and sons had no idea about the fraud, but the author explains why this is unlikely. The author does a little "what does it all mean" bloviating at the end, but that's okay.