When it comes to Netflix docuseries, it sometimes feels as if there are only two types of people in the world: scammers and true crime villains.
But in the streaming giant’s latest release, Madoff: Monster of Wall Street (streaming now), director Joe Berlinger attempts to package Bernie Madoff as both—a scamillain, if you will. Madoff affixes the worst touchstones of the true crime industrial complex to the Bernie Madoff scam, which, in our mind-numbing era of IP content, has already been told by HBO (Wizard of Lies), ABC (Madoff), PBS (The Madoff Affair), a handful of documentaries (In God We Trust, Chasing Madoff), and too many podcast episodes to count. You know the drill: eerie music, awkward reenactments, and dimly-lit talking heads.
Madoff is a lot like those other works, except longer. The series’ producers stretched the story into four hour-long episodes by adding interviews with fresh sources and new material, including footage from Madoff’s deposition. Given how familiar and straightforward the Madoff scam is, I’m not sure this was necessary. (As the forensic accountant Bruce Dubinsky succinctly explained in the final episode: “Bernie Madoff’s fraud was not a complex fraud. It involved taking people’s money, telling them he was going to invest their money, and then simply never doing it.”)
Hardcore financial crime fans might be tickled by some of the new details presented in Madoff, but it’s hard to imagine the general viewing public caring whatsoever about, for instance, the amount of funds that fed Madoff’s scheme in Europe (200) vs. the United States (70). Perhaps that’s why Berlinger, a veteran of the true crime genre, felt he needed to dial up the drama. Unfortunately, the genre’s tried and true tactics don’t work as well when applied to stories about financial scams.
The unsubtle, cartoonish recreation of Madoff as a villainous tycoon who wears pinstripe suits and puffs on cigars oversimplifies the man behind history’s largest ponzi scheme. Meanwhile, other true crime cliches, like close-up shots of evidence (boring bank statements in this case), distract from one of the series' smarter points: that Madoff didn’t act alone. As many of Madoff's talking heads mention, the man was hardly a societal lone wolf like Jeffrey Dahmer or John Wayne Gacy (the subjects of Berlinger’s last two projects). Instead, they argue, he was dependent on a team of people and enabled by a greedy and unregulated industry. If only the medium hadn’t ruined the message.
Below is the true, expanded story about the people who helped Madoff almost get away with his scheme—and what happened to them once everything finally came crashing down.
How Many Times Did the SEC Investigate Madoff?
One of the most infuriating aspects of the Madoff scandal is how many opportunities the Securities and Exchange commission had to stop it. Just ask whistleblower Harry Markopolos. The self-described “numbers guy” was working as a portfolio manager at Rampart Investment Management, when a guy from sales showed him Madoff’s faulty returns. Markopolos made a few calculations and figured out they were bologna. Then he spent eight years trying to get the SEC to listen to him.
Markopolos wasn’t the only one to call bullshit on Madoff. According to a 477-page report filed by the SEC’s Inspector General, the regulatory agency received “numerous substantive complaints that raised significant red flags ” about Madoff’s secret hedge fund starting in 1992. The first complaint alleged that an “unregistered investment company was offering ‘100%’ safe investments with high and extremely consistent rates of return over significant periods of time to ‘special’ customers. Take it from someone who has lost her shirt on a “sure bet” multiple times, there’s no such thing as a 100% safe investment, kiddos.
The SEC paid Madoff a visit at the time, but the officers they sent in were young, impressionable, and loath to piss off someone that could easily end up being their boss one day. Needless to say, the investigation was dropped. As was another one in 2004, and three additional examinations scattered throughout the early aughts. Even worse, Madoff actually used the investigations to his advantage, citing their lack of findings as reason for investors to trust him. In other words, not only did the SEC investigations fail to stop Madoff’s scam, they legitimized it.
And in case you were wondering: No one from the SEC was fired for failing to prevent the largest ponzi scheme in history despite repeated warnings.
How Was Madoff Caught?
He wasn't! At least, not in the traditional sense. In fact, had it not been for the 2008 financial crisis, Madoff might’ve gotten away with the whole thing. But the stock market meltdown caused a flurry of withdrawal requests among his investors, and Madoff didn’t have the funds to pay them all back at once. Knowing he didn’t have an out, he confessed his crime to his sons, who turned him into the FBI. The SEC never caught Madoff or his accomplice, Frank DiPascali, printing falsified bank statements. The Wall Street Journal didn’t break the story—even though Markopolos tipped them off to it. It was simply Madoff realizing he wasn’t going to be able to outrun the avalanche.
Who Else Was Arrested Other Than Madoff?
Madoff goes out of its way to show just how many people aided and abetted Bernie’s ponzi scheme. And yet, no one else went to prison. Not the CEOs of investment firms like Fairfield Greenwich Group, which provided Madoff with billions of dollars in other people’s money without even stopping to ask questions. “Their culpability was their complete failure to do any due diligence, which was their job,” said Dubinsky. Nor anyone from JP Morgan—the bank behind Madoff’s checking account and the only entity that had any visibility into the ponzi scheme. Due to the value of the account (somewhere between $3-$6 billion), they were supposed to monitor its transactions to gain an understanding of the business. Spoiler alert: they didn’t. And according to Helen Davis Chaitman, a lawyer for some of Madoff's victims, that’s probably because they were profiting from the scheme. As others have also pointed out, J.P. Morgan isn't required to disclose how much they profit from the schemes they've been involved in. (They've pled guilty to five acts of criminal conspiracies in the last six years, but who's counting.) "They just pay a fine and move on," said Chaitman. White-collar crime is really something.
Toward the end of Madoff, Markopolos makes a surprising, bold statement: “Madoff was the scapegoat for the financial crisis.” Thinking of Madoff as anything other than a crook, let alone a scapegoat, might seem strange at first—but Markopolos is referring to the fact that almost no one else was thrown behind bars during the financial crisis. Not a single Wall Street executive or mortgage lender, despite the crisis originating in part from their own greedy decision-making.
Madoff ends by asking “if such a massive fraud could possibly happen again.” The answer to this question is so obvious, it’s insulting. It already has. Multiple times. As recently as a month ago when the crypto exchange FTX collapsed and authorities arrested its CEO and deregulation enthusiast, Sam Bankman Fried. Just yesterday, by the way, who, I shit you not, just yesterday, pleaded not guilty for charges related to a “scam” that FTX’s new CEO, Jon Ray, said was worse than Enron. As in, the fake oil company. Let that sink in for a minute.
Given recent history, perhaps a better question to ask is: How many instances of fraud must occur until we stop calling them scams and realize instead that they are part of a system? Or what about: How much scam content do we have to watch until we realize the content itself might be a scam? Because I don’t know about you, but I’m tired of feeling played.
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