Madoff calls banks complicit in his fraud

By Diana B. Henriques
New York Times / February 16, 2011

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BUTNER, N.C. — Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family.

In his first interview for publication since his arrest in December 2008, Madoff — thinner and rumpled in khaki prison garb — maintained family members knew nothing about his crimes.

But he said unidentified banks and hedge funds were “complicit’’ in his fraud, an about-face from earlier claims he was the only one involved.

Madoff, who is serving a 150-year sentence, seemed frail and a bit agitated, perhaps burdened by sadness over the suicide of his son Mark in December. He spoke with great intensity. In asserting the complicity of others, Madoff pointed to the “willful blindness’’ of many banks and hedge funds who dealt with his investment advisory business and their failure to examine discrepancies between his regulatory filings and other information available to them.

“They had to know,’’ Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ’’

While he acknowledged his guilt and said nothing could excuse his crimes, he focused his comments on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail, he observed many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere.

“I would have loved for them to not lose anything but that was a risk they were well aware of by investing in the market,’’ he wrote.

Madoff said he was startled to learn of some of the e-mails and messages raising doubts about his results — now emerging in lawsuits — that bankers were passing around before his scheme collapsed.

“I’m reading more now about how suspicious they were than I ever realized at the time,’’ he said.

He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny.

He also claimed he was helping the court-appointed trustee who is seeking to recover lost billions on behalf of his swindled clients. In e-mails, Madoff said repeatedly that he provided useful information to Irving H. Picard, the trustee.

In an e-mail message, he was explicit about what he told the trustee: “I am saying that the banks and funds were complicit in one form or another and my information to Picard when he was here established this.’’

Madoff acknowledged he had not shared his information with federal criminal prosecutors.

Picard declined to comment on whether his team had interviewed Madoff.

Picard has recovered $10 billion through asset sales and settlements with foreign banks and Madoff clients, including the estate of a private investor, Jeffry Picower, and the family of Carl Shapiro, a Boston philanthropist.

The settlements with the Shapiro family and a Swiss bank came after Picard’s trip to the prison in Butner. It is unclear if information from Madoff was a factor. Neither Shapiro nor the bank has been accused of complicity in a crime.


Photos: Selling Madoff

Photos: Selling Madoff

Homes, belongings of convicted swindler sold to recoup funds.