THE WHOLE STORY: Markopolos documented his nearly 10-year investigation of Bernie Madoff in No One Would Listen: ATrue Financial Thriller, which was published earlier this year. “It has the worst possible ending,” Markopolos said. “He didn’t get caught — he turned himself in.”
Markopolos was convinced that Madoff was running a clas-
sic Ponzi scheme—that he was taking investors’ money and keeping it, and sending them monthly statements claiming returns that were so fabulous most people left their money with him. But nobody wanted to hear that, not even the partners at Rampart, who pressured Markopolos to create an investment vehicle that would help them to compete with Madoff. Markopolos tried, with limited success. But he also began dig- ging into Madoff’s company, determined to prove that he was a fraud, mostly so the partners would stop bothering him. “When- ever you’re competing against someone who’s cheating,” Markopolos said, “they’re always going to take your customers or your potential customers, because everybody’s going to gravi- tate toward the best returns, and you can’t compete with some- one who’s typing them in every month without actually trading.” Markopolos worked with a team of four that assembled
itself around the case: himself, Casey, Rampart portfolio manager Neil Chelo, and Michael Ocrant, an editor with MARHedge magazine whom Casey met at a hedge-fund con- ference in Barcelona in 2001. Eventually Rampart’s partners backed off about creating their own Madoff-esque instrument, but Markopolos’ team continued its investigation. Except now,
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it was about nailing Madoff simply because he was a bad guy who deserved to be caught. “Madoff stood for everything we stood against,” Markopolos said, his voice quickening again. “I learned in the military when you take the oath, you’re standing for something. Frank [who also served in the Army] took that same oath. Mike and Neil didn’t, but they had a firm sense of ethics, that this was wrong and they wanted it stopped. And if we didn’t do it, who would?” They didn’t know it when they set out to bag Madoff, but
their investigation would stretch across nine years and two con- tinents. By poring over investor prospectuses, audited financial statements, and other materials that Madoff Investment Securi- ties had released; by reviewing industry databases; and by talk- ing on and off the record with people who had their money tied up with Madoff (and people who didn’t), they discovered that he was much larger than anyone realized—pulling in tens of billions of dollars from investors in more than 40 countries, and reporting earnings that were simply impossible. Markopo- los even suspected that Madoff was taking money from Russ- ian gangsters and South American drug cartels, and began to carry a gun and regularly check his car for bombs. He went to the Securities and Exchange Commission (SEC)
with his team’s findings five times between 2000 and 2007, each time turning in a report that was more detailed than the last. One of them, submitted in December 2005, was titled “TheWorld’s Largest Hedge Fund Is a Fraud,” and outlined 30 red flags indicating that Madoff was running “the world’s largest Ponzi scheme.” He tried to interest TheWall Street Journal and The New York Times in the story. The reaction he got is summed up by the title of the gripping book he released earlier this year: No OneWould Listen. Several times the SEC