HARRY MARKOPOLOS on Meetings

What he looks for as an attendee: “I speak at conferences, and the ones that are financially oriented I insist on attending [as well], so I have more professional development for CPE credits than I know what to do with. If I’m talking to accountants over cocktails at a conference, or finding out what the current audit steps are or discussing how they need to be improved— attending them yields huge benefits for me for professional development. Whether it counts for a CPE credit or not is immaterial. I’m learning.”

How he creates his presentations: “Most professional associations will havea codeof ethics. I want to read that and tailor my presen- tation to their code of ethics and to their mission statement. The lessons learned in the Madoff

case are so numerous, I’ll try to pick out the select few that most resonate with the member- ship to which I’m presenting. And I like to talk to the event-planning staff.What would they like? Everybody wants something different from their presentations, so it’s my job to tailor it.”

The role of meetings in the Madoff investi- gation: “My team would go to [financial-services industry] conferences, and mainly at the break- fasts, lunches, dinners, and cocktails—particu- larly the cocktail receptions—that’s how they were able to track down Bernie Madoff’s feeder funds. And they were able to determine who had how much with Bernie and how they were operating. That’s how we solved the case. Most of it was solved at conferences.”

followed up with its own investigations, but never charged Madoff with anything. The agency seemed willfully blind, as did the many experienced investors who had to know that Madoff couldn’t be making them the money he said he was. It was a lonely, frustrating experience, and by 2004,

Markopolos had had enough of the world of finance. “I saw the ugliest side of the industry,” he said, “and I decided that I couldn’t be a part of that industry in good conscience.” He resigned from Rampart, and set up shop as a Certified Fraud Examiner specializing in bringing whistleblower cases against financial-services and health-care companies. He still kept after Madoff, too, but never actually expected that what happened on Dec. 11, 2008, ever would come to be.

‘A Cancer on This Nation’s Soul’ In the end, Madoff was as much a victim of the financial melt- down as anybody. As the stock market went into freefall in the fall of 2008, “too many of Madoff’s investors were des- perate for cash to protect their investments and meet their growing client redemptions,” Markopolos writes in No One Would Listen, “and attempted to withdraw their money— apparently these requests totaled more than $7 billion. There was no possible way Madoff could cover all these requests.” With nowhere left to go, Madoff came clean, and was

arrested by the FBI on Dec. 11. The Markopolos team was instantly vindicated. Markopolos was identified, publicly and repeatedly, as the “Madoff whistleblower.” In the coming months, he would give interviews to dozens of news outlets, including “60 Minutes” and, at long last, TheWall Street Jour- nal. He would consult with SEC Inspector General H. David Kotz as Kotz prepared a damning, 457-page report on the agency’s categorical failure. And, in February 2009, he testified,

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righteously, before a subcommittee of the U.S. House of Repre- sentatives Financial Services Committee: “Let this be a lesson to us all. White-collar crime is a cancer on this nation’s soul, and our tolerance of it speaks volumes about where we need to go as a nation if we are to survive the current economic troubles we find ourselves facing; because these troubles were of our own making and due solely to unchecked, unregulated greed.” How does Markopolos feel today? Any better? Bernie Mad-

off will die in jail, having been sentenced to 150 years. Kotz’s report, which drew heavily on the Markopolos team’s investi- gation, triggered a series of reforms at the SEC. And, this past July, President Obama signed into law a bill that overhauls the nation’s financial regulatory structures. “I think that govern- ment is capable of rising to the occasion in times of great stress,” Markopolos said. “In times of plenty, government often fails to do its job, lets industry self-regulate, and assumes that all is going well when the economy is going well. And that’s not the case. That’s where hidden dangers lurk. Hope- fully they’ve learned that lesson. I doubt it.” He still calls his team’s investigation “the biggest case failure

in history,” because they didn’t stop Madoff from losing $65 billion of his investors’ money. And he still thinks about Mad- off’s victims—the people whose life savings were wiped out, and his close friend, a French hedge-fund CEO heavily invested with Madoff, who killed himself after the fraud came to light. He thinks about the “human predation” that made it all possi- ble. And he channels everything into his new life as the whistle- blower’s whistleblower. The guy who won’t give up. Harry Markopolos, Certified Fraud Examiner. “I like bringing corporate fraudsters to justice,” he said. “I like big, bad cases that are ugly, with hair and warts.”

Christopher Durso is executive editor of Convene. www.pcma.org