|
Harry Markopolos, who blew the whistle on Bernard Madoff's huge Ponzi scheme, has met many people affected by the mind-numbing crime. But one victim, in particular, brings tears to his eyes.
During a recent finance conference, the son of a Madoff victim thanked him for his nine-year investigative fight to expose the crime. "But as he thanked me, I said, 'All we did was try; we weren't successful,'" said Markopolos during the Tuesday lunch General Session. "But he said, 'That's OK - thank you for trying.' "
Markopolos said the son of the victim told him his father had invested in Madoff's firm in the mid-1970s. "He owned a CPA firm," the son said. "Not only had he invested our entire inheritance [in Madoff's firm], but he invested his friends, other family members, and, of course, his clients. And that's what killed him. He died a broken man of heartbreak."
Victims such as these motivated Markopolos and his team of three to search for evidence to give to the Securities and Exchange Commission (SEC). Though Markopolos is still highly critical of the SEC's past work on the Madoff case and former investigative methods, he said he's impressed with its current efforts. He said he's pleased that the SEC is adding more CFEs in partnership with the ACFE. "[SEC Chairman] Mary Schapiro is on fire; she's changing that agency from the ground up and the top down."
|
 Video Highlights:
Clip 1: "You need to have the spirit to fight the big cases."
Clip 2: "It's the largest case of failure in history."
Clip 3: "The math never worked out for us."
Clip 4: "Fear was my constant companion."
Clip 5: "Most of the money went to pay off old investors."
Clip 6: "Let me talk to you about the red flags."
Clip 7: "Don't blame the victims."
|
|
Markopolos' quest began as a simple work assignment; he was a portfolio manager for an equity derivatives asset management firm in Boston when he was asked to analyze Madoff's money-making methods. He quickly discovered that Madoff was running an old-fashioned Ponzi scheme. The Madoff scheme had "many thousands of direct victims, many millions of indirect victims. Charities, endowments, research grants - all wiped overnight," he said to conference attendees.
Markopolos said Madoff "was allowing the feeder funds - the fund of funds - to collect the lion share of the fees... yet Madoff was doing all the heavy lifting. Madoff was the one falsifying all the accounts statements and sending them out every month," Markopolos said.
"He was the guy taking in the money on transfers, wiring out the money, keeping track of the whole scheme. So he was taking the littlest piece and that was the beauty of Madoff. And that's why it continued for so long because he paid [feeder funds] so much they looked the other way."
Markopolos appreciates the ACFE's efforts in fighting fraud. "I'd like to thank Joe Wells for this association. We're all Joe's protégés... Because we're carrying out the organization that he founded. We're his children, if you will. Without the ACFE, there would be no one to challenge the fraudsters," Markopolos said.
|
