- Madoff’s operation was enormous, taking in 2,350 clients.
- For at least 13 years, no securities at all were purchased on behalf of those clients. That means that every single transaction recorded, every cent of gain was simply made up out of thin air.
This may be bad news for Ol’ Bernie but it has to be even worse news for Walter and his Fairfield Greenwich Group. It’s arguable, I suppose, that their due diligence couldn’t be expected to uncover the fact that Madoff’s “auditor” was a retired old coot who split his time between a Florida trailer home and a strip mall in upstate New York – hey, how much expertise do you need to track a measly $50 billion? – but no trades in 13 years? You never tried to match a single one of them, did you Walt? Back when I hunted wicked stock brokers I used a very creative guy named Tom Benson to reconstruct trading activity in my clients’ accounts. Tom was wizard (he’s since moved from Naples but in his time he probably ran into Walt and Bernie at Palm Beach) who could usually generate a report, accurate to within a penny, in 3-5 days, max. Now, he was expensive – maybe as much as $5,000, but we were talking big money in those days, as much as $1 million. Walter only had to worry about $7.5 billion and why would he spend a dime investigating how that was doing when (a) he was dealing with the Bernard Madoff and (b) he was skimming $270 million a year off the top, a tidy little profit that would screech to a halt if trouble were found at Madoff headquarters. No, there was no need to ever look at the accounts.
And you know, Walt’s friends in Greenwich still today insist that he’s just a wonderful, warm-hearted guy. I’m sure he is.