The Wizard of Lies Page #2

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My brother told me

that his investment

advisory business

was a Ponzi scheme.

And what was your reaction

to hearing that Mr. Madoff

was operating

a Ponzi scheme?

Well, I was

in total shock.

In your first interview

with the government,

you stated that

you idolized your brother.

- Is that correct?

- Yes, and that's correct.

Why did you idolize

your brother?

Well, because

he was brilliant.

Everywhere you go,

people talked about Bernie.

He was a true pioneer.

Everyone in the industry,

including the highest-ranking

officials at the SEC,

believed

that my brother was

one of the most honorable

and successful traders

of our time.

Nobody believed that

more than I did.

I revered him.

I trusted him implicitly.

- Sorkin.

- Ike, it's Bernie.

Uh, I'm down

at FBI headquarters

handcuffed to a wall.

Bernie, don't say

another word.

We arrested him

this morning.

Was he okay?

I put the cuffs

on him myself.

He went quietly

as though he expected us.

To be honest,

he looked relieved.

You did

the right thing, son.

Turn to the right.

Yeah, the FBI

just processed him

and they transferred him

over to Pearl Street.

Yeah, we're heading in

right now.

So you were making money

off of the trades.

There were no trades.

- What do you mean there were

no trades? - I made them up.

- Weren't there statements?

- Every month, they were fake.

Purchase dates,

they were fake;

shares, they were fake;

options, they were fake;

returns,

they were fake.

So when was the last

trade you executed?

15 years ago.

Who else knew?

I acted alone.

When did he tell you he

started this Ponzi scheme?

He didn't.

And the entire time he was running it,

you had no idea?

- No, I didn't.

- And what was your role at the firm?

I ran the firm's NASDAQ

desk in the late '90s,

added the rest of the

market-making desk in 2001,

and moved to the proprietary

trading desk in 2003...

You're not answering

my question.

What exactly is your

role at the firm?

I'm only in the office

a few days a week.

I've been building a separate

business called Madoff Energy...

Sir, what is

your exact title at BLM?

Director of Proprietary Trading

and Codirector of Trading.

And where did the money

for these loans come from?

The loans that allowed you

to buy your loft in SOHO,

your house in Greenwich,

your house in Nantucket.

I assume from the money he

made through investments.

On the private

advisory side?

- Yes.

- On the 17th floor?

- Yes. - And you never asked

what went on the 17th floor?

Of course I did.

- You did?

- Yes.

- But...

- But what?

He would always say,

"You run your business

and I'll run my business. "

And you never thought

to follow up

on those questions?

- You don't understand...

- You're right, I don't.

I don't understand

how you could work in the

same office as your father

for 20 years

and suspect nothing.

Nothing?

Who are some

of your father's clients?

I'm not privy

to all of them,

but, um, Jeffry Picower

was a big one.

Fred Wilpon and Saul Katz

of the Mets.

HSBC,

Royal Bank of Scotland,

some family friends, Marty.

But he wouldn't talk about

who or what he did for them.

Our money was

with him as well.

So you were never

suspicious of your father?

Never?

Do you not understand

who he was?

I think we're all

beginning to understand

exactly who your

father is, Mr. Madoff.

He wasn't just my father.

You know,

he was f***ing idolized.

We're talking about a man

who created the modern

market as we know it.

He created NASDAQ.

He's Chairman of NASDAQ.

He's Chairman of the National

Securities Clearing Corporation,

Chairman of the International Securities

Clearing Corporation,

Chairman of the National Association

of Securities Dealers,

which was FINRA before

FINRA f***ing existed.

Chairman of the SIA

Trading Committee.

- Okay, we understand your point, sir...

- No, I don't think you do.

Chairman of the National

Business Conduct Committee.

- Sir, we understand. - Member of the

SIA Federal Regulation Committee.

- Sir, that's enough. - Chairman of the

NASD Small Order Execution Committee.

I mean, you're asking me

how I didn't know.

Well, I'm asking you.

You're the FBI,

you're the SEC.

You investigated him before,

so I'm...

I'm asking you

how the f***

did you not know?!

Sir, we are not

the focus here. You are.

You're saying that

you never stepped foot

on the 17th floor?

No.

And why not?

Sleigh bells ring

Are you listening?

In the lane

Snow is glistening

What happened on the morning

of December 11th, 2008?

Uh, I was in my office

and I got

a telephone call.

Who was on the phone?

It was, uh,

Bernie Madoff.

What did Bernie Madoff

say to you?

Yeah?

Frank, my brother,

is in the office...

- What?

- ... with the FBI.

What the f***?

How old were you when

you first started working

for Bernie Madoff?

I was 19 years old.

In what capacity

had you known him?

Oh, well,

he was my boss.

What type of work had you

done for him over the years?

Uh, really anything

he asked me to.

Everything from, you know,

running errands

to running his investment

advisory department.

Did you know why the FBI

was at Peter Madoff's office?

Yes, I did.

And what did that

mean to you?

Uh, it meant that

I was going to jail.

Why did you think

you were going to jail?

Because I was well aware

of the nature of the operation.

And what was the

nature of the operation?

It was a fraud...

simply put.

I always thought

that Bernie

would be able

to make it good, you know?

He had money here, he had money there,

he moved stuff around.

There was always

a lot of moving parts.

Maybe I was

lying to myself.

I don't know,

but I... I thought he...

I thought

he could cover it.

What the hell is this?

Bernie's been arrested

for securities fraud.

The SEC's getting

a court order

to seize control

and shut us down.

Without an investigation?

What could they

possibly know?

Whatever Bernie told them.

Sir, who was

that gentleman?

He's...

uh, he works here.

- Where?

- Uh, on the 17th floor.

There's a 17th floor?

Annette, Bernie's been arrested

for securities fraud.

The SEC and the FBI

are upstairs right now.

What?

The hell does that mean?

We need your keycard, ma'am.

Come on,

come on, come on.

Please, please.

Come on, come on, come on.

Open it.

FBI! Everyone stop

what what you're doing!

FBI! I said stop what

you're doing right now.

Move away

from the computer!

Sir, FBI. Do not touch

that computer.

I said move away

from the computer!

Hey, Dan,

walk this group out.

The advisory was a completely

separate business,

a completely separate entity.

Never the two

should meet, ever,

and they didn't.

And I made it that way

on purpose, obviously.

What about your brother?

Peter's in trouble.

- Yes. - Because he trusted you.

He did what you told him to.

- He did. - And you told him

to do things that exposed him

to this criminal liability

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