Bernie Madoff’s Empire of Deception with Brent Pella and Joey Dardano | 91

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Speaker 1 Besties, you know that song, I'm Looking for a Man in Finance, 6'5, Blue Eyes?

Speaker 3 Well, what if I told you I found him?

Speaker 1 Yeah, he's in finance. He's got blue eyes, but he's not 6'5.

Speaker 1 Is that a deal breaker?

Speaker 2 No? Great!

Speaker 1 What if I also told you he was the mastermind behind a multi-billion dollar

Speaker 1 Ponzi scheme.

Speaker 1 Still not a deal breaker? Besties, we may have to re-examine your standards, but I think you may know him. The name Bernie Madoff rang a bell?

Speaker 2 Uh-huh.

Speaker 1 Let's get into it, Besties.

Speaker 3 He amassed the trappings of wealth, a penthouse apartment, summer homes, boats, and designer clothing. Madoff conducted a $65 billion fraud that left thousands of victims financially shattered.

Speaker 4 The FBI arrested him this morning after he told senior employees yesterday that his business was a giant Ponzi scheme.

Speaker 5 We

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Speaker 1 From Wondery and at Will Media, this is the Big Flop, where we chronicle the greatest flubs, fails, and blunders of all time.

Speaker 1 I'm your host, Misha Brown, social media superstar and the sassiest short seller of flops at your bestie, Misha.

Speaker 1 And on our show today, I'm very, very excited because we have some comedians. They are digital creators, and you can catch them on Wild Not.
It's Brent Pella and Joey Dardano.

Speaker 1 So, okay, not to get too personal real early on, but what's the most money you've ever lost and how did you lose it?

Speaker 9 Ooh, the most money.

Speaker 9 I think I lost a solid couple grand during the NFT era a couple years ago.

Speaker 2 Oh, man.

Speaker 9 Because

Speaker 9 I love me some pixelated pictures of monkeys.

Speaker 10 We just learned a lot about you, dude.

Speaker 2 Just written one sentence.

Speaker 9 I'm a team player and I play on the losing team as often as possible.

Speaker 10 I'm going to back you up here.

Speaker 10 Mine's crypto related too. I bought a bunch of this one coin, Cardano, because my name's Dardano and my brothers and I were like, yeah.

Speaker 10 And my brother made me put it in some wallet. My brother's a tech guy, made me put it in a wallet, lost the password, $1,500, gone.
Oh,

Speaker 2 buddy. Yeah.

Speaker 10 Can't find it anywhere. That's rough.

Speaker 1 Well, today we're talking about Bernie Madoff. He's the man who made Ponzi schemes mainstream, really.

Speaker 1 For a long time, Bernie, he was on top of the world, but his success was built upon the ultimate house of cards. So let's go back to the beginning.
Bernard L. Madoff was born in 33.
Thank you.

Speaker 9 Put some respect on that name.

Speaker 10 No, don't show him respect. You ruin lives.

Speaker 9 Hey,

Speaker 9 he was ahead of his time.

Speaker 10 Yeah, actually, you're right. If he did this now, he would just get pardoned.
Keep going.

Speaker 1 Yeah.

Speaker 1 Well, he was born in 1938 in Brooklyn. His parents, Ralph and Sylvia, are the children of immigrants.
And Ralph and Sylvia, they get married right in the middle of the Great Depression.

Speaker 1 His dad gets work as a plumber, but the family often struggles to make ends meet. You know, times are tough.
It's called the Great Depression for a reason.

Speaker 1 Growing up, Bernie loves swimming. He's actually on the swim team at school, and eventually he uses his aquatic skills to get a job as a lifeguard at a club out on Long Island.

Speaker 1 In 1959, Bernie marries his high school sweetheart, Ruth, and in 1960, at the age of 22, he starts his own company, Bernard L. Madoff Investment Securities.

Speaker 1 But that took him a long time to come up with that one.

Speaker 1 He founds the company using $5,000 he saved up from Lifeguard Gig and also from installing lawn sprinklers.

Speaker 2 So, okay. So

Speaker 10 he did some hard work.

Speaker 1 Yeah. I mean, I think those oranges are about as humble as they get.

Speaker 2 Yeah. Okay.

Speaker 1 So, okay. Now I'm rooting for him.

Speaker 10 I wonder if he does anything bad later.

Speaker 2 I don't know. Well, let's take a look at a young Bernie.
Oh, shit, he's hot. Holy shit.

Speaker 9 That's Joey without a mustache. That's crazy.

Speaker 10 Yo, actually, I feel. hold on.

Speaker 7 Yo.

Speaker 10 Oh, he's kind of giving like a bit of a smirk with his left eye.

Speaker 9 Like, he's like, yeah, he's looking like, eh, I'm going to get your money.

Speaker 10 Yeah, you already know it's Big Bernie.

Speaker 9 I'm going to get in your pockets.

Speaker 10 They call me Buddy Bernard.

Speaker 1 Yeah, there's a twinkle behind the eyes, a little secret he's holding. Does it seem like he's the future mastermind of a massive Ponzi scheme?

Speaker 2 Yeah. Look at that smirk.
What are you talking about?

Speaker 1 Can't be trusted. So Bernie, he starts off selling penny stocks, helping people buy low-value bargain basement shares.
But Bernie doesn't want to be dealing in pennies his whole life, right?

Speaker 1 He wants to get out of that bargain basement and be a fancy investor.

Speaker 1 And so in 1962, he starts a new side of his business working as a money manager.

Speaker 1 Right. So clients trust him with their money and he invests it for them.
There you go.

Speaker 1 So one way that he gets a lot of his early clients is through his his father-in-law, his wife, Ruth's dad, is an accountant, and he sends his pals over to invest their money with Bernie.

Speaker 1 So, he's like a little bit of a Nepo baby-in-law.

Speaker 10 I was going to say, does that count as Nepo? Because that's like he married into nepotism.

Speaker 2 It still counts. I think it still counts.

Speaker 10 Yeah, actually, because they met when they were young, so he knew what he was doing. He knew, yeah.

Speaker 2 He knew.

Speaker 1 So, but things they go south kind of quickly. When Bernie makes his first bad trade, he loses about $3,000 of his father-in-law's friends' money.
So, that's

Speaker 1 it was about, that's like $30,000 in today money.

Speaker 10 Nah, but family dinner that week sucked.

Speaker 1 So awkward, right?

Speaker 2 Yeah.

Speaker 10 I bet you his father-in-law was like, can you pass the potatoes? And I don't know, like three grand.

Speaker 9 Should never have bought that photograph of a monkey.

Speaker 1 You know, I, $30,000 in today money doesn't sound like a lot, but he's a super young investor and just starting off. So I think this was probably a pretty big blow for him.

Speaker 10 No, that's, that's, that's bad.

Speaker 1 Well, what does he do? He makes up a fake trade to cover up his mistake and save himself from being embarrassed.

Speaker 10 Hell yeah.

Speaker 1 Yeah.

Speaker 1 Basically, he's telling his clients, hey, you didn't lose any money when they actually did, and crossing his fingers that he'll somehow be able to make up the missing cash at some point later on before anybody notices.

Speaker 1 What's the most elaborate way you've ever... prevented yourself from being embarrassed.

Speaker 10 Ooh, maybe, maybe just completely moving away from home and not talking to anybody that I knew from a certain period of time. What do you think about that?

Speaker 9 Reinventing myself to do comedy so that people would laugh at me purposefully instead of making me feel like I'm the butt of a joke.

Speaker 10 What's the most elaborate thing I did to cover embarrassment? I don't know. Change my whole personality, go on stage and act confident.

Speaker 2 Yeah,

Speaker 1 I know, right? My theater career wasn't working out. Instead of getting a real job, I got TikTok famous.
So

Speaker 2 there you go.

Speaker 10 Well, I feel like we all bonded right there.

Speaker 2 That was nice.

Speaker 1 But with Bernie's little lie, he's planted seeds of the charade that will one day grow into the biggest Ponzi scheme of all time. So let's pause for a second and talk about Ponzi schemes.
Yeah.

Speaker 1 What do you know about them?

Speaker 2 Pretty cool. Pretty fun.

Speaker 9 If you do it right and you don't get caught, it could be a real good time for you.

Speaker 9 You keep bringing money in and then you use that money and then you bring more money. You keep a little for yourself because you're doing all the work of bringing the money in.

Speaker 1 You might as well have a little bit for yourself.

Speaker 10 Absolutely. For someone not in business, that sounds like a business.

Speaker 2 Yeah.

Speaker 2 Yeah. To be fair.

Speaker 10 That just sounds like how a business is. Oh, we need more money to pay back people who we owe.
I'm going to bring in more money.

Speaker 2 Yeah.

Speaker 10 Truthfully, where's the miscommunication there?

Speaker 1 Right.

Speaker 1 Basically, a Ponzi scheme is a scam where you claim you're investing money for your clients, but what you're really doing is taking new clients' money and using it to pay back those earlier investments.

Speaker 10 Okay, so it's the lack of investments that's the issue.

Speaker 2 Yes, yes.

Speaker 1 All right. You give me $2 and I say, I'll be able to give you back $4.

Speaker 1 So now I need to find two more people who will be able to give me $2 so I have enough to pay you back.

Speaker 1 So, in order to keep a Ponzi scheme going, like you said, you need to keep bringing in money. You need to keep bringing in new clients to give you their money.

Speaker 1 It's like running on a treadmill, but the only way to keep the treadmill going is to set the speed higher and higher. And also, if you stop and fall off, you go to prison.

Speaker 1 So, how does Bernie keep building this Ponzi scheme? Well, it turns out it was pretty easy to convince his father-in-law's friends that he was doing a great job managing their cash.

Speaker 1 So he figures, why not just kick the bluffing into overdrive? So Bernie slowly brings more and more investors into his money managing business.

Speaker 1 And he starts by roping in people in his social circles, first as family members, friends, then acquaintances, colleagues. So everybody's fair game to good old burns.

Speaker 2 Yeah.

Speaker 1 And to start, people, they weren't giving him huge amounts of money. We're talking a few thousand dollars per investor.

Speaker 1 Though, of course, as it grows, so does the amount of money that Bernie's able to bring in. Now, if he were actually investing and managing this money correctly, there'd be no problem here.

Speaker 1 But because he's already gotten into the habit of lying, it quickly becomes a frog snowball that gets bigger and bigger as it rolls down a hill of scams.

Speaker 1 So what do you think it is about Bernie that makes people trust him?

Speaker 9 That little smirk. He's got a vibe, dude.

Speaker 10 a certain type of vibe. He's got a good look about him, man.
He's got a good vibe. Yeah.

Speaker 1 You can just, there's something about the eyes.

Speaker 2 Yeah.

Speaker 1 Just seems like

Speaker 9 cozy.

Speaker 10 I feel like Brent and I really caught on to Bernie's vibe kind of immediately. Yeah.
Yeah. One photo.

Speaker 2 Yeah.

Speaker 1 Well, actually, one of the largest keys to Bernie's success is the exclusivity of it all. So Bernie wants to attract a specific type of person to invest with him.

Speaker 1 He's going after the kinds of people he meets at country clubs and other elite settings.

Speaker 1 And he's not just targeting those folks because they're the ones that have, you know, all of the money, but it's also because those people will make him seem more legit.

Speaker 1 So one of the main ways Bernie brings in these elite investors is by playing hard to get.

Speaker 1 Yeah, when people come to him asking to invest money, he'll often turn them down at first. Oh, you want to give me hundreds of thousands of dollars to invest?

Speaker 1 So kind of you to offer, but I couldn't possibly.

Speaker 10 He's like a streetwear brand, but for

Speaker 10 investing money.

Speaker 10 Does that scale? Does that make sense? Sure, yeah. You want it, but you can't buy it.
Oh, no, not because you can't afford it. We don't have enough.

Speaker 2 Yeah, we don't have enough.

Speaker 1 Oh, I also gave away half of it to famous people.

Speaker 2 Yeah.

Speaker 1 Yeah,

Speaker 1 it's kind of a brilliant marketing strategy. If Bernie's out begging people to trust him with their money, that looks desperate, and suspicious.

Speaker 1 But if he doesn't want to take your money, he must have more money than he knows what to do with, right?

Speaker 11 Yep. Yep.

Speaker 1 And the strategy works. Eventually, celebs like Larry King, Steven Spielberg, even Kevin Bacon signs up to invest with Bernie.
That's right. Kevin Bacon trusted him with that foot loose money.

Speaker 9 Damn, Kevin.

Speaker 10 But then Bernie's too foot loose with the money.

Speaker 9 Ah, and Kevin is only one degree of separation away from parting with his cat.

Speaker 10 Think about it. Steven Spielberg had a close encounter with the turd kind

Speaker 2 because he was

Speaker 2 shitty with his money.

Speaker 9 Yeah, there you go. That works.

Speaker 2 That's good. That's good.

Speaker 1 Yeah, it gets to a point when Bernie takes you on as a client. It's seen as a mark of prestige.
So people spread the word about investing with Bernie and it's word of mouth.

Speaker 1 Everybody wants to make a connection and get in with him. So now it's important to note that Bernie's not just running the scammy money management side of his business.

Speaker 1 Some parts of his operation were actually legit. It's like the mullet of scams, like legit business in the front, Ponzi scheme in the back.

Speaker 1 But there is something pretty interesting about the legit part, and that's that his brother Peter starts working at the firm as the compliance officer.

Speaker 2 No, he got his brother involved.

Speaker 1 Yes, he gets the whole family involved.

Speaker 10 If I was doing anything illegal, I would keep all loved ones and family away.

Speaker 9 Away from it.

Speaker 1 yeah so his brother was actually the compliance officer aka the person who's supposed to make sure that nothing shady is going on uh

Speaker 1 right bernie also brings in his two sons mark and andrew to work on the lawful side of come on man he's bringing everyone down yeah it's the titanic of uh of investment firms but like i said this legit business it was pretty successful.

Speaker 1 He started using computer technology for stock trading in the 1970s, 1970s, sometime before other businesses even knew how to do that.

Speaker 1 So the use of computers lets Bernie's firm make stock trades faster and for way less money. And it pays off big for him.
In just about two decades, almost 10%

Speaker 1 of all trades of stocks on the New York Stock Exchange go through Madoff's company. That's a massive amount of the market.
So big, big money.

Speaker 1 But even though his legitimate trades are going pretty well, he's already in deep with his radar fraud scheme and there's no going back.

Speaker 1 Or who knows, maybe he likes the thrill of keeping this absolutely insane secret.

Speaker 2 I don't know.

Speaker 1 But while we're here, let's take a look at a photo of Bernie from around this time.

Speaker 2 Ah, that's the same thing.

Speaker 9 Same smirk.

Speaker 2 Same smirk.

Speaker 10 Same smirk, same twinkle.

Speaker 9 Dude, what if it was just like his fetish? Like, that's his fetish, was just like lying to people. It just turned him on.

Speaker 10 Yeah, that might have been his thing.

Speaker 9 It might not have even have been about the money. He might just like go home every night and get so turned on, like lying to people.

Speaker 10 Yeah, but actually, also, here's the thing: look at that face.

Speaker 10 I wouldn't think he's messing with, I wouldn't think he's lying.

Speaker 2 Right.

Speaker 10 We're joking about his little smirk and twinkle, knowing what we know now, but that is a charismatic guy.

Speaker 9 Totally.

Speaker 1 He looks like the worst he would do is talk to you about baseball for an hour.

Speaker 2 Yeah. Yeah.

Speaker 10 Like, this guy looks like the worst thing he ever does is just want one more beer. Like, oh, you want to have one? You have, like, want to have a little bit more fun? All right, man.

Speaker 2 Yeah.

Speaker 10 I'm going to miss my train, but he looks like he'll give you great advice after you mess something up.

Speaker 2 You know, oh, yeah. Like, he's going to make it all okay.

Speaker 10 He looks like the dude you call.

Speaker 9 Dude, he looks like one of the Samlot kids all grown up.

Speaker 2 That's great.

Speaker 1 Besties. Bernie may be legendary for his Ponzi scheme, but did you know there was once an actual person named Charles Ponzi whose scam was so big he got the whole thing named after him?

Speaker 1 So if you really want to go down a Ponzi rabbit hole, the at-will media team behind the big flop has got you. Their new podcast, Easy Money, The Charles Ponzi Story, is about to drop and it's wild.

Speaker 1 Here's a sneak peek. Go subscribe to Easy Money, The Charles Ponzi Story.

Speaker 12 You want to know the easiest way to make a million dollars? All it takes is a trustworthy smile and an understanding of one simple truth. There's nothing people crave more than easy money.

Speaker 13 In 1920, a broke immigrant became one of the richest men in America. His name was Charles Ponzi.

Speaker 13 Easy Money, The Charles Ponzi Story, is an Apple original podcast produced by Atwill Media, featuring award-winning comedian and actor Sebastian Maniscalco.

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Speaker 1 Well, even though he's got a trusting face, Bernie's Ponzi scheme is about to suddenly get a whole lot bigger when he gets access to a major new source of cash.

Speaker 1 Do you have any guesses what Bernard's brand new piggy bank is?

Speaker 10 George Soros, the government.

Speaker 2 The government?

Speaker 1 That's a good guess. Well, in 1989, Bernie's scheme levels up when he gets connected to a major investment firm in Connecticut.
I know.

Speaker 1 No, nothing more thrilling than the words investment firm in Connecticut.

Speaker 2 Yeah.

Speaker 1 But stick with me for a minute. The firm starts by giving Bernie $4 million to invest for them, but eventually they wind up sending over $7 billion

Speaker 1 his way.

Speaker 2 Wait, what? Wow.

Speaker 10 We've been talking about millions up until this point.

Speaker 1 But this connection also opens up the door to other investment firms and hedge funds sending money Bernie's way.

Speaker 10 That is a lot of digital monkeys.

Speaker 1 Lots of NFTs. And that makes Bernie's life a lot easier because these firms are basically doing the work of finding new people to rope into the Ponzi scheme for him.

Speaker 1 By the way, this Connecticut firm we're talking about, it's never convicted of any crimes and still exists today.

Speaker 1 And Bernie, he's living large off of his ill-gotten gains. He's got three yachts.
His wife Ruth has a jewelry collection that's worth almost $3 million.

Speaker 1 And they own four homes, including a pad on the French Riviera and a penthouse in New York.

Speaker 2 Wow.

Speaker 1 Well, now we might be asking ourselves, hello, why doesn't anybody notice that Bernie's running a Ponzi scheme?

Speaker 1 And one reason is that Bernie doesn't get too crazy with the amount of money he claims he's making for his clients, right?

Speaker 1 They're getting returns of like 10 to 20% per year, which is good, but not so outrageous that it's raising eyebrows.

Speaker 1 He also makes sure that if anyone ever asks to cash out their investment, he always has the money to give them. Well, you know, their money.
It's actually, of course, new investors' cash.

Speaker 10 Good business plan.

Speaker 2 Yeah. Yeah.

Speaker 1 What's your stance on trusting other people with your money?

Speaker 2 I don't know. Zero.

Speaker 1 Hard zero. I don't do that.

Speaker 9 Hard zero. I don't even trust myself with my money.

Speaker 10 I have a business manager. Her name is Deborah.
And her job,

Speaker 10 she doesn't touch my money. She just yells at me about how I spend it.
And that's all I want.

Speaker 2 Yeah.

Speaker 1 So yeah, Bernie is also very careful about making sure that all the phony statements he's sending out to his clients look totally legit.

Speaker 1 Like he wants to make sure that if investors start comparing notes with each other, all the numbers, they add up. And one way that Bernie does this is actually simple.
It's actually kind of genius.

Speaker 1 Each month, he just looks at the stocks that did the best over the previous month, and then he creates fake statements that say he invested his clients' money into those companies.

Speaker 1 So it's like telling people.

Speaker 2 It's so easy.

Speaker 1 It is so easy. It's like, I predicted all of the Tony awards perfectly when really I just filled out my ballot after that.

Speaker 10 He knew that no one would check on it because he was like, the IRS wouldn't pay to call internationally and like check on these trades that he's doing.

Speaker 1 Oh, I don't know, but that's interesting.

Speaker 10 I read the file on the FBI's website.

Speaker 2 Nice.

Speaker 10 To catch up. I actually can't believe the FBI just had a separate page for just this.
They're like, so you're here for Bernie Madoff. Let me do this.

Speaker 1 So besides Bernie just doctoring pretty simple documents, his personality is also what's keeping people from getting suspicious. He seems like a pretty low-key guy.
He doesn't do drugs.

Speaker 1 He barely drinks. He's got the temperament of a guy you'd want managing your money.

Speaker 10 He sounds less cool now, but I get it.

Speaker 9 For sure, less cool.

Speaker 1 One employee says, Bernie, quote, appear to believe in family, loyalty, and honesty. Never in your wildest imagination would you think he was a fraudster.

Speaker 10 But that's like the guy who presents himself as so good, where you're like, what are you hiding?

Speaker 2 Yeah.

Speaker 10 Like when a guy is like a wife guy and everything he says, he's like, my wife, gotta check in with the ball and chain. Gotta check in with the queen of the the house.

Speaker 10 It's like, you cheat on her every day, don't you? Yeah,

Speaker 1 you're lying to her, every single day. It still seems crazy to me, though.
Like, how reasonable is it that absolutely nobody has seen any red flags in Bernie Madoff, the almost billionaire?

Speaker 10 At this point, have you ever been out to a really nice dinner that someone else has paid for?

Speaker 2 Yeah,

Speaker 14 that made me shut up.

Speaker 9 I wouldn't ask questions over a 32-ounce ribeye.

Speaker 2 Think about that.

Speaker 10 Buy me one 32-ounce 32-ounce ribeye, make me giggle a little bit, and I'll die for you.

Speaker 10 Think about that.

Speaker 1 You know, Bernie's also obsessed with keeping up appearances in other ways. He wants everything squeaky, clean, and presentable, especially in the offices.

Speaker 1 There are presumably janitors in the building, but sometimes he goes in first thing in the morning to vacuum the floors himself before anyone arrives. So...

Speaker 10 This would actually be my red flag.

Speaker 9 He's a blue-collar guy.

Speaker 10 No, but this is the part.

Speaker 10 i i like his background i like the way he came up but this is the thing that would make me be like what are you what are you hiding man because if i ever had a thing that i didn't want people to see i'd be like no no no i'm just helping to clean up i run the place

Speaker 10 i have things i got to do i'm not i'm not windexing i'm indexing think about

Speaker 1 bernie is also still keeping up an entire separate wing of his business that is totally legit and not connected to the Ponzi scheme. And remember, this is now a family business.

Speaker 1 Bernie's two sons work there and are expected to take over the firm one day. And his wife is a regular presence at the office, and she is very popular with the employees.

Speaker 1 So, by the way, I should also mention the legit side of the company is legit a billion-dollar business in its own right.

Speaker 2 Wow.

Speaker 1 So, if that's doing so well, why not just stop?

Speaker 14 Yeah.

Speaker 10 But here's the thing: You ever have a really nice dinner?

Speaker 9 Don't you want that again?

Speaker 1 32-ounce ribeye.

Speaker 9 You have just one of those.

Speaker 10 Just one nice 32-ounce dinner.

Speaker 9 Change your whole perspective toward wealth.

Speaker 1 Well, Bernie also burnishes his reputation by donating to charities as well, including eight-figure donations for cancer research.

Speaker 10 He's doing everything right, man.

Speaker 9 He's a really good guy. He vacuums his own floors.
He's curing cancer. You know, he's just, he's a misunderstood guy.

Speaker 1 Yeah, we love

Speaker 1 research donations,

Speaker 1 although his philanthropy does get him access to the people who run those charities and attend charitable functions.

Speaker 4 Okay, so he's fake.

Speaker 1 So, yeah, I mean, but once he gets those people in the room, he gets those people to invest with him. But not only that, he also gets the charities themselves to invest with him.

Speaker 2 Ooh.

Speaker 9 I Take back what I said.

Speaker 2 Yeah.

Speaker 1 Some of the charities include the Jewish Community Foundation of Los Angeles, which gives him $18 million to manage, and the Carl and Ruth Shapiro Family Foundation, which trusts him with a whopping $100 million.

Speaker 1 Yeah, come on, man.

Speaker 10 Don't be doing that.

Speaker 2 That's...

Speaker 1 Yeah, it's pretty despicable to rope a charity into a Ponzi scheme.

Speaker 10 Brent, I don't know about you, but I've kind of been on Bernie's side this whole time up until now.

Speaker 9 Up until now, I was split.

Speaker 10 I was looking for things to be like, oh, like, what's the, you should have seen it coming.

Speaker 1 This is, this part's messed up.

Speaker 2 Yeah. Yeah.
Not a free. Yeah.

Speaker 1 So, yeah, from top to bottom, everyone seems to trust this guy for whatever reason. Uh, he serves on the boards of major finance institutions.

Speaker 1 And for three years in the 90s, he's even made chairman of the NASDAQ.

Speaker 1 So all positions of power that signal how much Wall Street respects him.

Speaker 1 And to illustrate how secure Bernie is feeling feeling about his position, let's take a look at a clip from an interview with him.

Speaker 14 In today's regulatory environment, it's virtually impossible to violate rules. And this is something that the public really doesn't understand.

Speaker 14 And if you read things in the newspaper and you see somebody

Speaker 14 violate a rule, you say, well, they're always doing this. But

Speaker 14 it's impossible

Speaker 14 for a violation to go undetected. Certainly not for a considerable period of time.

Speaker 2 Wow.

Speaker 10 It was was a bit of a dog whistle was that during like the height of his scheme oh yeah that was in the midst wow oh yeah so he was giggling in the back of his head oh yeah yeah yeah you know you're gonna get caught if you do something bad

Speaker 10 yeah they don't really like it when you uh mess with people's money

Speaker 15 hiding his laugh

Speaker 10 yeah that would have been awesome if he uh laughed so hard he choked and died in front of everybody and

Speaker 10 then we find out about what he did.

Speaker 1 Yeah. I mean, this proves, though, that Bernie seems bulletproof at this point.
People think it's totally legit. I mean, he's respected and he is loaded.
By 2008, his net worth is over $800 million.

Speaker 10 Come on, man.

Speaker 2 Solid.

Speaker 1 However, there is one thing that could get him down. Right? Don't forget a Ponzi scheme depends on continually bringing in more and more money.

Speaker 1 So if something were to happen that made a bunch of investors all panic at the same time and not only stop giving Bernie their money, but also try to cash out all of their investments at once, Bernie would be in big trouble.

Speaker 1 Is there anything in the history of the world you can think that happened?

Speaker 10 Internet, internet, internet, digital photos of monkeys.

Speaker 1 It was NFTs.

Speaker 1 No, obviously it is big flop alum. The financial crisis hits.
Yeah. Good old 2008.
And Bernie is teetering on trouble.

Speaker 1 So, when Lehman Brothers collapses in September, investors are on, they're full-on panicking, trying to save as much of their money as they can.

Speaker 1 So, Bernie's investors want their money out of the stock market and they want their cash right now.

Speaker 1 And not just the original amounts they put in, but the gains they believed they've made over the years.

Speaker 1 So, clients start pulling more and more money out of Bernie's funds. We're talking like $12 billion by December.

Speaker 1 And with all of the money money going out and almost nothing coming in, Bernie's entire scheme is now in peril.

Speaker 1 So December 10th, 2008, at an office Christmas party, Bernie seems uncharacteristically quiet, a little distracted.

Speaker 1 And no, he's not bummed out for the usual office holiday party reasons like getting an ugly sweater and a gift exchange.

Speaker 1 Bernie has finally realized that he can't keep his scam going and it's basically all over.

Speaker 1 So he tells his sons, Mark and Andrew, that they need to have a talk after the party, but he's still going to hand out the holiday bonuses to everybody first while there's still money left in the company.

Speaker 1 Now, usually when your dad says we need to have a talk, it's about, I don't know, the birds and the bees, or, you know, you got in trouble for something.

Speaker 1 But in this case, dad's the one who's in trouble. And after the party, Bernie admits to Mark and Andrew that it's all been one big lie.
If your dad came to you and said that, what would you do?

Speaker 9 I'd be like,

Speaker 2 dad?

Speaker 2 Is that you?

Speaker 10 You just start going blind.

Speaker 10 I would straight up, I would tell, I would tell the other, my other brother to just straight up pretend like he had never heard that.

Speaker 2 Yeah.

Speaker 1 You also didn't hear that, right? Mark and Andrew, they learn this and immediately report their dad to the authorities.

Speaker 10 All right. The immediately part, I'm like, you guys didn't think about it if that's your dad.

Speaker 2 It's like you've got to think about it for a second.

Speaker 2 Yeah.

Speaker 1 So it certainly seems like at this point, Bernie knows that he's going to get caught one way or the other, whether or not his kids are involved.

Speaker 1 And the very next day, December 11th, Bernie gets a knock on the door of his apartment. It's the FBI.
Hey, Queens.

Speaker 1 Bernie doesn't even try to pretend anymore. He immediately confesses to the agents.
He just flat out says to them, quote, I've been running a massive Ponzi scheme.

Speaker 10 That dude, I have to tell you, while doing research, when I read that, he literally, Brett, they ask him and he's like, no, yeah, I've literally been running a Ponzi scheme the entire time.

Speaker 2 He's quoted as being like, no, yeah,

Speaker 10 I've been doing a Ponzi. I've been doing a crime.

Speaker 2 Oh, my God.

Speaker 10 He doesn't even fight it. He's like, ah, yeah, you're going to look at a bunch of stuff.
You're not going to like any of it.

Speaker 2 I did a big Ponzi scheme. I'm a bad guy.

Speaker 1 That's the easiest day in the office ever.

Speaker 2 Yeah.

Speaker 10 For those agents. I'm still also caught up on getting a knock in the door, and it's the FBI.
And you go, hey, Queens,

Speaker 10 I have something to tell you. I've been doing a pretty bad thing.

Speaker 9 Thank you. Step off the elevator.
Come this way.

Speaker 10 Let's just say financially I've not been slaying the house down boots.

Speaker 2 I have been

Speaker 2 Time.

Speaker 1 It's always vanishing. The commute, the errands, the work functions, the meetings, selling your car?

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Speaker 2 There isn't one.

Speaker 15 We just respect you and your time. Oh, you're still here.

Speaker 2 Move along now.

Speaker 15 Enjoy your day.

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Speaker 1 Well, upon Bernie's arrest, the fallout is massive. $64.8 billion have disappeared overnight.
The folks who've lost their fortune include celebrities, universities, big financial firms.

Speaker 1 But it's not just big institutions and millionaires who've lost money. There are a number of small investors who've trusted Bernie with their savings, as did those many charity organizations.

Speaker 1 Now, despite his fame in Wall Street circles, Bernie was never a household name. And suddenly overnight, he's public enemy number one.
So obviously SNL had to take a swipe. Let's take a look.

Speaker 16 It's me, Bernie

Speaker 16 If you can. Take care.
Bye-bye.

Speaker 1 He also makes the cover of the New York Post around this time, so let's take a look at that.

Speaker 9 Smack, smack, smack, smack, smack, smack, smack, smack.

Speaker 2 Ah,

Speaker 2 still there. He's still got it.

Speaker 9 He's still got it.

Speaker 9 He's a little apologetic, but the energy is still there.

Speaker 10 His face is kind of screaming, what are you going to do?

Speaker 11 What are you going to do?

Speaker 10 Things happen. I've been running a massive Bonzi scheme.

Speaker 1 For the listeners only, the headline is the most hated man in New York.

Speaker 10 Can I just say, even if I committed crimes, that is a devastating line to have.

Speaker 11 I'd be like,

Speaker 11 the most hated man?

Speaker 2 All right. You guys were all my friend like last week.

Speaker 1 Yeah, I mean, no matter how you calculate it, there are a lot of people who are just plain furious with Bernie and not just folks who lost money with him, but also members of the general public now.

Speaker 1 Because remember, this is December of 2008. The recession is in full swing.
So in some ways, Bernie becomes the living personification of Wall Street greed.

Speaker 1 Now, during his trial, mobs of people wait outside his apartment to shout at him.

Speaker 2 There was a trial?

Speaker 10 He straight up said, I've been running a massive Ponzi scheme. I feel like that just gets settled right then and there.

Speaker 9 You still got to check into the court and say, What's up to the judge? Yeah. I guess.

Speaker 2 Yeah.

Speaker 10 Hey, sorry. Haven't done a crime.
I don't know any of that.

Speaker 1 He actually had to wear a bulletproof vest to and from because it was so tense. So cool.
But at this point, do you have any simps for Bernie?

Speaker 2 No.

Speaker 10 Well, I'm going to say this. I'm going to say this.
If you find something that it's working,

Speaker 11 it's hard to stop.

Speaker 1 all right i can lie and make hundreds of millions of dollars why would i stop that because i feel bad think about it it probably became an addiction or or his kink like you said who knows i think it's his kink still yeah yeah for sure still his kink it's also me playing devil's advocate this guy's a piece of oh absolutely yeah no don't feel bad for bernie but i mean he's not the only one impacted by the revelation of his crimes the situation does take a toll on the entire family as well.

Speaker 1 Bernie's wife, who claims she had no idea about the scam and is not charged with any crimes, is allowed to keep just $2.5 million of the family money, which is a lot of money, but just a fraction of the $825 million she and Bernie have.

Speaker 10 So here's another thing. When you have 800 million.

Speaker 11 $2.5 million.

Speaker 1 Yeah, she's spending that a year.

Speaker 2 Yeah. That's

Speaker 10 nothing. She's buying Aesop soap.
She's adding avocado.

Speaker 9 She's not looking at the receipt.

Speaker 1 She's not making coffee at home.

Speaker 9 She's working valet with no questions.

Speaker 1 She's not even bothering to cancel her subscriptions.

Speaker 10 No, she's buying MP.

Speaker 1 Bernie's assets are also auctioned off to try to raise money to pay back his victims. Let's take a look at a report on one of those auctions.

Speaker 1 It's kind of like a reverse cribs, you know, a showcase of all the stuff that Bernie is about to no longer own.

Speaker 10 That'd actually be such a good show.

Speaker 17 This 10 and a half carat diamond ring was the top seller by far. $550,000.

Speaker 17 This leather bull footstool sold for $3,000. Cigar aficionados bid competitively for Madoff's salvadors.
These leather cigar holders sold for $1,300.

Speaker 10 I didn't know that leather cigar holders exist and now I know what the hell I'm buying next.

Speaker 2 That kind of sucks for me.

Speaker 1 That leather bull footrest for three grand sounds like a steal. Just to say I have Bernie Madoff's footstool.

Speaker 2 Yeah.

Speaker 1 You know? Yeah. I wouldn't wouldn't buy it myself.
There's some fun stuff.

Speaker 10 I like how there was a Bernie Madoff branded umbrella.

Speaker 2 Yeah.

Speaker 10 But also, who the hell would buy his friggin' slippers that he had with his initials on it?

Speaker 9 Probably the people that he stole from, just so that they could have some type of ownership.

Speaker 10 Dude, imagine leaving the courthouse and getting stomped out by someone wearing your slippers. That would be

Speaker 9 cigar burns into your neck with your own cigars. Yeah.

Speaker 11 Yeah.

Speaker 10 And then they yell out, I took this out of one of your leather holders, by the way.

Speaker 1 So it looks like not the entire family was innocent. Ah! In the aftermath, Bernie's brother Peter,

Speaker 1 compliance officer, also gets sent to prison for 10 years for making over $15 million as part of the scheme.

Speaker 10 But this is one of those callbacks. This is one of those seeds that we just smelled from the moment you introduced him.

Speaker 10 He worked in compliance.

Speaker 1 Yeah, hello. Strangely, Peter's forced to give give up all of his family savings as part of the sentence.

Speaker 10 Man, I'd be pissed.

Speaker 1 One of the most tragic outcomes of the crime, and this does get dark, is that on the second anniversary of his father's arrest, Bernie's son Mark dies by suicide at the age of 46.

Speaker 1 And then Bernie's other son, Andrew, dies of cancer two years later at the age of 48.

Speaker 9 Bummer. Bummer.
That's a big bummer.

Speaker 1 That's a big bummer. So Bernie pleads guilty, and in June of 2009, he is sentenced to 150 years in prison.

Speaker 10 Oh, that's easy.

Speaker 10 You can get off in 130 with good behavior.

Speaker 1 Yeah, all in all, Bernie took between 17 and 20 billion dollars from investors, making this one of the biggest frauds in history.

Speaker 1 And during his sentencing, Bernie apologizes and admits that he knew he couldn't keep his scheme up forever. He says, quote, I realized that my arrest would inevitably come.

Speaker 10 So.

Speaker 2 okay.

Speaker 10 I knew that the arrest would come. Do you guys want to know why? I was running a massive Bonzi scheme.

Speaker 1 I truly don't know how you could deal with the stress of that, though, like just waiting to be arrested for all of those years, you know? Yeah.

Speaker 1 So when he's in prison, a journalist asks Bernie how he was able to keep going, knowing that some point he would have to get caught.

Speaker 1 Bernie replies, quote, I always, you know, figured, well, maybe some miracle will happen. You delude yourself into thinking that, you know some miracle is gonna happen

Speaker 1 this dude's awesome

Speaker 9 what's crazy is i i wonder if he had actually invested money during all those years if he would have actually like made people money and made himself money it seems like the legit side was doing really well The legit side was doing well.

Speaker 9 If he had just like taken people's money and actually smartly invested it, it probably would have made him solid money.

Speaker 10 There was one line in the recent White Lotus where that, have you guys seen it the last season?

Speaker 10 That where the dad is like, when he finds out he's going to get caught for doing whatever he did, I forget what the crime was.

Speaker 10 He talks to the guy on the phone, he goes, and I only made $15 million off of this.

Speaker 7 That's nothing.

Speaker 2 Yeah. Yeah.

Speaker 10 Watching the whole thing, you're like, oh, so you're like Richard. I don't feel bad for you.
What you did was stupid.

Speaker 2 Right.

Speaker 10 Because you are doing the good part of your job is fine. You're making so much that you thinking 15 million is nothing?

Speaker 1 Crazy.

Speaker 10 Could have just kept doing the good part.

Speaker 1 I don't know. I've never run a huge Ponzi scheme, but you know, if you don't have a business, someone is running a huge Ponzi scheme.

Speaker 1 But if you have a business that's, you know, a billion-dollar business, couldn't you just like, I don't know, take some of that and just slowly start paying back or actually investing, you know, like take some of your legit stuff, stuff that's yours, or your own $800 million.

Speaker 10 Also, why wouldn't you just like

Speaker 10 with your like highfalutin

Speaker 10 social credit, why don't you just like charge more in your rates be like oh by the way when you invest with us it's we take 20 but you make a lot of money like you could just raise your rates you could just charge in this an obscene amount why not just do that

Speaker 10 who knows let's ask him bernie

Speaker 1 speaking of let's do a little where are they now bernie dies in prison in 2021 at the age of 82.

Speaker 1 uh there there is no redemption story here he dies completely disgraced and his name is forever synonymous with fraud.

Speaker 1 Like seriously, if you look up fraud in the dictionary, there is a picture of Bernie Madoff right next to it.

Speaker 1 But that being said, here on the Big Flop, we do try to be positive people and end on somewhat of a high.

Speaker 1 So are there any silver linings that you can think of that came about from Bernie Madoff and his schemes?

Speaker 9 Somebody is the current owner of some very nice leather cigar cases.

Speaker 1 Very, very nice.

Speaker 10 Very busted.

Speaker 1 Well, we do have a little update that is a true silver lining, and that is, as of 2024, the victims of Bernie's scheme have gotten back 94% of their money thanks to the funds started by the government.

Speaker 1 So,

Speaker 1 well, now that you both know about Bernie Madoff, the man behind one of the biggest Ponzi schemes in history, would you consider this a baby flop, a big flop, or a mega flop?

Speaker 10 It's a mega

Speaker 11 mechopla. Mega flop.

Speaker 9 That is a mega flop on par with the flop of the 32-ounce ribeye steak that Bernie would buy people as he seduced them in.

Speaker 10 I think the only way that this would have been like a little flop would be, and this is gonna

Speaker 10 is if he got away with it his whole life and then right after he died, they found out about it and his family dealt with it.

Speaker 9 Yeah.

Speaker 10 Like, like if he basically got to live this awesome life,

Speaker 10 then he gets away with it and his family has to deal with the flop, then it's, you know, then it's not as bad in his perspective. Yeah.
It's worse.

Speaker 10 I think actually in the great scheme of of things, that'd be worse.

Speaker 2 But I don't know.

Speaker 2 Kind of mega flop, dude. Mega flop.

Speaker 1 Well, thank you so much to our hilarious guests that I am absolutely invested in.

Speaker 10 Come on now.

Speaker 1 Brett Bella and Joey Dardano for joining us here on the big flop.

Speaker 1 Of course, thanks to all of you for listening and watching. If you're enjoying the show, please leave a rating and review or subscribe.
And we'll be back next week with with another flop.

Speaker 1 Jen Shaw, former Salt Lake City housewife, once said, The only thing I'm guilty of is being shamazing.

Speaker 1 If that's another way of saying guilty of conspiracy to commit wire fraud in connection with telemarketing, then yeah, she's shamazing.

Speaker 2 Bye. Bye.
Bye.

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Speaker 1 The Big Flop is a production of Wondery and At-Will Media, hosted by Misha Brown, produced by Sequoia Thomas, Harry Huggins, and Tina Turner. Written by Anna Rubinova and Luke Burns.

Speaker 1 Engineered by Zach Rapone. With support from Andrew Holtzberger.
The video podcast is edited by Olivia Vessel. Managing producer is Molly Getman.

Speaker 1 Executive producers are Kate Walsh and Will Malnotte for At Will Media. Legal support by Carolyn Levin of Miller, Korzynik, Summers, and Raymond.

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Speaker 1 Music supervisor is Scott Velasquez for Freesong Sink. Theme song is Sinking Ship by Cake.
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