The New York magazine
interview with Bernie Madoff has finally been published. Steve
Fishman spoke with Madoff on the phone (collect calls from Madoff's prison) for
And so, sitting alone with his therapist, in the prison
khakis he irons himself, he seeks reassurance. "Everybody on the outside kept
claiming I was a sociopath," Madoff told her one day. "I asked her, 'Am I a
sociopath?' " He
waited expectantly, his eyelids squeezing open and shut, that famous tic. "She
said, 'You're absolutely not a sociopath. You have morals. You have remorse.' " Madoff paused as he
related this. His voice settled. He said to me, "I am a good person."
There aren't many who would agree.
According the the interview, Madoff was already a wealthy
man before he starting stealing from his clients and lying about their
In the early days, Madoff mostly employed technical and
fairly low-risk arbitrage techniques built around his market-making business.
"I always had a good feel for the direction of the market because of the order
flow I was seeing," he said. In the eighties, he said, he produced consistent
returns of 15 to 20 percent, and he insists he did it legally.
To me it sounds a bit like he was taking advantage of his
trading business to help out his investment advisory business. Madoff had long
been suspected of front-running trades to make money for his advisory business.
In the interview, he claims that the fraud started after
the crash of 1987. Clients pulled out capital and he was forced to unwind
long-term hedges on unfavorable terms. Then his trading scheme was no longer
working because the market lacked the volatility needed for his arbitrage. And
because trading spreads were narrowing because of the rise of electronic
In the interview, Madoff displays some of the classic criminological
behaviors of a fraudster.
He blames his victims: "Madoff says that he waved red
flags, issued caveats that should have been obvious to even an unsophisticated
He denies his victims: "Everyone was greedy," he
continues. "I just went along. It's not an excuse." "Look, none of my clients,
even if they lost every penny they put in there, can plead poverty." In the
tapes he claims that very few of the early investors will have lost their
He condemns his condemners: "The whole new regulatory
reform is a joke. The whole government is a Ponzi scheme."
He claims everyone else is doing it: "It's unbelievable,
Goldman ... no one has any criminal convictions."
I think Madoff's prison therapist told him the wrong
answer. Or Madoff lied to Fishman about the therapist response.
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
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