An Interview With Bernie Madoff's Whistle Blower, Harry Markopolos Author of No One Would Listen

Author: Harry Markopolos
Publisher: John Wiley & Sons Inc.
ISBN: 978-0-470-55373-2

Today, Norm Goldman Publisher & Editor of Bookpleasures.com is excited to have as our guest Harry Markopolos author of No One Would Listen.

Good day Harry and thanks for participating in our interview

Norm:

Was there ever a time during the nine years you were investigating Madoff where you said the hell with it and I quit?

Harry:

I felt like quitting more than once that’s for sure. But then anger at what Madoff was getting away with and the tremendous damage he was going to cause to our nation’s reputation and to our capital markets would overcome my disgust and I’d be back on the case again. Plus the SEC’s Ed Manion would always call and tell me that if I didn’t keep the investigation going then who would? When he put it like that it was obvious that if my four-man team didn’t do it, then no one else was, so we weren’t left with much choice. I was lucky to have three other men of three different faiths but one shared belief, that Bernie Madoff stood for everything we stood against.

Norm:

What changes have taken place with the SEC since you wrote No One Would Listen? Are these enough to prevent another Madoff?

Harry:

The SEC is a different agency that it was two years ago. The collapse or near collapse of all five major investment banks under the SEC’s regulatory purview combined with the Madoff Ponzi scheme had this embattled agency on the brink of being disbanded and their functions handed over to another agency. 2008 was a wake-up call to the SEC’s staff. The old adage, “when the going gets tough, the tough gets going” has been taken to heart by the SEC.

SEC Chairman Mary Shapiro has replaced the top ranks with higher quality leaders who are vigorous and enthusiastic enforcers of the law. And the SEC has retrained their staff. Today when whistleblowers send the SEC a well-documented case of securities fraud, the SEC responds quickly and effectively to these complaints. In fact, they incorporate whistleblower complaints into their examination process, sending out examiners when credible tips come in. The SEC has also adopted the reward system I recommended to Congress and they will pay 10% - 30% rewards to whistleblowers whose case submissions result in a successful monetary recovery for the SEC. In this manner the SEC should be able to stop frauds while they’re still small and before they require massive taxpayer bailouts like the banking scandals have.

To date I have been very impressed with how quickly the SEC has reformed itself. It’s only been 23 months and it’s still a work in progress but the SEC is definitely moving faster to reform itself than any other government agency I can name.

The SEC’s highly successful $550 million Goldman Sachs settlement proves that the SEC is back in the fight against white-collar fraud. In this particular case the SEC went after the largest, wealthiest and most powerful investment bank. Amazingly, it was a case that wasn’t really about securities law violations as much as it was about poor ethics and treating clients in a less than fair manner. Yet the SEC’s Director of Enforcement, Robert Khuzami, brought what many on Wall Street thought was a losing case and his agency ended up winning despite long odds. To me it was a sure sign that the SEC was back after being missing in action for way too long.

Norm:

I often wondered how some well-known charitable institutions were taken to the cleaners by Madoff. Surely they had knowledgeable accountants, lawyers etc on their board of directors. Why didn't any of these individuals do their due diligence?

Harry:

The main reason why Madoff got away with his scheme for decades was that everyone assumed he was so rich and so successful that he wouldn’t need to steal. No one who invested with Madoff ever did his or her own due diligence. They simply assumed he was beyond reproach. They also assumed that surely others must have already conducted due diligence so they didn’t see the need to waste their time asking their own questions. Somehow they were comforted by the fact that other knowledgeable investors were invested with Madoff so they wrongly assumed that they must certainly have thoroughly checked before investing. In reality though, no one checked. And Madoff wouldn’t answer questions if you did ask them, he’d tell potential investors that his strategy was a “take it or leave it” proposition because he was too busy running his firm to waste time with bothersome investors whose money he didn’t really need anyway.

Norm:

Why did you write your book and when did you have the time to write it with all of your other jobs?

Harry:

I knew there weren’t enough hours in the day to write this story on my own. So I made sure my team helped write their stories into the book too and we engaged a very good ghostwriter, David Fisher, who’d had a lot of experience writing organized crime non-fiction books to help us get through the process.

I also found out that writing a book only means you’re halfway done. The other half of the workload is traveling to media interviews to meet with TV, radio and print reporters and answer all of their many questions. I literally spent four and one-half months on media interviews and unfortunately, I was only able to accommodate less than half the press requests that came in.

Norm:

Whom do you think will benefit from reading your book and why do you feel it is important at this time?

Harry:

Bernie Madoff is part of the nation’s history and it’s a sad chapter at that. I wish our book’s ending could have been a happy one but obviously it was anything but. The one saving grace is our book is making a positive difference in the university classrooms nationwide. Several universities are using our book to teach business, finance and accounting ethics. I’ve put classroom resources including case videos, government deposition transcripts, Madoff related financial statements, and my analysis of those materials up on our book’s website www.noonewouldlisten.com for professors to use. One university not only has their students read it for accounting ethics but also has them write a 2 page fable based upon no more than four characters (both good and evil) and the moral conflicts presented in our book.

While it is too late for my generation to make amends for the unchecked, unregulated greed that led to our nation’s near economic collapse, if our next generation of citizens can incorporate the lessons learned then it was well worth our time writing a book. Hopefully our story will inspire others to step into the breech when government regulators shirk their sworn duties to protect and serve.

Norm:

Have you read any other books concerning Madoff and how do they differ from No One Would Listen?

Harry:

I’ve read all three of the Madoff biographies that came out in August 2009 and enjoyed them all. Of the three I liked Erin Arvedlund’s Too Good to Be True: The Rise and Fall of Bernie Madoff the best. She’s a financial journalist so she had the background to understand and explain the financial chicanery in easily understandable terms for the average lay reader.

Our book is a financial whodunit mystery where we put the reader in our shoes as we solve the case and take it to the government time and time again. We don’t go into Madoff’s upbringing, his family life, or anything other than the actual case investigation we undertook over eight and one half years across two continents. You’ll find out how global the scheme was and we’ll take you behind the scenes into Madoff’s network of several hundred feeder funds spread out over dozens of countries. You’ll discover how close Madoff was to running short of funds in 2005 and 2007 and how he kept his scheme going for so long without detection. And you’ll understand why Madoff turned himself in because he had stolen from the most powerful and some of the most dangerous people on the planet; so literally there was no place for him to run and no place for him to hide.

Fortunately for readers we purposely left out some of the truly horrific things that happened in the aftermath of the scheme’s collapse. There are things that to this day that make me cry. I wished we hadn’t seen and heard what we did, but we can’t undo the past and some things are too painful to put into words so we left them out of the book. You’ll notice I put in heavy doses of my offbeat, corny humor and I do that to counteract the evil predatory people and actions you’ll encounter as the story unfolds and the scheme grows.

Norm:

Where can our readers find out more about you and No One Would Listen?

Harry:

My team cooperated with a Canadian film crew as they followed us around for a year and produced a 93 minute long documentary entitled, The Foxhounds: The Pursuit of Bernie Madoff. It’s a condensed version of the book and premiered at Amsterdam’s International Documentary Film Festival in mid-November 2010. We also plan on submitting it to other film festivals and if audiences like it enough, it may even make it into theaters before going to cable.

There is also going to be a Hollywood feature film. My team is close to signing up with an experienced production company after fielding multiple (mostly bad) offers from Hollywood. I expect filming in 2011 and it should be in theaters by 2012. I’ve been told that this will require a six-month minimum time commitment assisting the screenwriter and offering technical advice on the movie set. Our goal is for the movie to show how truly evil Madoff was and to expose those who knowingly aided and abetted him, here and abroad.

If I had to describe the movie in just a few words, I’d call it a “bone-chilling detective mystery involving a global conspiracy of white-collar predators.” The hardest part will be finding actors capable of accurately portraying the proper depth of evil we came across during our investigation. Like our book, the movie won’t need any embellishment whatsoever because fiction has to make sense but real life doesn’t have to make sense, it just happens.

Norm:

Is there anything else you wish to add that we have not discussed.

Harry:

I’ve returned to private life chasing bad guys and bringing companies that cheat our nation’s taxpayers out of billions each year. Right now I’m heavily involved in bringing State Street Bank to justice for looting billions of dollars from tens of millions of American’s retirement pension accounts over a period of decades. The bank engaged in a massive foreign currency fraud which stole tiny amounts ranging from 20 to 45 hundredths of a percent from each currency transaction they did on behalf of pension funds that trusted them as a fiduciary. While small in percentage terms, the dollars involved were huge, so getting them to repay those retirees is my main focus these days.

The California Attorney General intervened and joined my case against the bank in October 2009 and is asking for $200 million back. In late October 2010 the State of Washington had $11.7 million that State Street stole from them returned to the state treasury. I hope to see all of that stolen money plus interest and penalties returned to retirees before the end of 2011.

I have several other cases filed that have not yet been made public that involve similarly large sized frauds committed by other companies against us taxpayers. I enjoy tackling big predatory companies and bringing them to justice. Bernie Madoff might have been my first case but he’s not my last case. There are plenty more like him running loose and I can’t think of a better job than tracking them down one by one.

Norm:

Thanks once again and good luck with all of your future endeavors: