Bloomberg Law
Dec. 11, 2018, 4:16 PM

The Bernie Madoff Ponzi Scheme: Who’s Where Now?

Erik Larson
Erik Larson
Bloomberg News

It was great being in Bernie Madoff’s orbit, until it wasn’t. For decades, Madoff was a respected Wall Street financier, generous with employees and beloved by his family. But after his securities firm was exposed a decade ago as the biggest Ponzi scheme in U.S. history, thousands of investors lost their money, in many cases their life savings — $19 billion in principal, all told. Those closest to Madoff suffered in other ways, amid criminal convictions and giant payouts. Here’s where they are today.

The Family

Photographer: Timothy A. Clary/Getty Images

The Mastermind: Bernard Madoff The 80-year-old disgraced financier, whose epic scam started as early as the 1970s, is serving a 150-year sentence at a medium-security federal prison in Butner, North Carolina. He pleaded guilty to fraud in 2009. From prison, he partly blamed his earliest and richest investors for forcing him into crime to keep up with their demands. Even if that were true, Madoff lied to everyone around him for decades and took money from investors — close friends and strangers alike — though he knew they’d probably lose it all. By now, Irving Picard, the trustee overseeing the firm’s liquidation in bankruptcy court, has recovered about 70 percent of approved claims, or $13.3 billion, with settlements such as a $162 million deal with the owners of the New York Mets back in 2012 and, just this year, a $280 million accord with the hedge fund operator and philanthropist J. Ezra Merkin. In the end, Madoff expressed regret -- for pleading guilty so quickly. “The biggest mistake I made,” he said in a deposition from prison, “was not going to trial.”

Photographer: Yvonne Hemsey

His Wife: Ruth Madoff The con man’s better half is living in a rented home in Connecticut after being forced out of the couple’s lavish Upper East Side apartment. After her husband’s plea, she was stripped of most of their cash and assets and allowed to keep $2.5 million. Never charged, Ruth Madoff denied knowing about the fraud but was shunned by the wealthy Jewish community her husband targeted and sued by Picard, the trustee. She once said she and her husband tried to kill themselves with a prescription-drug overdose two weeks after his arrest.

His Elder Son: Mark Madoff Mark, who was head of sales at the company’s market-making business, denied knowing about the fraud and said his part of the business was legitimate. He committed suicide in 2010, at 46, on the two-year anniversary of his father’s arrest. Alerted by a disturbing email, his wife’s stepfather found him hanging from a dog leash in the living room of his Manhattan apartment, while his 2-year-old son slept in an adjoining bedroom. He was never charged.

Photographer: CBS Photo Archive

His Younger Son: Andrew Madoff Andrew, who as head of equities helped build the company’s proprietary-trading desk, also denied being involved in the scam and, like his brother, wasn’t charged. The trustee claimed in court filings that the brothers deleted emails to obstruct a 2005 Securities and Exchange Commission probe that could have exposed the Ponzi and that they squandered $150 million in customer cash on their lavish lifestyles. Treated for mantle cell lymphoma in 2003, Andrew died of cancer in 2014 at 48.

Photographer: Bloomberg

His Brother: Peter Madoff The con man’s brother was also his longtime chief compliance officer, now serving a 10-year term in a Brooklyn, New York, lockup. His “sham compliance program” allowed the scheme to go undetected, a judge said. He helped his brother run the firm for four decades but denied knowing the business was a scam until it collapsed. A settlement with the trustee required his family to forfeit assets valued at $90 million held by his wife, his daughter and others. He admitted helping his brother dole out the firm’s last $300 million to insiders when he learned of the fraud.

Photographer: Patrick McMullan via Getty Images

His Niece: Shana Madoff Peter Madoff’s daughter, who wasn’t charged, joined her uncle’s firm in 1995 and served as in-house counsel and compliance officer. She was sued by the trustee for allegedly spending client cash on credit card bills, vacations and business ventures with her cousins. The case was dropped after her father agreed to pay the $90 million. She married Eric Swanson, a former compliance inspector at the Securities and Exchange Commission. They met when he was examining Madoff’s operations and married after he left the SEC.

The Staff

Photographer: Bloomberg

His Right-Hand Man: Frank DiPascali Madoff’s chief financial officer pleaded guilty in 2009 but died of cancer at 59 in 2015 before he could be sentenced. The native of Queens, New York, was the government’s star witness in the trial of five of Madoff’s top aides, all of whom were convicted in 2014. Jurors, who called the aides Madoff’s “soldiers,” said DiPascali’s testimony was crucial, and prosecutors praised him. When it came time to sentence the five, the judge overseeing the case, Laura Taylor Swain, assailed his testimony as largely unbelievable. All five received far shorter terms than the government requested.

Photographer: Bloomberg

His Right-Hand Woman: Annette Bongiorno The woman who ran Madoff’s investment-advisory business was convicted in 2014 and sentenced to six years behind bars, far less time than prosecutors sought. For years, she created fake trades and account statements to dupe customers and generated “incredible wealth” for herself in the process, the U.S. said. She is locked up at a medium-security prison in Sumterville, Florida, and due for release in May 2020. Once Madoff’s secretary, Bongiorno was hired at 19 and testified that Madoff gave her no outside training in finance. “He said, ‘Everything you need to know, I’ll teach you,’ ” Bongiorno testified.

Photographer: Bloomberg

His Ops Chief: Daniel Bonventre Madoff’s operations director, who started in the 1960s and ran his broker-dealer unit, was convicted in 2014 and sentenced to 10 years. The U.S. said he helped Madoff perfect his fake reports for regulators and siphoned off $799 million in customer funds to prop up the con man’s market-making business. He’s locked up at a facility in Minersville, Pennsylvania, and due for release in 2023. At his sentencing hearing, Bonventre called his ex-boss “soulless” and said that even though he knew he’d misled investors, he didn’t know about the Ponzi scheme. “Your life has been shattered as well,” Judge Swain told Bonventre at the hearing.

Photographer: Bloomberg

His Account Manager: Joann Crupi Crupi was convicted in 2014 and sentenced to six years. She’s due for release on May 28 from a minimum-security prison camp in Alderson, West Virginia. A Madoff employee for nearly three decades, Crupi started as a keypunch operator and rose through the ranks. She aided Bongiorno in creating fake trades for account statements and was “privy to some of the most openly fraudulent conduct,” the U.S. said. Seeking to explain her actions, her lawyer told jurors that Madoff’s workers viewed him as “almost a god.“

Photographer: Andrew Burton/Getty Images

His Coder: George Perez One of two computer programmers whose code was used to automate the creation of millions of fake documents as the fraud expanded rapidly in the 1990s, Perez was convicted in 2014 and sentenced to 2 1/2 years. Lawyers for one group of victims called the sentence “outrageous.’’ The judge “understood that their role in the fraud was quite narrow,” Perez’s lawyer said. At trial, his lawyer sought to blame the fraudulent code on the programmers’ former boss, Liz Weintraub, who died 10 months before Madoff’s arrest. Perez was released for good behavior after 20 months.

Photographer: Andrew Burton/Getty Images

His Other Coder: Jerome O’Hara O’Hara was also sentenced to 2 1/2 years and released after 20 months. The documents “fooled auditors and regulators who attempted to understand the business,” the U.S. said. DiPascali testified that O’Hara and Perez demanded to be paid in diamonds after they realized how vital their role was. The former CFO said he refused. Like Perez, O’Hara put the blame on Weintraub, saying she helped write and develop Madoff’s computer code more than a decade before the men were hired and oversaw programs to create false reports and delete company emails. “These were not financial guys,” O’Hara’s lawyer said.

Photographer: Bloomberg

His Accountant: David Friehling Friehling, whose bogus accounting helped keep Madoff’s fraud alive, pleaded guilty in 2009 and was sentenced to 250 hours of community service after testifying. He admitted signing off on phony audits of Madoff’s firm for decades and helping Madoff’s family with false personal tax filings. At his 2015 sentencing, the judge slammed the accountant’s “complete abdication” of his duties. Friehling apologized to his elderly father, his mother-in-law, his siblings and his nieces and nephews, all of whom lost their life savings.

His Top Trader: David Kugel A former supervisor in Madoff’s proprietary trading unit, Kugel pleaded guilty in 2011 to aiding the fraud by giving historical pricing data to Bongiorno and Crupi starting in the 1970s. Kugel’s data helped them mimic real trades when they doctored customer statements. Kugel said Madoff also let him backdate trades to boost profit in his own account, as long as they didn’t look “ridiculous.” He avoided prison by testifying and got two years’ probation. “The guilt, embarrassment and humiliation have become part of my DNA,” he said at his 2015 sentencing.

Photographer: Bloomberg

His HR Guy: Craig Kugel Craig Kugel, David’s son, pleaded guilty in 2012 to a tax scheme that paid salaries and benefits to people who weren’t employees of the company. In court in 2015, he admitted charging personal expenses to his corporate credit card. Kugel, who said he played no role in the Ponzi scheme, avoided jail by helping prosecutors build their case against others.

His Controller: Irwin Lipkin Lipkin, the first non-family member Madoff hired for his firm, in 1964, pleaded guilty in 2012 and got a six-month sentence. Lipkin retired a decade before the fraud collapsed and appeared in court in a wheelchair. He admitted falsifying books and records for years but denied knowing about the Ponzi. “If I had known what I know now, I would have never have done these things,” he told Judge Swain at his 2015 sentencing. The U.S. made him give up a Rolex. He got to keep his stamp collection.

Photographer: ZUMA Press via Alamy

His Other Controller: Enrica Cotellessa-Pitz Cotellessa-Pitz joined Madoff’s firm in 1978 and became controller a decade before it collapsed. She pleaded guilty in 2011 and avoided prison after testifying. She admitted helping Madoff siphon off customer cash for years from his investment-advisory business to hide trading losses in his broker-dealer unit. “I believed in and trusted Bernie, like so many other people and industry professionals,” she told prosecutors. At her sentencing, her lawyer said, “Not in her wildest dreams did she imagine there was no trading going on in the investment-advisory business.” In 2015, she got two years of probation and 250 hours of community service.

His CFO’s Assistant: Eric Lipkin Lipkin, Irwin’s son, pleaded guilty in 2011 and avoided jail after testifying. He admitted falsifying documents and paying people for no-show jobs but said he didn’t know about the Ponzi scheme. In 2015, he was sentenced to nine months of home detention. Lipkin began working at Madoff’s firm as a teenager. “To be part of the biggest financial fraud ever is an embarrassment I will live with for the rest of my life,” he said in court.

The ‘Big Four’

Madoff has had almost a decade in prison to think about what went wrong. He’s concluded that a few of his investors were themselves partly responsible for his fall from a legitimate securities trader to the biggest Ponzi schemer in U.S. history. Specifically, he blames the “Big Four,” his earliest and richest clients. All denied knowledge of the scheme, and none were ever charged.

Photographer: CAPEHART via Getty Images

His No. 1 Fan: Jeffry Picower Picower, a Florida accountant, was one of Madoff’s earliest and richest investors. He’d been investing with Madoff since the 1970s and withdrew more fake profit — $7.2 billion — than any other customer. In October 2009, less than a year after Madoff’s arrest, Picower suffered a heart attack and died in a swimming pool at his home in Palm Beach at 67. In 2010, his widow, Barbara, agreed to forfeit $5 billion to the trustee to settle his lawsuit and another $2.2 billion to a Justice Department victims fund.

His L.A. Connection: Stanley Chais One of Madoff’s oldest friends, the Beverly Hills money manager funneled his own clients’ cash into Madoff’s firm for years, making hundreds of millions of dollars in fees “despite having clear indications” Madoff was engaged in fraud, the SEC alleged in a suit against Chais. The trustee claimed Chais and his entities reaped about $1 billion in profit from fake securities transactions. Celebrated in the U.S. and Israel for his philanthropy, Chais said he’d been duped. He died in 2010 at 84. His estate in 2016 agreed to pay victims $277 million to settle the trustee’s suit.

His Executor: Norman Levy The family of the late New York real estate magnate paid $220 million to victims in 2010 to resolve a lawsuit claiming they withdrew more money from their accounts than they put in. Levy invested with Madoff from the mid-1970s until his death in 2005. He had named Madoff executor of his estate, giving him the power to make unilateral decisions about its non-real-estate assets and allowing him to siphon off more money for his fraud.

Photographer: ZUMA Press via Alamy

His Seed Capital: Carl Shapiro The Boston-based philanthropist who built a fortune selling women’s clothing in the 1950s knew Madoff for 40 years and was one of his biggest investors in 1961. The trustee accused Shapiro and his investment entities of withdrawing about $1 billion in fake profit from the firm. In court filings, Shapiro said he didn’t know about the fraud, citing his family’s $250 million investment with the firm just weeks before Madoff’s arrest. In 2010, Shapiro and his family members agreed to forfeit $625 million to settle the trustee’s suit.

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To contact the author of this story: Erik Larson in New York at

To contact the editor responsible for this story: Joe Schneider at Peter Jeffrey