The fog is now disappearing from my head, yet the empty feeling in the pit of my stomach continues. When I first read the online news report late Thursday night that former NASDAQ chair and famed investor Bernard Madoff had been arrested, I ignored the obvious: my family had lost a significant chunk of money in one of the largest frauds in American financial history.
Maybe I was naive to think that it meant nothing because it was reported that Madoff had only been charged with one count of fraud and no one else appeared to be involved. Maybe, I was deluding myself because I just didn't want to face the reality that the protective nest egg left to my brother and me when my father passed away had disappeared. Or maybe, just maybe, it was a mistake and it would just go away.
It didn't.
The cold, harsh reality of what it truly meant hit me this morning as I read detailed, online accounts of fortunes lost and lives turned upside down by one man's insatiable greed and stone-cold secrecy.
I am now another name on that long, long list of people who have become fallen dominoes in this once in my generation economic crisis.
For years, investors, rivals and regulators all wondered how Bernard L. Madoff worked his magic. ". - The New York Times, December 14, 2008
The first time I opened up and read the old style computer sheets filled with the lists of stocks, T-bills, puts and calls, I was as confused as a young boy on his first date. The endless Fortune 50 investments were listed in a seemingly disorganized, haphazard and inexplicable manner and perusing these reports did not help to raise the curtain on my understanding.
The only thing that made sense was that we were told the account made, on average, more than ten percent a year. It didn't matter that all of this was modern day sanskrit to my journalistic mind. The gravy train was stopping at my station and the mysterious Bernie was the engineer taking my wife, two daughters and I to our destiny. Next stop, big money!
"But some investors said they had questioned Mr. Madoff's supposed investment prowess years ago, pointing to his unnaturally steady returns, his vague investment strategy and the obscure accounting firm that audited his books."- The New York Times, December 14, 2008
My father had been tipped off to this magic carpet ride by his girlfriend's family. They had given him the seeming golden ticket into a secret club. The people of more than modest means allowed him to invest his hard earned money into one of those secret, sacred accounts. It served its purpose. He made enough to live very comfortably off the interest, for the rest of his life, or at least that's what we were told.
When it passed down to us upon his death in 2003, her children told us what they deemed the fund's rules.
- Don't call.
- Don't ask any questions.
- Don't question their methods.
My assumption was that if we crossed the great monetary magician and broke the code, we would be thrown into a Dickensian poor house and sentenced to a life of poverty.
Tempting fate, and with the secrecy of a C.I.A. operative, I did call once. My wife and I had been told by our accountant that the investment wasn't worth the capital gains taxes we had to pay. Though I thought our number cruncher's dismay dealt with his own inability to conjure up any semblence of sense about the fund, I called and asked if the account could be split into two. This way, each and every transaction would not have to be made by mutual decision and I could fight the battle of assets and debits on my own terms.
"You don't have enough money in the account to do that, sir, " I was told by the Madoff account executive.
"But, it's our money."
"I'm sorry. You don't have enough money in your account."
I thought for a minute.
"What if I did have enough money to split the account in two?," I asked hesitantly. "Could I do it then?"
"No, sir. We aren't accepting new accounts and splitting the account it two would give you two accounts."
"What would happen," I continued, "if I demanded to split the accounts?"
"Then sir, " she said in a monotone voice, "we would ask you to withdraw your money from our account. You are not allowed to alter the account. "
I thanked her, hung up and never called again.
"The one thing my father always told me was, 'Never sell your Madoff,'" said a Florida investor who believes he's out $3 million he'd hoped to give to his children.
"My only question is whether [the feds] will be able to salvage anything," he said. "My gut tells me no." -The New York Daily News, December 14, 2008
I am fortunate that we did not lose the same fortunes that the charities, universities or the New York Mets lost. This was not money my family depended on for our day to day expenses and we had long ago diversified our other limited investments. It was a fund we used for emergencies and hoped to have available when we retired. I am going to file my forms and get in line with my fellow investors and hope that the Securities and Exchange Commission or the S.I.P.C. will tell me I can salvage some if not all of the money.
But, I also realize that the pain I have felt today was caused by the people hardest hit by the financial crisis. This Ponzi scheme would not have been uncovered if those in desperate need had not overwhelmed Madoff with their withdrawal requests and his inability to fulfill them. They will not get their hard, earned money back and maybe not even their lives. It's little solace that I may have lost my rainy day fund, but others are drowning in the downpour of debt, unemployment and instability.
And, I am saddened by the thought that one more link to my father has been lost. A child of the depression, he saw his job in life as being the provider for his two sons during his lifetime and after he departed this mortal coil. Each and everytime I pulled one of those large, old computer statements out of the mailbox, I thought of him. Now, i won't be getting those reports any longer.
I guess you could say that is my biggest loss today.