Books shed light on Bernard Madoff's shady activities

The first books on swindler Bernie Madoff's monstrous $65 billion Ponzi scheme have landed.

Financial journalist Erin Arvedlund's Too Good to Be True and biographer Jerry Oppenheimer's Madoff With the Money are among the best.

While they fall short of revealing the heart of the beast, surely Madoff, who pleaded guilty, is the only one capable of that analysis.

Both have the feel of being woven together quickly. Little wonder. They were. Madoff was arrested less than a year ago on Dec. 11 and pleaded guilty on March 12, 2009. Both do, however, make fine reading for the curious looking to pull back the covers even partially. The narratives revolve around a cast of characters, strewn across the globe, and complex Wall Street sleight of hand. Each cobbles together a portrait of Madoff, and what emerges is a starkly soulless figure — much like Madoff's gray-and-black office decors.

First up, Arvedlund's Too Good to Be True. You have to hand it to Arvedlund. She had the goods and guts to expose the shaky underpinnings of Madoff's secretive hedge fund empire in early 2001 in an article, which appeared in Barron's, based on more than 100 interviews. Her story, titled Don't Ask, Don't Tell, was a jarring eye-opener … if only the Securities and Exchange Commission had paid it any heed.

She skeptically asked Madoff how some of his funds invested for individuals in private accounts had never had a down year and had produced compound annual returns of 15% for more than a decade. He blew her off by saying: "It's a proprietary strategy. I can't go into it in great detail." She called around to the firms that marketed his funds, such as Fairfield Greenwich, a New York City-based hedge fund marketer, and asked how he accomplished this. Co-founder Jeffrey Tucker responded, "it's a private fund" and wouldn't discuss returns.

The returns had been so consistent that some on the Street had begun speculating that Madoff's market-making operation subsidized and smoothed his hedge fund returns, she reported. And she wrote that one satisfied, unnamed investor informed her "Madoff politely requests that his investors not reveal that he runs their money."

Arvedlund's book uses her Barron's story as a launching pad to delve deeper into the business story of how Madoff arrived at such a lauded state of hushed reverence from investors and SEC regulators alike. Until he was arrested, Madoff was relatively unknown outside the financial world.

She begins with Madoff's brazen court statement on March 12: "I never invested the money. I deposited it into a Chase Manhattan bank."

"Madoff's crime, painstakingly carried out over many years, was audacious but based on a simple premise: He paid earlier investors with later investors' money," she writes. Arvedlund has an investigative reporter's grasp of the investment world. She explains how hedge funds operate and how financial markets are regulated, and provides insight into some of the biggest global investors. She follows money funneled from individual investors to feeder funds such as Fairfield Greenwich, and ultimately to Madoff's Chase Manhattan account.

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