Dec. 12, 2010 -- The following excerpt is taken from Brian Ross's book "The Madoff Chronicles," published by Hyperion.
Bernard Madoff's sons Andrew and Mark knew him to be a generous man.
Thanks to their father, they were both multi-millionaires. Madoff paid his boys big salaries at the family firm, gave them platinum American Express cards, loaned them money for expensive homes, helped them through divorces, and provided millions of dollars to their charitable foundations.
We gave them everything, their mother Ruth would later lament when Bernie's crimes split parents and children in an ugly family feud rife with accusations and recriminations.
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"Why don't you investigate those two boys," said one person close to Ruth Madoff. "You'll never find anyone more self-serving."
"He was a crook and she was an enabler," said a person close to the sons, describing the boys' parents.
Andrew was crushed by his father's arrest and the aftermath. "Now, we're orphans," he told someone close to him.
The boys were raised amidst wealth and privilege in the New York suburb of Roslyn, on Long Island. Mark was the eldest, born in 1964. Andy was two years younger, born in 1966. There never seemed to be any question that they would join the family business.
"They started at the bottom," recalled Madoff's long-time secretary Eleanor Squillari. "It was nice to see two brothers who were so close." Each had a distinctive personality. "Mark was more vibrant and more noticeable. Andy's very reserved and polite. He keeps to himself. He observes before he gets to know you."
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Even before they finished college, Bernie had the boys come to the office. "When Mark first came in," Eleanor said, "before he started working full time, he used to sit out and answer the phones with me. He seemed to know so many of the people, because he grew up around these people."
According to federal prosecutors, their father's huge scam was secretly operating full steam by the time his sons joined the firm.
Mark received a Bachelor of Arts in Economics at the University of Michigan and joined the firm at age 22, in 1986. Andrew started working for his father in February, 1988 at the age of 22, after graduating the University of Pennsylvania's Wharton Business School with a Bachelor of Science in economics.
"He made them go to school, earn everything they got," said former office messenger "Little Rick," who remembers Mark and Andy at some of Bernie's wilder office parties. "Andy gave the persona of being uptight while Mark was more laid back, liked the topless bars and stuff like that."
They could both be spoiled brats as young men. Little Rick says they infuriated their mother when they "trashed" a motel room in Montauk during one of the summer beach parties held for Madoff employees.
On another occasion, Little Rick says he had to intervene when Mark's close friend Jeff Wilpon had a heated argument with "one of our girls" at a Madoff firm Christmas party at a restaurant under the Brooklyn Bridge. Wilpon is the son of one of Madoff's biggest investors, Fred Wilpon, the real estate developer and owner of the New York Mets baseball team.
"Those kids grew up together, Jeff Wilpon and the Madoffs," said Little Rick. He said the younger Wilpon had arranged for his girlfriend, Linda, to work at the Madoff firm and when she tried to break off their relationship, it turned ugly. Little Rick says that when the argument flared up inside the restaurant, he and another employee, "Big Rick," took Wilpon outside, "right by the edge of the river." The two Ricks, hired from the streets of Brooklyn and the Bronx, are not men to mess with. "And we told him, 'Listen, you're done. Don't ever do that again." A spokesman for Jeff Wilpon said Wilpon confirmed the relationship with Linda but did not recall the conversation with Big and Little Rick.
Mark and Andy's first assignment was the trading room of Madoff Securities. "I remember Mark said that he would prefer to answer the phones and his father was like, "No, it's time for you to go in there.' It was a lot of pressure," explained Eleanor.
His boys soon took over the day-to-day management of the busy trading operation, sitting at a desk on an elevated platform, their father's office directly behind them. "He was able to look out and see his sons in the front," said Eleanor.
Everywhere he looked, a proud Bernie Madoff could see family. Andy and Mark were at the trading desk. Ruth helped to keep the firm's books and balance the checking account from her office on the eighteenth floor. His younger brother, Peter, served as the chief compliance officer and was the executive who oversaw Andy and Mark on the trading floor. Peter's wife, Marion, was also on the company payroll at $163,500 a year, although the bankruptcy trustee said there was no evidence that she did any work. Peter's daughter and Bernie's niece, Shana, became the firm's compliance lawyer after graduating from Fordham Law School in 1995. Peter's son, Roger, worked there briefly until his death from leukemia in 2006. Another Madoff nephew, Charlie Weiner, the son of Bernie and Peter's sister, Sondra, had started on the trading floor in 1980.
"It was one big happy family," recalled a former employee. "They all seemed so clean cut and close." Inside the family, however, there were some who feared Madoff, including his niece. "Shana tried to do everything perfect because she was afraid Bernie would yell at her," said Eleanor. All of the Madoffs, however, respected his power over them and regarded Bernie like the king of a royal family, or, some would say, the capo of a Mafia family. When the kingpin was taken out, all the other pins around him would be in jeopardy of falling too.
As the boss' sons, Mark and Andy's rise to the top was not unexpected but former employees say they proved their mettle to their father on the fast-paced trading floor on the nineteenth floor. "Here's a guy who pushed his kids to learn everything about the stock market that they could," said Little Rick. "He was very big on them succeeding."
Andrew and Mark did not work on the seventh floor where the criminal scheme was being run but Madoff apparently told one of his biggest investors that his sons gave him trading advice for that part of the business. In testimony before the Securities and Exchange Commission in 2007, Jeff Tucker, the co-founder of Fairfield Greenwich, was asked if he knew any of the people besides Madoff and Frank DiPascali who were involved in making investment decisions.
"Going back some time," testified Tucker, "Bernie once or twice said, 'You know, I may consult with my kids who run the trading room because they get a good feel for where the market is.''
"So the two kids, was it Andrew Madoff was one of them and -- ?" asked the SEC lawyer.
"Andrew and Mark," replied Tucker.
Madoff's statement to Tucker was a lie on at least one level. He never made any trades for his investors, so there would be no reason he would consult his sons about which trades to make. Nevertheless, by invoking Andy and Mark's names Madoff was able to pull the wool over Tucker's eyes. At another point, Madoff also told Fairfield Greenwich that if he were to die suddenly, his sons or brother would take over. If nothing else, he used his sons to carry on the deceit, because planting the idea of them by his side picking stocks or ready to succeed him helped bolster his image.
The sons told the FBI they were completely unaware of their father's crimes until he confessed to them on December 10.
Others on Wall Street have said that if Mark and Andy did not know, they should have known. Given Madoff's sons day-to-day involvement in the market, many wondered how Andy and Mark could not have not have noticed their father's lack of trades and not have realized something was wrong. Madoff did not like titles, but his son Mark was considered the head of trades.
"That the sons didn't question the fact that there was no volume in the securities that they were making markets in, that he was supposedly trading," said Suzanne Murphy, a hedge-fund adviser, raised lots of questions. "Dad, hey, why aren't we doing these trades? They had to know something, something, funny was going on, because they weren't doing the trades."
According to the bankruptcy trustee, both Mark and Andy had accounts with their father. "So presumably they were getting statements," said Murphy. "And if they had looked at their statements, they would've said, 'Wait a second.'"
Madoff's cover story for the lack of trades in the New York office was that all of the trades were being handled through the European markets by the London office, Madoff Securities International, LTD. His employees in London have since told British and American investigators that, other than a small volume for Madoff's personal accounts, they never made any such trades. Both Mark and Andy had been directors of the London business since 1998, and in that role they had the ability, and some would say the fiduciary responsibility, to learn the truth.
Like many others, however, the two sons had plenty of reasons not to push their father on the way he did business. He always took care of them.
Madoff gave Mark a $5 million loan while he was married to his first wife, Susan, with whom he had two children, Daniel and Katherine. According to records filed in his divorce proceedings in 1999, Mark was then making $770,000 a year working for his father. His "periodic dividends" from his partial ownership of the London office were applied to pay the interest on the $5 million loan from his father.
In June, 2008, Mark again used his father's money, to buy a $6.5 million beach house on Nantucket, the exclusive island retreat off Cape Cod. The home is on the ocean in the Tom Nevers section, with five bedrooms, four baths, a hot tub, and separate guest quarters. The money came directly from the firm's account as a "loan" to Mark and his second wife, Stephanie, at 3.2 percent a year. An investigator for the bankruptcy trustee found no "records of any interest or principal" being repaid by Mark and "no apparent benefit" to the firm for offering the loan. In effect, money stolen by his father paid for Mark's summer beach house.
Although he was the younger brother, Andy was no less well rewarded for being Bernie's son. The foundation he set up with his now estranged wife, the Deborah and Andrew Madoff Foundation, had more than $4 million. Andy had survived a scare with lymphoma in 2003 and his parents "doted on their baby," according to someone close to Ruth.
Even as the markets neared collapse in September of 2008 and Madoff was beginning to see trouble on the horizon, he still had enough money to help Andrew buy a $4 million apartment in New York City, on East 74th Street overlooking the East River. He closed on the property on October 6, three weeks after the bankruptcy of Lehman Brothers, when his father was already in a desperate scramble to raise money from new and old victims and avoid the detection of his crimes. The $4 million came directly from the money investors entrusted to Madoff.
If nothing else, Mark and Andrew now face the almost certain loss of anything they own that was paid for by their father. Mark's home in Nantucket, and Andy's New York apartment were financed by Madoff at a time the government contends his criminal scheme was well underway. The sons also remain under scrutiny by the FBI, which does not accept Madoff's statements that he "acted alone." His decision to "confess" to his two sons and arrange for them to call the FBI was designed to divert any suspicion of Andrew and Mark. But for many, it seemed too obvious.
"What would you do if you were a father trying to protect his sons," asked Suzanne Murphy. "'I'm going to say you knew nothing about it, because I'm seventy years old, you're forty, you've got children. So I will take the fall for this.' It's probably the only menschy Jewish thing he's done."
Whatever the truth, Mark and Andrew have acted to cut off their parents from their lives in every way possible. The boys have refused to see their father in prison or to speak to their mother. All their communications are through lawyers. Bernie wrote to his grandchildren, but Mark would not allow his children from his first or second marriage to visit their grandfather in prison or their grandmother in her apartment. They have exchanged letters with their grandfather in prison, but they want to change their last name to avoid the shame associated with anything Madoff.
Ruth is livid with both of her sons. She found their behavior "unconscionable" and "outrageous."
She told someone close to her that she understood how her sons feel, but that their behavior toward her was "unforgivable." She ranted that they didn't understand what she was going through. They had their families and the outside world, she only had them. Mark and his wife, Stephanie, sent Ruth a birth announcement for the newest Madoff, Nicholas Henry, but there was no invitation for Grandma to visit. Ruth told others in the family that only Mark's ex-wife Susan seemed to have the decency to send her support.