Bernie Madoff and the disorienting mix of motives that led to history’s largest Ponzi scheme

Everyone seems to agree that Bernie Madoff, who died this morning in prison, was evil. And he was. But he was evil in a strange way that doesn’t fit any conventional conception of the term. His disorienting mixture of occasional concern for others and deeply ingrained lying, of legitimately earned respectability and the coldest-hearted malevolence (which destroyed lives), helps explain how he perpetrated history’s largest Ponzi scheme.

He doesn’t appear to have wished his victims ill. He wasn’t out to hurt them. Just the opposite: He described himself as a “people pleaser” in correspondence from prison with Jim Campbell, who analyzes Madoff and his fraud in a new book, Madoff Talks. While there’s no reason to believe anything Madoff says, evidence supports that self-description.

Read Fortune‘s definitive 2009 cover story “How Bernie Did It.”

Starting out as an investment manager in 1962, he lost money on an IPO. His clients were 24 friends and family, and he couldn’t bear to tell them that he’d lost money. So he borrowed $30,000 from his father-in-law and made his investors whole. He had no legal obligation to do so, and the practice was unheard of on Wall Street. The episode foreshadowed events that would recur on a much, much larger scale.

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As Madoff’s investment advisory business grew, he obviously couldn’t borrow money to cover losses. At the same time, he felt unable to tell clients he’d had a losing year—ever. So he established a practice, again unheard of on Wall Street, of telling investors in January what their return for the year would be. As Campbell explains, “hitting the promised benchmarks by year end sometimes required outlandish returns for December if accounts were significantly below target.”

Since there was no way to hit the targets honestly, Madoff simply lied to clients and told them the targets had been hit. If clients wanted their money, he had to take it out of other clients’ accounts. Eventually—exactly when is in dispute—there were no actual client accounts, just one gigantic checking account at J.P. Morgan Chase and a secret operation to churn out fake trading records and fake account statements. The business had become entirely a Ponzi scheme.

Further evidence suggests—as hard to believe as it may be—that Madoff didn’t do it to get rich. Some of his early clients, notably investor Jeffry Picower, made far more than Madoff did. Picower sometimes bailed Madoff out (though Madoff believed he didn’t know the fund was a Ponzi scheme) and was handsomely rewarded for doing so. He died less than a year after the fraud was exposed; his widow and estate settled Madoff-related claims for $7.2 billion, reportedly the largest forfeiture in U.S. judicial history. It’s unclear exactly how much Madoff took out of the fund over his lifetime, but it was nowhere near that much.

Besides, Madoff had separately made himself a legitimate billionaire, at least on paper. Entirely apart from the Ponzi scheme, he built a market-making firm that at one point was worth an estimated $3 billion. He could have sold it, and he told Campbell that several major Wall Street firms offered to buy it, a claim that isn’t confirmed but is plausible. Yet he didn’t sell. He wrote to Campbell, “While my family thought I was crazy to not sell out and retire, they had zero knowledge of my fraud which would not allow anyone to inspect our books.”

The internal contrast was stark and bizarre—Madoff was driven to build a squeaky-clean multi-billion-dollar business and equally driven to commit a historic crime.

Is it true that Madoff’s family knew nothing about the scam? Some investigators believe they must have known, though no hard evidence connects them. Circumstantial evidence suggests he protected his sons, Andrew and Mark, from any relationship with the fraud. When they asked him to accept friends as investors, he often refused. Madoff attorney Ira Sorkin—whom Madoff released from attorney-client privilege—told Campbell the sons wanted their father to acknowledge their roles in the legitimate side of the business by changing the company name from Bernard L. Madoff Investment Securities to Madoff Securities, but “Bernie absolutely, unequivocally said no.”

Perhaps the strongest evidence that the sons didn’t know about the scam is that when their father confessed to them on the afternoon of December 10, 2008, they immediately reported him to federal authorities. He was taken into custody the next morning. The sons were never charged.

Again we see the strange conflict in Madoff’s motives. He protected his sons, yet he certainly didn’t do them any favors. Mark never spoke to him again and hanged himself on the second anniversary of his father’s arrest. Andrew blamed the stress of the scandal for the return of cancer that had been in remission since 2003; it killed him in 2014.

Which raises the large question of how Bernie Madoff thought this would all turn out. He apparently believed he could keep the Ponzi scheme going for as long as he lived, and if the largest financial crisis since the Great Depression hadn’t happened in 2008, he might have been right. Yet he had to know that even if he had avoided detection, all hell would have come raining down upon his investors, his employees, and his family as soon as he was gone.

The simplest explanation is monumental selfishness. If all had gone as planned, he would have kept everybody happy—his strongest motivation—for as long as he was around to accept their approbation; after that, nothing mattered.

Because the grand plan failed, he didn’t depart this earth in a blaze of glory. Instead, he spent 12 years in prison and died there. He got off easy.

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