the madoff affair

So what do you think about Bernard Madoff and how he managed to get away with it for so long?

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June 17, 2009

Dear Sirs:

Frontline's "The Madoff Affair," broadcast on May 12, made several untrue assertions about companies in the Fairfield Greenwich Group, a group of affiliated New York financial services firms that, along with their clients, were victimized in the fraud.

Contrary to statements made on the program, Fairfield Greenwich conducted thorough due diligence of Bernard L. Madoff Investment Securities and its operations. From the time we made an initial "test" investment with Madoff in 1989 and launched the Fairfield Sentry fund in 1990, Fairfield Greenwich continually and regularly enhanced its diligence and risk monitoring capabilities to keep pace with evolving industry standards and growth of the Sentry funds. Throughout these years, Fairfield Greenwich performed extensive oversight through quantitative monitoring based on trade confirmations, monthly brokerage statements, price checking, and asset verification. Fairfield Greenwich's diligence and risk management practices were consistently in line with what it told investors about its funds.

The Frontline program contained several other errors, as well. For example:

1) Frontline inaccurately portrayed a December 2005 call between Madoff and Fairfield Greenwich personnel, in preparation for an interview with the SEC. Frontline failed to disclose that, prior to the call, Fairfield Greenwich had requested permission from the SEC to speak with Madoff, and that Fairfield Greenwich people discussed the Madoff call with the SEC afterward. Most important, records clearly show that Fairfield Greenwich personnel responded truthfully to all of the SEC's questions.

2) Frontline erroneously portrayed an on-site visit to Madoff's office by Fairfield Greenwich executive Jeffrey Tucker, implying that Mr. Tucker never received verification of Madoff's trading. In fact, Mr. Tucker was shown an electronic screen with Depository Trust Company records of Fairfield Greenwich client trades.

3) Frontline erroneously reported that Fairfield Greenwich's due diligence operation was located solely in Bermuda. In fact, our professionals actively monitored the investment with Madoff and conducted due diligence both in Bermuda and at the firm's New York headquarters.

4) Finally, Frontline erroneously implied that every feeder fund failed to disclose Madoff's name in marketing materials. In fact, Fairfield Greenwich's marketing materials did refer to Madoff by name.


Fairfield Greenwich

Greenwich, CT

FRONTLINE's editors respond:

To ensure the accuracy of the reporting in "The Madoff Affair" in regards to the Fairfield Greenwich Group, FRONTLINE producer Martin Smith had extensive conversations with attorneys for the company in advance of the broadcast and researched all of their concerns. FRONTLINE stands by its report.


Dear Frontline People,

Your piece titled the Madoff Affair was riveting.

I don't think even Stephen King could create a scenario this bizarre in every aspect.

This may be the best 55 minutes of covering a story that I have ever seen.

Thank you for your fine work.

Best regards,


Mike Ring
Allentown, PA


Who were Madoff's co-conspirators? I think there were two men one named something like DiPalia(?) and another man, besides his family members. What has happened or is happening to them?

I understand there was to be an auction of real estate and personal property belonging to Madoff, what has happened to that?

What is the whistle blower Marcupolis(sp) doing now. I hope he will takeover and restructure the SEC.

Maureen Halleran
Chicago, Illinois


Dear Frontline;Great program on The Bernie Madoff fraud. This fascinates me that he could get away with it for such a long time. Hollywood should make a movie showing all he gained and what he lost.I have read a couple of books and seen a dvd on Bernard Madoff but I find your program the best so far at putting it into perspective.Thank You

Donna Murray
Phoenix, Arizona


I love the reference to the "Black Box" and "proprietary" investment techniques which Madoff pointed to. As the program intimated, that is the very foundation of a Ponzi scheme (the inability or reluctance to explain earnings).

Charles Dawson
Ottawa, Canada


After watching an hour of finger-pointing and hand wringing by Madoff's flunkies and victims, I have much less sympathy about this whole incident. Madoff almost looks like a principled Robin Hood - except he takes money from the most greedy elements of society and throws it into a volcano.

My heart goes out to the victims at the bottom of the pyramid, as well as anyone who accumulated their initial capital through waged labor. Let me get out the world's smallest violin for the willfully ignorant aristocrats who perpetuated this fraud and now seek to blame the eunuch regulators who they themselves castrated.

John Oen
Minneapolis, Minnesota


Frontline: Great show as usual. When I watched the Madoff show I thought about another frontline episode called, "The Warning." When Allen Greenspan says he didn't want to prosecute fraud, because the market will take care of it. Mr. Greenspan was telling Wall Street we are turning our back. This is your chance to slaughter main street. Now when Madoff is found with the bloody sword in his hand many among us act surprised. How many more Madoffs are there? And is anyone seaching for another them? I think not. The game continues and you will get nothing more than pretense. Sadly it is just the way things are done.

Paul LaNoue
Metairie, Louisiana


How about an interesting poll for your viewers?

Let's say you had the opportunity to be among the wealthiest people in America for 40 years, live a lifestyle of excess and riches, BUT- you had to spend the last few years of your life in a normal prison- would you do it?

The shame of this crime is that it went on for so long, the Mr. Madoff has a lifetime of memories of being among the wealthy elite, and at his age will only have a few more years to get used to paying the penalty.

Dan Harbs
costa mesa, ca


This is a great episode, as I have come to expect from Frontline. It does need a follow-up, though. As noted by others, the "greedy naivete" of the investors, as well as those who handled the investors' funds. In short, everyone associated with Madoff was so chillingly willfully ignorant. Also, I'd like more on the government turning the blind eye. The reporter cited how understaffed, allegedly, the FTC was, but surely the culture of deregulation begun under Reagan was at least equally to blame? I know this might be spelled out in other episodes, but it belongs here, as well. Looking forward to the follow-up, in whatever form it takes.

Jennifer Sunseri
Eugene, OR


In all this I'm still struck most by the nearly universal outpouring of sympathy for "the victims" -- the individuals pocketing their 16, 17, 18 percent gains year after year, seemingly never inquiring, seemingly never wondering, how this could be accomplished. Stock market goes up, market goes down; it goes up big, it goes down big -- but I get my 18 percent. "The victims" -- like the feeders, they too just got fed very well and never asked how the impossible became possible, indeed guaranteed, for them. They, too, simply acquiesced in the crime.

Kenneth Hittel
New York, NY


The Madoff Affair episode is widely accepted as the best initial view of the Ponzi scheme orchestrated by Bernie Madoff. I completely agree. After watching the program, I listened to the additional interviews and comments online. The report by Frontline is outstanding and gives an excellent understanding of the biggest scam in the history of the United States.

I look forward to the next episode dealing with it, as there is enough material to fill a season of Frontline broadcasts. I have heard mentioned and also agree, that there is a strong possibility that Madoff had influence on the SEC's evaluation of his scam through cash payments, family, or both. Frontline will dig up information on much more; likely in a more timely manner than the government which may not have strong motive to attack one of its own agencies.

What isn't mentioned much and is an obvious key to the situation is greed. Greed made many who were very suspicious of Madoff silent. High returns (on paper literally) and exclusivity greased the skids of the entire scheme by keeping even "experts" quiet. Greed can be costly. An explanation I would love from Frontline is why Bernie Madoff has the same smirk in every picture of him seen since his arrest, including the image at the beginning of this program.

Karl Medina
Marion, MA



Excellent program.

The failure of the second SEC investigation remains a big mystery. The common excuse that the SEC was under-resourced is unsatisfactory because, among other reasons, the SEC did in fact launch a multi-year investigation of Madoff.

And the suggestion that the staff-level investigators were incompetent also rings hollow to me, first, because I'm skeptical of such a widespread allegation of incompetence and, second, because even a mediocre investigation would have revealed significant concerns.

That leaves the suggestion that the result was driven by "policy" pressures on SEC management (as described, for example, in last part of the Henriques interview). Perhaps this is the least incredible explanation of incredible events, but if so, I'd expect there to be internal docmuents identifying concerns and recommending formal action, as well as staffers disgruntled about failure of management to pursue recommendations. Is anyone aware of this kind of evidence?

David A.
Boise, ID


It was interesting watching the PBS coverage on the Madoff swindle. What would be more informative is to see a current follow-up that focuses on a few investors who lost their bankroll and the exact particulars on the workings of all of it.

What I truly found to be entertaining were the comments from all those "experts" in the "field" who claim they weren't truly aware of what Madoff was doing. To me that would be like Mickey Mantle catching a fly ball in the outfield and hearing a teammate yell. ' Throw it to third base," and Mantle saying, " Where's that?"

What a pack of frauds.

Rocky Bobbo
Franklin, Nj


This is another example of hypocrisy in America. Everyone "wants" the government out of their lives and then cry about it when they get hurt.

All enforcement agencies' budgets were severely cut and understaffed because the Americans wanted to have have it both ways. Supposedly the market had "an invisible hand" to take care of it. But you see what happens.

Another example is a recent special election in California. The budget balancing propositions were soundly defeated, yet nobody wants the state to cut funding to any of their "precious priorities." What a great hypocrisy we live in.

Robert C
Los Angeles , California


I have read several comments on this website of people who withdrew their money (or knew people that did) after years of investing with Madoff.

Those people should only be able to keep their original investments and not the money they fraudulently made. If those same people were still invested and were losing every thing, they would claim to be innocent victims.

It is funny that the people who complained to the SEC were people who were upset that they couldn't generate similar rates of return or weren't given the opportunity to market to their clients. Any one making money looked the other way as they collected their cash.

We need to change requirements for starting an investment firm since so many of these people don't know how to dissect investment formulas.

kat divine
washington, dc


posted may 12, 2009

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