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Every scandal begins with a lie. But the truth will come out. And then comes the fallout and the outrage.
Scandals have shaped America since its founding. From business and politics to sports and society, we look on aghast as corruption, deceit and ambition bring down heroes and celebrities, politicians and moguls. And when the dust finally settles, we’re left to wonder: how did this happen? Where did they trip up, and who is to blame? From the creators of American History Tellers, Business Wars and Tides of History comes American Scandal, where we take you deep into the heart of America’s dark side to look at what drives someone to break the rules and what happens when they’re caught. Hosted by Lindsay Graham.
Tue, 16 Feb 2021 10:00
Bernie Madoff is young and broke. And he's hungry for a big paycheck. So he sets out for Wall Street. But a market crash forces him to make a difficult decision, one that will haunt him for years.
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It's March 12, 2009 in downtown Manhattan, a crowd of people surrounds a federal courthouse with police officers standing by their hands on their radios. Journalists and members of the public gather behind a safety rail. A car pulls up in front of the courthouse and parks. Suddenly, the crowd begins to murmur, photographers raise their cameras, and when the door to the car opens, a man with silver hair and a dark suit steps out. It's burning made off, and by now he's used to the feeling of people gulking. It's not just that made off is one of the richest men in the world, or a legend on Wall Street. Made off has been making international headlines recently for other reasons. Many months ago he was arrested and charged with committing one of the largest acts of fraud in the history of finance. The newspapers have made him to look like a monster, and as made off walks up the stairs and into the courthouse, he knows that today the public is hungry. But he isn't going down without a fight. He believes that there is still a chance he could walk away a free man. Made off Ender's courtroom 24b and takes a moment to compose himself. He airs hot and stuffy, but made off tightens his tie, buttons his jacket. He knows he has to be poised and collected, no matter how scared he actually feels. Because soon he's going to make a statement that will change the course of his trial. Made off walks over to the defendants table and takes a seat. Soon a courtroom door opens and the judge enters in a flowing black road. The room falls silent as the judge makes his way up to the dais. The court will now hear from Maureen Ebel. Made off winces and glances right. He sees a 60 year old woman approaching the stand. She's wearing a cheap purple suit and looks worn down. This is bad news for Made off. He hoped that today he'd get the chance to just enter his plea and make himself look like a decent person, someone who shouldn't go to prison. But with this move, the judge has now allowed witnesses to give testimony before Made off speaks. The older woman takes a seat on the witness stand, and the judge looks down from his bench. Miss Ebel, you've asked to speak today before I hear the plea of Bernie Made off. May I ask why? Because I want everyone to know what kind of creature stand on trial today. And what Miss Ebel did he do to you? Ebel pauses and bites her lower lip. Last year, on December 11th, I got a call, who was 10.45 pm. It's my uncle. I figured calling that late, there must have been some kind of disaster or maybe a death in the family. So why did he call? He told me that Bernie Made off, this man sitting right here, has just been charged with fraud. I gave Bernie my entire life savings, and my uncle told me all the money was gone. Miss Ebel, how much money did you lose? Everything. All of it. I spent a lifetime working as a nurse. My late husband left me his savings, all together $7.3 million, and it was all gone. I had to sell everything. I even started picking up nickels on the sidewalk, all because of this man. Ebel points a finger at the defendant's table, and Made off takes a deep breath. This looks bad, but the trial isn't over, not yet. The judge bows his head and looks back at Ebel. What do you hope will come from this day, Miss Ebel? I pray that Bernie Made off will suffer nothing less than the full weight of the law. Miss Ebel, thank you for your testimony. As Ebel descends from the stand, she glares one last time it made off, but he knows he needs to give her a gentle nod, one that shows that he understands her pain. Because court is no different from the outside world. Appearance is everything. The judge then calls the next witness, and soon he calls the one after that. Made off listens patiently to an onslaught of anger and recrimination. Finally, the judge asks Made off to rise. He reminds Made off that he's been accused of a large number of crimes, including securities fraud, money laundering, perjury, and theft. The maximum sentence is 150 years. The judge then asks Made off how he wishes to plead. Made off holds his head up. He's always been good at persuading people to do what he wants. And right now, he needs to channel that skill to save himself from prison. Because he knows it's not too late. Made off has never been a loser, and that's not going to change now. American scandal is sponsored by the new ABC drama Alaska Daily. When an indigenous woman goes missing in Alaska, it sparks new questions about other missing and murdered indigenous women. And that's where the thrilling new ABC drama Alaska Daily begins, and where it's headed, will have you on the edge of your seat. Two time Academy Award winner Hillary Swank stars as Eileen, a veteran reporter, who joins a team of local journalists working to bring the truth to light. From Academy Award winning screenwriter Tom McCarthy, Alaska Daily premieres Thursday, October 6th on ABC, and streams next day on Hulu. If you're into true crime, the Generation Y podcast is essential listening. We started this podcast over 10 years ago to dissect some of the craziest and most notable murders, crimes, and conspiracy theories together, and we'd love for you to join us. Follow the Generation Y podcast on Amazon Music or wherever you listen to podcasts. From Wondry, I'm Lindsey Grant, and this is American Scandal. In 2008, Americans lived through one of the largest economic collapses in the nation's history. Workers were laid off, retirement accounts seemed to vanish overnight, and countless people lost their homes. This crisis would come to be known as the Great Recession, and as it unfolded, many began to glimpse two very different realities of America. There were those who struggled to stay afloat, and then there were those who were rich, and only getting richer. It was late that year when the public learned how one man had made a massive fortune. He was a financier named Bernie Madoff, and he was accused of leading an elaborate financial scam. Thousands of investors had lost their money, including charities, teachers, blue collar workers, and synagogues. Madoff was instantly reviled as one of the greatest con men in American history. Yet Madoff had also been alleged on Wall Street. He was even the former chairman of the Stock Exchange NASDAQ. And as details of his story trickled out, the nation was left to wonder, how, for decades, could Madoff have tricked investors in the federal government? And how was he able to conceal his secrets from even his own family? This is Episode 1, Sins of the Father. It's late July 1956, and nearly 53 years before Bernie Madoff will stand trial in a federal courthouse. Today, it's a hot summer afternoon in Queens, New York, in a small suburban neighborhood where the air is heavy and humid and filled with the sound of air conditioners. Everyone seems to be indoors, cooling off and watching TV. But Bernie Madoff isn't so lucky. With a loud clang, he bangs his wrench against his sprinkler head, but it won't budge. He wipes his forehead, digs his feet into the grass, and hits the sprinkler again. And still doesn't move. And so with one last try, he heaves all his weight into the wrench, and finally it turns slightly. Madoff collapses in relief as a bead of sweat trips into his eye. Bernie Madoff is working his summer job, installing a new sprinkler system for a neighbor. It isn't how he wanted to spend the summer after his senior year in high school. He wishes he could be out swimming and goofing around with his friends. But he had no choice. He had to make money. There was no other option, not after everything that happened with his father. Madoff leans forward and begins to tinker with the broken sprinkler. That's when he hears his name being called. He looks over and sees the lady of the house. She's an old friend of Madoff's mother, and she's standing at her front door, waving him over. Madoff gets up and wipes his pants, and he treaches over to the front door. The woman tells Madoff that she needs to go shopping, and so she's going to pay him now. She rummages through her purse, searching for money. Madoff waits on the porch, and peers inside the house. He sees one of his classmates sitting in the living room watching TV. Boy's laughing, drinking lemonade. He looks like he doesn't have a care in the world. Madoff wipes a sweat from his face. He looks down and notices a dirty smudge on his hands. He'd give anything to be inside and watching TV, doing almost anything other than the sweat and frustration he's been experiencing all day. But it doesn't matter how badly he wants it, relaxing in front of a TV is out of the question. For one, Madoff's family doesn't even own a TV, not anymore. They had to sell it, just like they had to sell everything else. Madoff's father made some bad business decisions, and he went bankrupt again. That's why Madoff has spent this whole summer installing sprinklers. It's the only way he can make money. Madoff looks up at the woman standing in the doorway. She finishes searching through her purse, and lays $4.50 in his hand. She nods and says it's not a mistake, she included an extra dollar. It's for Madoff and for his family. And she gives Madoff a smile that drips with pity and tells him everyone is worried. Madoff squeezes the money in his fist. His face burns with humiliation. More than anything he wants to hurl the money at this woman and tell her he doesn't want her charity, he doesn't need it. But he knows he can't do that because it's true. He and his family do need every dollar and scent they can get. So Madoff smiles and thanks the woman. He takes a last look at his classmate, who is still lounging in front of the TV. And then he heads back out onto the lawn and into the sun. Madoff kneels down on the grass and yanks at this sprinkler head. He then pauses and shuts his eyes. It's right then that he makes up his mind for good. Someday he's going to make money. Lots of it because he won't ever let himself feel this small again. A year later, Bernie made off sits in his family's living room waiting for dinner. His stomach crumbles and Madoff grits his teeth feeling annoyed and impatient. Bernie's father Ralph sits nearby on an old couch. Ralph taps his foot and keeps flipping the pages of a life magazine. He nearly tears the pages out as he flips the mangroly. The magazine is now several months old, but it's all they've had for entertainment. And Bernie knows his father is sending a clear message. He's angry and tired. But Bernie doesn't believe his father has any right to be angry. There's a reason they don't have a TV or anything else to read. There's a reason that dinner is late. And that reason is Bernie's father and his failures as a businessman. Ralph ran a manufacturing business and was involved in stock trading. And after some bad decisions, he had to file for bankruptcy. And that's why these days, Bernie's mother has to support the family. After his father's business went under, his mother took a job in a local blood bank. That means dinner has been coming later and later, as she puts in extra hours for a little more money. Bernie watches his father flip through the pages when suddenly he feels something inside him snap. Hey, pop. Enjoying your old magazine? Of course not. All we've got is garbage. Yeah, but it's our garbage. The garbage we know. I take that garbage over a new TV or new magazines or a new radio. Boy, you think you're funny? Well, maybe I'm not funny, but I am hungry. I'm tired of waiting. Well, I'm not the one in charge of dinner, so blame your mother. Well, I would if she weren't also the one paying the bills. Bernie watches as his father's cheeks grow flush. Ralph sits down the magazine and his nostrils begin to flare. You think I'm not good enough for this family, don't you? Now, all I'm saying is you could learn a lesson or two from Mike's dad. You're talking about art, Lieberbaum? Now, what do I have to learn from that, schmuck? Oh, about a million things. He bought stock and Polaroid and just yesterday, Polaroid went public on the New York Stock Exchange. Now he's a millionaire. Over night, I'd say that's a lesson you could learn. Bernie sees his father grow visibly tense. He knows that he's picked a fight and he probably just wounded his father's pride. It's no secret that Ralph had been hurting ever since his business went under. He seems angry whenever he's reminded that his wife is the breadwinner. But Bernie knows that sometimes people are like horses. They just need to kick to get them going. Still, his father's scowls and shakes his head. Yeah, well, I guess some guys have all the luck. There's nothing lucky about buying that stock. He made a choice. And he doesn't pretend like he's a victim. But that Ralph rises from the couch. He steps up to Bernie and holds his face inches away. Now you listen to me, kid. Some people get lucky, some don't. And mark my word, Lieberbaum's going to find out that luck runs in streaks. With that, Ralph made off turns and stomps away. Bernie exhales and sinks back into his chair. And he stares off into the kitchen. Dinner still won't be ready for a while. Not until his mother gets home from work. Bernie stomach grumbles audibly. But despite his hunger, he suddenly feels a small electric tingle of excitement. He realizes there's nothing special about art, Lieberbaum. If he made a million dollars, then Bernie can make that kind of money too. It's 1959. Bernie made off lies on his twin bed, reading an article in the Wall Street Journal. It's about how technology is revolutionizing finance. The industry is changing rapidly. And there are now millions of dollars up for grabs. Made off finishes the article and lets the paper drop to the floor. He gazes around his bedroom, feeling a wave of bitterness rising inside him. Two years ago, made off resolved to get rich to make something of himself. But somehow, he's still living in his parent's house. And he's still poor. His life does not look like it's supposed to. In part, that's because he let his mother Sylvia convince him to go to law school. She said being a lawyer was a safe way to make money and get some stability. At the time, he thought she was right. But now, sitting in his childhood bedroom, he can't believe he went along with the plan. He's now in his early 20s, engaged to get married, but still broke and still living at home while he finishes law school. He feels like high school all over again. Making things worse, he doesn't like law school. The law has no buzz, no speed, no risk or reward. Makes him feel like he's sitting still, going nowhere. Bernie rises and looks out the window. High above, he can make out the white trail of a soaring airplane. It's hurdling through the sky, going somewhere fast, and somewhere far away. Bernie swallows hard. He knows it's time to make a decision. It's time to start living the life he wants. So he turns and leaves the bedroom. Then he makes his way downstairs, where he finds his mother Sylvia wiping the counters. He stands in front of her, his heart racing, his palms sweaty. But he knows what he has to say. A moment later, his mother looks up, and Bernie makes the announcement. He's quitting law school. He's going into finance. That's his dream, and he needs to pursue it. Sylvia sits down a rag and stares at Bernie. He knows that he needs to start explaining himself. So he tells her about all the new things he's seeing in the world. Jets are soaring through the skies. There are computers that can run calculations thousands of times faster than a person. With technology, everything everywhere is on the cusp of revolution. With so much changing, there are now new ways to make a fortune. And that's what he's going to do. Sylvia doesn't speak. She just looks at Bernie with tired eyes. Bernie knows that she lived through the Great Depression. She watched her husband fail multiple times while trying to make a quick buck. He knows that that's the last thing she wants for him to take a risk with his future. Sylvia steps forward and says exactly that. But she also says she's worried about something else. No reputable firm would hire a Jewish kid from Queens. It made us live in a different world from all those titans of finance. So she asks, where does Bernie plan to work? Bernie looks down at the floor, gathering courage. Then he tells his mother that he's going to start his own shop. All the other firms are slow, steeped in old ways, and that's why he'll have the advantage. He'll use technology and he can guarantee he'll come out the winner. Sylvia picks up her rag and once again begins wiping down the counter. With a quiet voice, she tells Bernie that his father used to make the same kind of promises. Bernie feels himself grow cold. He's not like his father. All his father does is sit around, complain, blame others for his own failures. That's not how Bernie lives. He knows that life is a series of choices. You can choose to be successful, or you can choose to get left behind. Bernie made off has chosen to be a winner. So he turns, walks away from his mom, heads back to his bedroom and starts to plan everything he's going to pack. He can't live at home much longer, and he won't live like this anymore. Often the distance he can hear the rumble of another jet that's slicing through the air. And all at once he feels driven with a sense of purpose. Soon he's going to make something of himself. And soon he's not only going to make millions, he's going to revolutionize Wall Street. What if your family was the victim of a home invasion? Or you woke up in the morgue? Or you were seriously injured miles from help? What would you do? This is actually happening. Ask our listeners this very question. While we bring you captivating real life stories of trauma and perseverance. This is actually happening brings listeners extraordinary true stories from the people who lived them. You'll hear stories about conflict, turmoil, or threats that dramatically alter the course of someone's life. Each episode is an exploration of the human spirit and how survivors manage to overcome hardship and move on with their lives, even thriving afterward. The new season of this is actually happening is available ad free only with Wondry Plus. And if this new season isn't enough, you can listen to more than 120 exclusive episodes available only to Wondry Plus subscribers. Join Wondry Plus on Apple Podcasts or on the Wondry app. It's 1962. Inside a small office in downtown Manhattan, Bernie Madoff paces nervously. Any minute now, a meeting is set to begin. A meeting that could make or break his startup business for Nard L. Madoff investment securities. Madoff is just 24 years old and has put his hopes and dreams into this company on the way to the end of the year. Madoff investment securities. Madoff is just 24 years old and has put his hopes and dreams into this company along with all of his savings. Finally, he's working as an investor. He has the chance to make some real money. But right now, he's close to broke, which is why this meeting has to go perfectly. Madoff continues pacing through his office, but then stops to admire a big machine sitting on a desk. It's an IBM 1401 mainframe computer. The stacks of punch cards sit on the computer's panel. This machine is what cost Madoff and his brother Peter all of their money. They had faith that the new technology would give them an advantage on Wall Street, but now he's about to learn whether that faith was misguided. There's a knock on the door and Madoff opens it, standing before him as his brother Peter. He looks solemn and says their guest has arrived. Bernie Nards stealing one last glance at the computer. He only hopes this gamble will have been worth it. Then he turns his frown into an easy grin and steps into the hallway. Bernie passes through the office and smiles at his beautiful wife Ruth. She winks back. Just like Peter, she also works for the firm. It's a family business, but that's not what sets them apart. And that's not how Bernie's going to sell his services to the man who's now standing in front of him. Carl Shapiro is small in stature, but he's a major force in the world of business. Shapiro is a king in the garment industry, and he's the owner of a vast fortune. He's also connected to a network of wealthy investors. A mutual friend introduced him, and today Madoff is hoping to convince Shapiro to invest in the firm. If all goes well, maybe Shapiro will recommend the firm to some of his friends. The two men shake hands and then Bernie and Peter launch into their pitch. Bernie explains that their firm has a distinct advantage. Peter is an expert with technology. And with their mainframe computer, they can run trades 300 times faster than their closest competitors. Shapiro squints and asks why that matters. Bernie leans forward and smiles. He explains that by using their technology, they'll be able to get money into Shapiro's pockets before the other guys even have time to write up a deal. Trading faster means making more money. Shapiro sits still, his expression is inscrutable. Bernie has seen this look before though. And he knows what it means. This man thinks Bernie is either stupid or crazy. Either way, the answer will be a no. But then, without breaking eye contact, Shapiro nods and says, all right, he'll send Madoff $100,000 to start an account. And if he likes the results, he'll send more. Then Shapiro stands and walks out of the office. For a moment, Bernie Madoff is stunned. He turns to Peter with a look of disbelief. But then Peter jumps out of his chair and wraps Bernie in a hug. All it wants the truth hits him. They have money, real money, more than they could ever imagine. And now he's got a connection to an entire network of investors. Things are happening, and they're happening fast. But as his brother, Peter, and his wife Ruth break into celebration, Bernie has hit with another stark truth. Bernie has to deliver on his promises. 17 years later, Man walks up to the entrance of a large beach house in Montauk, New York. The sun beats down as pale skin and puma sneakers. Man takes out a marble red and lights it up. As he takes a deep drag, he breathes in the salty smell of the Atlantic and catches a hint of expensive designer perfume. The world smells different out here on the tip of Long Island. It's different from Queens, New York for sure. That's where this man, Frank DePascalie, Jr. has spent most of his life. DePascalie is 22 years old, and he still thinks of himself as a poor kid from a tough neighborhood. What he sees here at this beach house is the future he wants for himself. He drops a cigarette and grinds it out. Then he heads inside. As soon as he enters the house, he catches a glimpse of Bernie Madoff, standing on the deck with his friends. They're all in polos, wearing shiny Rolex watches. They look tan and powerful. DePascalie is certain that these are the kings of the world. This is at the first time he's seen Madoff. DePascalie works for Madoff's company, which after about two decades has grown into one of the most powerful investment firms in New York. The company is a living example of the American dream. Madoff started with nothing, and single handedly built himself an empire. DePascalie has felt lucky to be part of all the action, working alongside Peter Madoff, Bernie's brother. Still, even after four years at Madoff securities, no one at the company seems to know DePascalie. Some even mistake him for the janitor. That's why he came here today, to this beach party at Bernie Madoff's new house. DePascalie knows it's time to make a move and start climbing higher up the ladder. He'll do whatever it takes to start living like Madoff, like a king. DePascalie weaves his way through the house, past men and women and designer sunglasses. He knows he doesn't look like someone who belongs here, but DePascalie puffs up his chest and keeps walking. He won't let their judgment get in the way. DePascalie steps out into the yard where paving stones stretch from the pool to the deck. That's where Madoff is standing right now, talking with a group of men. As DePascalie stares at Madoff, he can sense a glow that hovers over this legendary investor. He has the reputation as New York's King Minus. Everything Madoff touches turns to gold. A minute later, Madoff looks up and catches DePascalie's eyes. He smiles and waves him over. DePascalie walks across the yard, listening to the sound of waves crashing on the shore. Soon he reaches the deck, and Madoff claps him on the shoulder. Madoff chuckles, says he noticed that DePascalie was doing a bit of staring. He asks whether DePascalie likes what he sees, the beachfront property, the bottles of champagne, the beautiful women. DePascalie races his eyebrows and tells Madoff it's an easy yes for all three. Madoff laughs and mentions that there was no hesitation in DePascalie's answer. DePascalie gazes out over the property, and says to Madoff that when you know what you want, you go for it, and you don't apologize or make excuses for yourself. Madoff pauses. DePascalie notices a slight smirk on his face, and for a moment he feels a rising sense of fear. Should he have been more respectful, more professional? He shouldn't have talked like some thug in the streets perhaps. But then Madoff claps him on the shoulder again, and tells DePascalie to follow him. Together, the two walk to the edge of the deck and stare out at the ocean. Madoff then tells DePascalie that he's heard about him. Madoff's brother Peter speaks highly of him. He says that DePascalie isn't just smart and good with tech. Peter says that DePascalie is a neighborhood guy, so one you can trust. Then Madoff turns to DePascalie and asks if he'd be interested in taking on more responsibility. And again, without hesitation, DePascalie says yes. He'll be tireless, and no matter the situation, he'll remain loyal to Madoff. It's a bond that won't be broken. Madoff takes a sip of champagne as he looks out over the ocean again. He tells DePascalie that it's all set then. He should report to Madoff on Monday, and not his brother. Then he turns and walks back to the party. DePascalie feels a warm glow filling his whole body. He knows that just now he received the golden touch from King Midas himself. From here on out, nothing can go wrong. It's eight years later on Monday, October 19th, 1987. Bernie made off stands with his eyes closed, trying to calm himself, trying to drown out the noise. He knows he needs to focus. For a moment, he goes to that quiet place. Just him and his thoughts and a voice that says he can get through this. That he's not going to lose, that it's not his time yet. Madoff opens his eyes. All at once the noise returns. Voices shouting, bodies rushing by in every direction. Stock traders grab their faces in agony and shout orders into their phones. Madoff watches the madness unfold inside the headquarters of Bernard L. Madoff investment securities. Despite the chaos, Madoff feels ready to take action. He's now 49 years old and knows how to manage a crisis. And this appears to be the mother of all crises. Madoff looks at a wall monitor where stock prices stream by at a relentless pace. Alongside all of those numbers, red arrows point down. Right now the market is in free fall. And it's not just a minor blip. The market hasn't plummeted this much and this quickly since 1929. Already people are calling the day black Monday. It's bad and Madoff isn't laboring under any illusions. The market could wipe out everything he's built over the last 25 years. And not just his wealth, but today could destroy his reputation too. Madoff has grown to be a legend on Wall Street and the media has called him a genius. But Madoff knows that could all disappear unless he acts fast. And that's what he plans to do. So Madoff races out of his office and heads downstairs to the 17th floor. Madoff enters the office and spots his loyal associate Frank Deepa Scali. Deepa Scali is dressed in a fine suit. He's come a long way from the rust streets of Queens and from his early days at the firm. Now he looks the part for rich successful trader. But even with the quick lands Madoff can see the terror and anxiety on Deepa Scali's face as he cradles a phone on his shoulder. Bernie, Bernie, people keep calling. They want to cash out. What do I do? Hang up the phone. But these are clients. Hang up on them Frank. They'll call back. Deepa Scali drops the phone and waits for Madoff to speak. Listen Frank, the market's in free fall. That means everyone isn't free fall. People are panicking. Yeah, no kidding they're panicking. Their money is evaporating. Okay. That's what they believe. But what if the money isn't disappearing? What are you talking about? It's disappearing. Look at these prices. It's a dumpster fire. Listen Frank and listen closely. Every person who calls, you tell them we're seeing a massive market correction. But you also say that I saw it coming. That's crucial that you tell them that I was prepared. Say that last week I moved all their money into treasury bills. Government bonds. 100% safe. Got it? Tell them that they haven't lost a dollar. Deepa Scali rubs his temples looking very worried. Madoff knows that he's just instructed Deepa Scali to lie. Bernie, our clients want their cash. So, what am I supposed to do? You pay them. Pay them with what money? We have money. There are other people who aren't cashing out. Wait, no, no. We can't, we can't mingle accounts. I can't, I can't steal from one to pay in another. Frank, we're not stealing. Don't say words like that. It's borrowing. It's temporary. And as soon as the market recorrects, we'll restock those accounts. And what if the market doesn't come back? Well then we're dead anyway, right? This at least gives us a chance. Madoff can see the look of anguish on Deepa Scali's face. This plan is clearly making him uncomfortable. So Madoff leans in. Frank, years ago you told me you'd be loyal. A bond between the two of us. You'd do what I needed you to do. Well, this is the day and now is the time. So pick up the phone and do what this firm needs you to do. Deepa Scali swallows hard. Then he picks up the phone and begins to recite the story. Bernie Madoff saw this coming. He protected all of his clients. The money is safe. Madoff feels his muscles relaxing. He feels good, in control. Because even as the rest of the world panics, Madoff knows he'll stay on top. He'll fix this little problem when the time is right. And in the meantime, he'll continue to rake in millions of dollars and remain the king of Wall Street. The end It's June 1992 and five years since the market crash known as Black Monday. Today, Bernie Madoff is at home in his luxury penthouse in Manhattan. He's drinking coffee, reading the financial news, as he prepares his investment strategy for the coming year. Black Monday may have devastated the market, but Madoff's firm has survived just fine. It's true Madoff hasn't fully replenished the accounts that he borrowed money from. But so far, all his clients have remained happy. And Madoff has remained on top of the financial world. He's now not only a legendary investor, he's the chairman of NASDAQ. Madoff flips another page for the newspaper when his phone rings in the other room. He stands and tries to cross marble floors up an elliptical staircase into his library and picks up the phone. Hello, this is Bernie. Bernie, it's Michael Piannis. Madoff scratches his chin. He and Piannis are business partners, and the man used to work alongside Madoff's father in law. But it's not like Piannis to call Madoff at home. Michael, what can I do for you? Bernie, this is serious, so I'll get right to it. I'm under investigation, it's the SEC, and it's looking bad. The feds? What are the how on you? Well, it's not just me, Bernie, it's both of us. Both of us? What do you mean both of us? You're an accountant. What does my investment firm have to do with your business? That's the thing, I'm an accountant. But how long has it been since we started investing with you? 30 years? Ah, yeah, about 30 years. Yeah, so you know where this is going. It's not our own money, it's our clients money. We've been taking their money and investing it with you, which we're not allowed to do because of the SEC rules. Damn it, I know what the SEC rules says. You're not licensed to your accountants, but you've been investing your clients money. That's right. And let me guess, now you want all your clients money back. Well, it's not that we want the money back, it's that we need it back. How much? I don't have the books in front of me. Made off waits for a response, but the line goes quiet. Michael, what's the total? Bernie, it's $441 million. And you need all of it. Plus any interest. And if I don't get you the money... Yeah, then the SEC isn't just going to come after me. Made off hunches forward and rubs a hand through his hair. He knows he has no choice. He has to come up with the money. If he doesn't, the SEC will start digging around, and they'll learn the truth. They'll see how he siphoned off money from his own clients accounts, and he'll go to prison. But he has a problem. He doesn't know how he's supposed to get that kind of money. Paying out $441 million could ruin him. Made off stands and begins to walk around his library. He knows that there's a silver lining here. There always is. Somehow, he'll figure it out. But in the meantime, he has to keep Biennes from making things any worse. So with a steady voice, he tells Biennes not to worry. He'll get him the money soon. Two weeks later, Frank Deepa Scally sits in front of a computer screen staring at rows and rows of green text. There are client names, investments, dollar figures, and a blinking cursor waiting for his command. Deepa Scally chews on the rim of a styrofoam cup. Cold coffee sloshes around at the bottom. Then he bangs the table and stands up. He can't do this. He can't follow the orders that Bernie made off just gave him. Made off told him to liquidate every one of their accounts, all of them, all the clients, and all their investments. Deepa Scally was then supposed to pool the cash without saying anything to the clients. Made off said this was their only option. They needed to come up with $441 million. And the wise they were done. For days prior, Deepa Scally had been trying to help make off come up with the money. The methods they thought about were unsavory, including skimming off the top of big dollar investors. But even then, they were still hundreds of millions of dollars short. So now it's come to this. In five minutes, when the stock exchange opens, Deepa Scally is supposed to initiate the cell orders. He rises and hurls his chewed up cup of coffee into the trash. Deepa Scally knows he can't do this. He may have come from some rough streets, and he may have done some illegal things in A7. But this is something else entirely. This is theft at the biggest scale. So Deepa Scally makes a decision. He picks up the phone. He needs to call the police and go on record before anything happens. He knows he'll get charged for the other crimes. But that's nothing compared to this. Then, right as Deepa Scally begins to dial, the door bursts open and made off enters the office. Made off wheeling in a three foot tall IBM computer, ranting that he's got a solution. It's going to fix all their problems. So Deepa Scally sits down the phone. He looks at made off waiting for an explanation. Made off walks over and sits down on the desk. Then he explains the new scheme. Made off says that he found a couple of people who agreed to invest $50 million in the next two weeks. Made off smiles and said that $50 million is, of course, less than $441. But it will help them cover their tracks. Deepa Scally frowns and asks, made off what he's talking about. Made off continues, explaining that they'll still liquidate all the investments from all their clients. But they can take the new $50 million and add it to the new bank account. With this pool of cash, they can then pay investors. Tell the clients that the money comes from their actual investments from dividends on stock. Money is money and the clients won't know the difference. Made off then gets up and walks over to the IBM computer. He gives it a pat and smiles. Then he tells Deepa Scally that it's this machine that's the key. Deepa Scally just needs to program the computer and get it to spit out fake reports. Those pages will look like real dividend reports from real companies. The clients will still get paid and they'll stay happy. And over time, made off and Deepa Scally will make things right. They'll dig themselves out from this hole. Deepa Scally stares and made off. He's dumbstruck. Made off wants to add another layer of deception and theft on top of his already insane scheme. If they do this, there's no coming back. Made off looks up at the clock, and Deepa Scally follows his eyes. It's 9.30 am. The exchange is now open. Made off approaches Deepa Scally with a coldness in his eyes. He says there are two options. They can run this Ponzi scheme which will buy them some time. Or the two of them can go to prison for everything they've already done. Deepa Scally feels lightheaded and dizzy. He wants to lie down to sleep and think this over, but Made off isn't waiting. He commands Deepa Scally to begin selling. He reminds him to sell everything. Then Made off walks out the door and shuts it behind him. Deepa Scally looks back at the computer screen. He stares at the rows of green text, the list of clients names and their investments. It doesn't feel real. Just numbers on a small screen. And it's then that Deepa Scally realizes that Made off is right. He's out of options. He's already a guilty man. There's nothing else he can do. So he begins typing a command on the keyboard. It appears in green letters on the screen. Sell. Then he goes down to a second line and types it again. And again, he continues line after line until his eyes begin to blur and it doesn't seem like he's doing anything wrong. When he finishes, Deepa Scally sits back in disbelief. He and Birdie Made off have just launched one of the biggest scams the world has ever seen. From Wondry, this is episode one of four of Bernie Made off from American scandal. On the next episode, Made off fights an investigation by the government. And a financial analyst begins digging into Made Off's record, raising alarms about a potential Ponzi scheme. If you'd like to learn more about Bernie Made off, we recommend the book The Wizard of Lies by Diana Enriquez. This episode contains reenactments and dramatized details. And while in most cases we can't know exactly what was said, all our dramatizations are based on historical research. American scandal has hosted, edited and executed to produce by Nee Lindsey Graham for airship, audio editing by Molly Bach, sound design by Derek Barons. This episode is written by Charles Olivier, edited by Dave Kane. Our senior producers Gabe Riven, executive producers are Stephanie Jenns, Jenny Lauer Beckman, and her non Lopez for Wondry. Wondry Wondry Wondry.