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a distinction that I’m sure I made.”

The inspector general did confirm that at least part of Cheung’s reluctance to accept my offer to help may have come from the fact that she simply didn’t like me. Simona Suh told David Kotz that she didn’t know why Cheung disliked me. Asked why Meaghan Cheung refused to meet with me, she said, “I don’t know what her reasons were. I knew her general impression of him was she was skeptical of him, but I don’t know what her reasons for not meeting with him were.” Later she added, “I remember hearing that she thought he was kind of condescending to the SEC.”

Certainly one reason that office paid so little attention to my submission is that they believed my motive for pursuing Madoff was to collect a big reward. Bachenheimer described me to SEC Inspector General David Kotz as “a competitor of Madoff’s who had been criticized for not being able to meet Madoff’s returns, and that he was looking for a bounty”—information she probably got from my previous public testimony. She added, “If the first thing I hear from someone is what’s in it for me, then it raises my antenna a little bit.”

As it should—although she didn’t bother to add that I wrote in the submission that I believed Madoff was running a Ponzi scheme, and therefore I would not be able to collect any reward. But probably because these people weren’t smart enough to understand my message, they decided the problem had to be with the messenger. The fourth member of the SEC’s investigation unit was Peter Lamoure, who agreed with Cheung. “In short,” he wrote in an e-mail, “these are basically the same allegations we have heard before. The author’s motives are to make money by uncovering the alleged fraud. I think he is on a fishing expedition and doesn’t have the detailed understanding of Madoff’s operations that we do, which refutes most of his allegations.”

Simona Suh also admitted later that the staff had been skeptical of my claims because Madoff “didn’t fit the profile of a Ponzi schemer, at least as we—in the world that we knew then.” The prime requisite for someone to successfully run a Ponzi scheme is to not look like they are running a Ponzi scheme. I can’t even imagine what a profile of a Ponzi schemer would look like.

The real problem was that too many of the SEC’s investigators were lawyers, so they were expecting me to provide legal proof, which basically is the lowest standard beyond which you go to jail. Certainly a math proof is a much higher level of proof than a legal proof. In a legal case, two juries hearing precisely the same evidence can easily reach two different verdicts; but with a math problem there is only one correct answer. Two people or two hundred thousand people can do that math problem, and there still is only one correct answer. It’s an absolute answer, and even the greatest lawyers who have ever lived couldn’t change it; it isn’t trying to determine if the glove fits or find the legal definition of is. There is only one answer to an equation. For example, a man claims he is trading $30 billion in options and there is only $1 billion of these options in existence. There is an answer for that: It’s impossible. The math doesn’t work. This one red flag should have been sufficient evidence for the SEC to launch a full investigation of Madoff. But there were so many others. A split-strike strategy by definition couldn’t produce the returns Madoff was delivering. His basket of stocks had to have a reasonable mathematical correlation to the exchange on which the stocks were traded, and they did not. It shouldn’t have mattered whether the SEC liked me. Meaghan Cheung and her team just weren’t smart enough to understand that.

I never learned very much about the actual investigation, except for the fact that according to the FBI, Madoff operated his hedge fund on the 17th floor and his broker-dealer on the 18th and 19th floors of the same building, and the SEC team went to the wrong floors. As the agent told me, “They were conducting an investigation for two years and never even figured out there was a seventeenth floor; that’s how dumb they were. You really shouldn’t give them any more of your cases. Your quality of work is way beyond the SEC’s capabilities. From now on when you have a case, just give us a call.” After reading my entire submission the SEC officially opened a Matter Under Inquiry (MUI) of Madoff’s broker-dealer business to determine if he was in violation of government regulations by operating as an investment advisory service, a hedge fund.

Apparently Cheung’s team informed Madoff that the SEC had opened this investigation and intended to question him as well as some of the fund managers whose assets he was handling. It turned out that Bernie thought even less about the capabilities of the SEC than I did. During a December 2005 telephone conversation with Amit Vijayvergiya, the chief risk officer of the Fairfield Greenwich Group, and General Counsel Mark McKeefrey, Madoff warned, “Obviously, first of all, this call never took place.” Then he urged Vijayvergiya not to show any anxiety: “You don’t want them to think you’re concerned about anything. You’re best off, [if] ] you just be casual.”

According to transcripts, Madoff told Vijayvergiya that this was simply a “fishing expedition,” and the best way to handle the SEC’s questions was to avoid them. “You don’t have to be exact on this stuff because . . . no one pays attention to these types of things.” Later in the conversation he gave them some advice about how to handle the investigators: “These guys ask a zillion different questions and we look at them sometimes and we laugh and we say, ‘Are you guys writing a book?’ ”

Madoff told him how to answer the questions he

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