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in fact, had the SEC investigators done it they would have discovered that the trades didn’t exist and Madoff would not have been able to explain it. But this manager quietly left this hedge fund and opened his own fund with a unique strategy he had developed. He was immediately successful and, as part of Neil’s job recruiting managers for Benchmark Plus, Neil visited him in his new East Coast office. “I spoke to him for a few hours,” Neil told me. “His desk was covered with papers and I saw the logo from [his former employer] on his desk and I was trying to read them without being caught as he explained his strategy to me. I couldn’t do it, though.

“Finally I just asked him straight out, ‘You were at [the fund] for a long time. I just gotta ask you, what did you really think about Madoff?’”

“And?” I asked.

“He hesitated, like he was trying to find the right way of answering. I can’t really explain it, Harry, but you should have seen how uncomfortable he was with this question. His whole body sort of sat up and I could hear the strain in his voice. ‘Basically,’ he said, ‘I did my own thing while I was there. The Madoff thing was [he named another partner]; he took care of all that.’ I pressed him, and the closest he got to admitting anything was telling me that there was enough going on where he thought it was a good time to exit. He said, ‘I was running my own strategy anyway, so it seemed like the right thing to do.”’

Neil and I both believed very strongly that he knew. He was much too smart to believe in either the tooth fairy or Bernie Madoff. But his attitude was very typical of the attitude on Wall Street. Those people who knew something was wrong and had not invested with him went along with the unspoken industry code: If it’s not my business and it doesn’t affect my business, I’m not going to get involved. And those people who were invested with him and knew something was wrong kept silent because his returns were too good. Bernie Madoff could not possibly have gotten away with it for so long without the silence of so many people. Madoff wasn’t an aberration; he was a creation of the profit-at-all-costs culture of Wall Street. And maybe the scariest thing about Bernie Madoff?

He isn’t the only one. Like unvanquished monsters, there are more of them out there in the dark.

When we had discovered Madoff in 1999, Frank, Neil, and I had been working at Rampart. In the eight years since then, each of our lives had changed drastically. Neil had moved to Tacoma and had become the director of research—meaning he hired hedge fund managers—for Benchmark Plus; Frank had survived a catastrophe at sea and was living in New Jersey, working for a marketing firm dedicated to raising pension assets for hedge funds and funds of funds called Parkway Capital; I had started my own business, and Faith and I now had three little children. About the only thing that hadn’t changed was our pursuit of Madoff. Month and month, year after year, we continued compiling a growing mountain of damning evidence that nobody seemed to care about.

In 1999 Madoff had easily been the largest hedge fund in the world, and he had continued to grow bigger and bigger. It was no longer possible to estimate accurately how large he had become; we guessed $35 billion to $40 billion, but certainly it could have been substantially more. After he collapsed, investigators found evidence that he was taking money from well over 339 funds of funds in over 40 countries, and estimates of the total amounts investors thought they had invested with Madoff as of their November 2008 monthly statements were as high as $65 billion.

And no matter how many red flags we discovered, there were always more. Early in 2007, Neil was speaking to a third party marketer (someone who sells for various hedge funds), who started telling him about an incredible fund he had discovered. As soon as he said “phenomenal returns” and “split-strike conversion,” Neil knew who he was talking about.

“Are you talking about Bernie Madoff?” It was the Fairfield Greenwich Sentry Fund. Neil laughed. He liked this guy, and told him that he had heard—not that he had spent almost eight years investigating Madoff—that there was something wrong with Madoff, that he might be a fraud.

“I’ve heard that, too,” this man responded, “but there’s nothing to it.” Madoff had been around forever. He couldn’t be a fraud, the marketer explained to Neil. How could he have pulled off a fraud for 20 years? And besides, the SEC had investigated him and didn’t find any problems.

Neil had become a pretty good investigator. So rather than simply dismissing the concept, he asked if it was possible to see Madoff’s audits. At that point we didn’t realize how much Bernie needed every million dollars he could get his hands on, so this investment adviser was delighted to provide to Neil copies of Madoff’s audited financial statements from 2004 to 2006. As he wrote to Neil in two e-mails, “I have attached the last three audits for the Fairfield Sentry Fund, which is the domestic Madoff strategy....

“The year-end audits show only the snapshot of what the fund is holding on December 31 of that year.... Madoff is always in T-bills at year-end, so that is all you see.... He has closed out his trades and put the money into Treasuries for year-end, which is typical for him.

“I know it is odd. I am still working on getting the actual trade examples for you, and again, I am happy to put you in touch with someone at the Sentry Fund to walk you through how the trade works and the process.”

As soon as Neil got them he forwarded them to me. And after even a brief examination

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