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stupid (high net worth) clients. He’s got to be managing at least $30 billion.” And as long as he was able to raise more money each month than he had to pay out, he could keep going indefinitely; by offering such a high and steady return, presumably he had attracted many clients who were using their investment with him as a savings account. Bernie was their bank; they invested their money with him and left it there, and it grew 10 percent a year, every year, far more than they possibly could earn anywhere else. As long as they didn’t need it to pay the mortgage or pay for college tuition or buy a new Porsche, there was no reason to take it out.

That’s exactly what Bernie was banking on, too.

We never stopped speculating on what would happen when he went down, how substantially the industry would be damaged; but we never considered the impact on individual investors. Oddly enough, after years of investigation we didn’t know that Madoff had opened up direct accounts, that individuals were involved other than through feeder funds. For example, while Mike Ocrant told me that in the Jewish community Bernie was referred to respectfully as “the Jewish T-bill,” none of us had any idea how deeply he had penetrated into the synagogues of New York and Florida.

When we got the opportunity, we did try to warn people. In 2003, just after Neil had started working at Benchmark Plus, he attended the annual Bank of America hedge fund conference at the Ritz in San Francisco. It was an opportunity for funds of funds to find fund managers. Each hedge fund had precisely 10 minutes to make a pitch. At this conference Neil met a man who had inherited several hundred million dollars and was a hedge fund investor. With his inheritance as the foundation, this investor had opened his own hedge fund of funds. Neil had heard that about half of the money in it was his own, and he had been successful enough to win several important awards. Neil met him at subsequent conferences and gradually the two men had become friendly. Neil had heard rumors that somewhere between 40 percent and 80 percent of his personal assets were invested with Madoff.

At almost every conference Neil ended up talking investments with him—and sometimes talking Madoff. Neil can’t directly recall telling him that Madoff was a fraud. Rather, he tried to find ways to warn him without revealing that he’d been investigating Madoff for several years and without handing him a long list of red flags. “You know, something about Madoff doesn’t look right,” Neil would tell him. “It doesn’t smell right. Look at his strategy; it doesn’t make sense. Look at the open interest. I think maybe it’s a fraud.”

But like the many thousands of other investors, no one wanted to hear it. People who had invested in Madoff through Tremont believed it must be safe, because Tremont had done substantial due diligence.

Neil tried with him and many others he’d met in the hedge fund industry. I tried with Thierry. Mike Ocrant made it clear to people in the industry that Madoff wasn’t kosher. But just like the SEC and the media, nobody listened.

The reality that a lot of individual investors were going to be devastated when Madoff collapsed was brought home to us in the fall of 2008. Frank Casey had left Benchmark and had started repping a British money management firm that built customized portfolios for investors. He had been pitching this company to an executive who approves new products to be sold by a major insurance company. As Frank remembers, the man listened carefully for almost an hour, then told him thank you very much but it wasn’t a good fit for his brokers. It was too complicated for them, he said; they didn’t know how to sell customized products.

Frank packed his briefcase as he had done countless times before and got up to leave. The two men shook hands, and as Frank turned to leave the man asked suddenly, “Frank, what do you know about Bernie Madoff?”

Frank was stunned. That question had come out of nowhere. His first thought was that he had been set up. He turned around and said sharply, “Who are you and why are you asking?”

“You know who I am.”

“No, I don’t,” Frank snapped. “I know your name and I know your position in this firm, but who are you and why are you asking me about Madoff?”

The man explained calmly, “I don’t want to tell you why I’m asking yet, because it may affect your answer; but I’ve been sitting here for 40 minutes listening to you talking about hedge funds and mitigation of risk and customization of portfolios, and what I was thinking the whole time was that you’ve got gray hair, and you told me you’ve been around the industry in derivatives for 34 years; so I figured you had to know something about Madoff.”

Frank sat down. “Okay, you’re right. I know a lot about him. What do you want to know?”

“Everything.”

As Frank later explained to me, he felt somewhat reassured by the fact that this man wasn’t in the financial industry; he worked for an insurance company. And Frank was very curious; why Bernie? “Okay, you want to know about Bernie Madoff. I’ll tell you,” he decided. And for the next half hour he related in detail the whole story of our investigation. It was the first time he’d told the complete story from beginning to end, and after holding it inside for seven years it just seemed to flow out of him—although he was careful not to mention any of our names or where we worked. When he’d finished, he looked this man right in the eyes and said, “Now. You tell me: What’s this all about?”

“Two years ago I married into a very wealthy Jewish family,” the executive began. “My wife is the sole heir to her father’s

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