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international financial system potentially could collapse. The week of October 5 the S&P 500 lost 20 percent of its value and the Dow Jones Industrial Average lost 18 percent. The deputy governor of the Bank of England called it “possibly the largest financial crisis of its kind in human history.” By November the markets had fallen almost 40 percent. While hundreds of other hedge funds had been forced to close or had stopped allowing redemptions, Madoff was still claiming to be profitable. Incredibly, there were numerous people who still believed in Bernie, and rushed to get out of money-losing investments and into the safer Madoff funds. Bernie told Fairfield he was open and would take whatever FGG could raise for him. Maybe he still had some hope that he could survive. Who knows?

But too many of Madoff’s investors were desperate for cash to protect their investments and meet their growing client redemptions, and attempted to withdraw their money—apparently these requests totaled more than $7 billion. There was no possible way Madoff could cover all these requests, but he wouldn’t give up. He started scrambling, desperately trying to raise cash. In late November Fairfield announced the creation of a new fund, Fairfield Emerald. But it was too late; it was over for him.

Finally, on December 10, 2008, he supposedly told his two sons that his investment business was a fraud, “Basically, a giant Ponzi scheme.” Early the following morning, December 11, 2008, two FBI agents knocked on his front door and asked him if there was an innocent explanation.

He shook his head. “There is no innocent explanation.” The two agents immediately placed him under arrest. The largest Ponzi scheme in history had finally collapsed.

Chapter 8

Closing the Biggest Barn Door in Wall Street History

The moment they put the handcuffs on Madoff, my life was changed forever. I just didn’t find out about it for several hours. That morning Frank and I had been to a partnership breakfast of an organization called World Boston. World Boston is part of the 60-year-old World Affairs Council that brought politicians and dignitaries from around the world to Boston to speak to local leaders of the business community. We were there to support Gaytri Kachroo, who was on its board. Among the other people there were bank chairs, investment officers, and fund managers. It was a terrific event; even the food was good. We couldn’t have known it, but we were sitting in a sea of Madoff victims.

I’d gotten home from that meeting just in time to take my twin boys for their karate lesson. It was while I was waiting for them at the dojo that my life changed. Madoff had admitted he was running a Ponzi scheme. Madoff had been arrested. Billions of dollars were gone. The whole financial industry was shaken. People were panicking.

After dealing with the initial shock, I didn’t really know how to react. I wanted to do a hundred things first, and my brain sorted through them rapidly, trying to put them into some kind of sensible order. But I was in new territory. I needed information. I needed to know what had happened, when, and how. I needed to have all the details. I called Dave Henry back. “It’s finally over,” he said, bringing me up to the minute. “There could be a bloodbath on Wall Street.” We tried to guess the ramifications, who was going down, but we had no real idea. I returned Andre Mehta’s call, but he was being overwhelmed by clients. Wall Street was in an uproar; everybody was trying to find out who and what was affected. People were desperate for information.

The energy generated by my excitement was surging through my body and I couldn’t stand still; as we spoke I kept walking in tight circles. I began thinking, One enemy down; but there still was one battle to fight. The one that might have gotten me killed was finished, but the Securities and Exchange Commission (SEC) was still potentially very dangerous to me. The papers I had in my possession would expose the incompetence of the SEC to the world. Unless it could prevent me from getting my documents published, the reputation of that agency was going down in flames, and careers were going to end that day. Those papers were sitting in folders in my house. I realized I had to get them out of the house right away, before anyone could get a court order to stop me. And I had to get them published. I’ll call Wilke, I thought. I’ll bet he’s gonna want ’em now.

Finding John Wilke was going to be a problem. I knew that on Thursdays he was at Johns Hopkins University receiving radiation or chemo, or both, to fight his aggressive cancer. Medical facilities did not permit cell phones to be used around that equipment. I called anyway, three different times, and left a brief and nervous message each time.

I knew I needed to get my kids home as quickly as possible and start getting organized. I began running through checklists in my head, trying to prioritize. Minutes later my boys finished their lesson and we walked outside into a driving rainstorm. After the mandatory check for bombs underneath my vehicle I loaded the twins into the car. Five minutes later I was up in my office, digging out papers, making piles. The phone hadn’t stopped ringing, but I didn’t want to answer it. When it rang again I checked the caller ID and recognized a New York area code and figured it was one of my Wall Street derivatives buddies calling with the Madoff news. But when I answered, a voice I didn’t recognize asked, “Are you the Madoff whistleblower?”

My first reaction to that call was anger. “Who is this?”

“This is Greg Zuckerman of the Wall Street Journal,” the caller said. “CNBC is reporting the existence of a Madoff whistleblower. Is that you?”

“You fucking damn well know it is,” I snapped. “You people have

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