Madoff and the Scamming of America (2009)

Ripped Off: Madoff and the Scamming of America is a documentary film that was shown on the History Channel in April 2009.

It is the story of Bernard Madoff (born 1938) and his financial crime, which is often referred to as a Ponzi scheme. The crime was perpetrated for decades without being discovered and it concerned a huge amount of money, almost 65 billion US dollars. It is considered the largest financial fraud in the history of the US.

Produced by the Films Media Group, the documentary explains how this crime took place. It also shows how the financial oversight - known as the SEC – failed to intervene and stop him. Madoff was only caught because of the general economic crisis of 2008, which forced him to confess to his sons, who then reported him to the FBI. He was arrested in December 2008.

Since this film was aired in April 2009, it cannot not tell us what happened to Madoff after his arrest. I can tell you what happened: he was found guilty in a court of law and in June 2009 he was sentenced to 150 years in prison.

While the focus is on Madoff, the film also has a historical perspective. It explains the origin of the term a Ponzi scheme. It is named after an Italian immigrant Carlo (later Charles) Ponzi (1882-1949), who used this scheme in the US in 1920.

Basically, you pay early investors with money from later investors. Another way to explain the process is to say that you “rob Peter to pay Paul.” As the scheme goes on, you need more money and more investors. It can be difficult to continue and impossible to find a happy ending for all involved.

Several witnesses were interviewed for the film. Here are some of the names:

** Stephen Greenspan, author of Annals of Gullibility (2008)

** Diana Henriques, reporter for the New York Times and author of Bernie Madoff: The Wizard of Lies (2011)

** John Steele Gordon, author of An Empire of Wealth (2004)

** Mitchell Zuckoff, author of Ponzi’s Scheme (2005, 2006)

** Richard Behar, investigative reporter at Forbes, Time magazine and Fortune

The witnesses are well-chosen, but one detail about the last witness is intriguing: Richard Behar is described as the author of an upcoming book about Madoff. Since the film was aired in 2009, more than five years ago, I would expect this book to be published by now, but so far there is no book about Madoff by Behar.

How long does it take to write a book? More than five years? According to information on the internet, he was commissioned by Random House to write a book about Madoff in December 2008. According to Behar’s page on the Forbes website, he is still working on it. He is certainly taking his time.

According to a post on Twitter (7 January 2015), the book will be published by Simon and Schuster. Perhaps they got tired of waiting for him at Random House, so he switched to Simon & Schuster. Who knows? Perhaps there will eventually be a book about Madoff written by Behar.

As stated above, the film explains how the financial oversight, the SEC, failed to intervene and stop Madoff. One financial expert discovered that there was something wrong with Madoff’s business long before he was arrested. This expert is Harry Markopolos, who tried several times to warn the SEC about Madoff, but they did not want to listen to him.

Markopolos is mentioned in the film. We see him testifying at a public hearing that was recorded on television, but he was not interviewed as a witness. Markopolos is the author of the book No One Would Listen (2010, 2011). The documentary film Chasing Madoff (2011) is based on his book.

Ripped Off: Madoff and the Scamming of America is an excellent documentary film. The crimes of Bernard Madoff are explained and placed in a historical context. If you are interested in the history of the modern world – in particular the world of banking and investment – then this film is something for you.

PS # 1. The Madoff Affair is a documentary film that was shown on US television (PBS) in May 2009. It is an episode of the long-running program Frontline (season 27 episode 10).

PS # 2. Madoff is a movie that was shown on US television (ABC) in February 2016. The leading role is played by Richard Dreyfuss. The Wizard of Lies is a movie that will be shown on US television (HBO) in 2017. In this version, the leading role is played by Robert De Niro.

PS # 3. Unraveled is a documentary film (from 2011) about Marc Dreier, a former Manhattan attorney, who was arrested in December 2008 for orchestrating a massive fraud scheme that netted over 700 million dollars from hedge funds. In July 2009 he was sentenced to twenty years in prison.

***

This is a poster for the ABC movie that was shown in February 2016:

Richard Dreyfuss plays Bernard Madoff

***

The Madoff Affair (2009)

The Madoff Affair is a documentary film that was shown on US television (PBS) in May 2009. It is an episode of the long-running program Frontline that focuses on the news (season 27, episode 10). Here is some basic information about it:

** Produced by Marcela Gaviria and Martin Smith

** Written by Marcela Gaviria and Martin Smith

** Run time: 54 minutes

PART ONE

This film is the story of Bernard Madoff (born 1938) and his financial crime, which is often referred to as a Ponzi scheme. The crime was perpetrated for decades without being discovered by the authorities and it concerned a huge amount of money, almost 65 billion US dollars. It is considered the largest financial fraud in the history of the US.

This documentary explains how this crime took place. It also shows how the financial oversight - the SEC – failed to intervene and stop him. Madoff was only caught because of the general economic crisis of 2008, which forced him to confess to his sons, who then reported him to the FBI. He was arrested in December 2008.

Since this film was aired in May 2009, it cannot not tell us what happened to Madoff after his arrest. I can tell you what happened to him. He was found guilty in a court of law and in June 2009 he was sentenced to 150 years in prison.

What is a Ponzi scheme and where does the name come from? It is named after an Italian immigrant Carlo (later Charles) Ponzi (1882-1949), who used this scheme in the US in 1920. How does it work? Basically, you pay early investors with money from later investors. Another way to explain the process is to say that you “rob Peter to pay Paul.” As the scheme goes on, you need more money and more investors. It is be difficult to continue and impossible to find a happy ending for all who are involved.

Several witnesses were interviewed for the film. The list of names is quite long, but it is included to show just how serious and comprehensive this investigation is. Some of them are former Madoff investors, who lost their money, while others are reporters who have followed and studied the case for a long time. Here are the names in the order of appearance:

** Sandra Manzke, CEO, Maxam Capital
** Bettie Greenfield, Madoff investor
** Lawrence Velvel, Madoff investor

** Diana Henriques, reporter at the New York Times, author of Bernie Madoff: The Wizard of Lies (2011)
** Katherine Burton, reporter at Bloomberg, author of Hedge Hunters (2010)
** Martin Smith, reporter for Frontline

** Michael Bienes, Avellino & Bienes
** Joan and Arnold Sinkin, Madoff investors
** Bob Norman, reporter at the Daily Pulp

** Harvey Pitt, chairman, SEC, 2001-2003
** Mitchell Zuckoff, author of Ponzi’s Scheme (2005, 2006)
** Ross Intelisano, Rich & Intelisano, LLP

** Sherry Cohen, Fairfield Greenwich Group, 1987-1998
** Joe Weisenthal, Clusterstock (a blog about the financial industry)
** Myret Zaki, reporter at Le temps, Geneva, Switzerland

** James Mackintosh, reporter at the Financial Times
** Rick Caputo, Madoff Securities, 1993-2005
** Nader Ibrahim, Madoff Securities, 2000-2003

** Frank Casey, Rampart Investments, 1998-2001
** Michael Ocrant, editor of MAR Hedge (a newsletter published 1994-2006)
** Stuart Singer, Boies, Schiller and Flexner, LLP

** Burt Ross, Madoff investor
** Lucinda Franks, reporter, the Daily Beast

PART TWO
As stated above, the film explains how the financial oversight - the SEC - failed to intervene and stop Madoff. One financial expert (Harry Markopolos) discovered that there was something seriously wrong with Madoff’s business long before he was arrested. He tried to warn the SEC several times, but they did not want to listen to him.

Markopolos is mentioned in the film. We see him testifying at a public hearing that was held in the beginning of 2009, after the arrest of Madoff, but he was not interviewed as a witness. Markopolos is the author of the book No One Would Listen (2010, 2011). The documentary film Chasing Madoff (2011) is based on his book.

There were other early warnings and two of them are mentioned in this film:

# 1. In May 2001, an article by Michael Ocrant was published in MAR Hedge, a bi-monthly newsletter about hedge funds, a very specialized publication that did not have a wide circulation. The title is “Madoff tops charts; skeptics ask how.”

# 2. In May 2001, an article was published in Barron’s, a weekly paper about the financial market of the US, which has a much wider circulation than the newsletter MAR Hedge. The title is “Don’t Ask, Don’t Tell: Bernie Madoff Attracts Skeptics in 2001.”

The latter article is mentioned and even shown on the screen, but for some reason the name of the author is never mentioned. The author is Erin E. Arvedlund, who has since then written a book about the case: Too Good to Be True: The Rise and Fall of Bernie Madoff (2010).

Both articles raise questions about Madoff and his business: how can he offer an almost constant return of one per cent per month on his investments? Whether the market goes up or down, Madoff offers his clients a stable return. Is this really possible? Is he for real or is there a more sinister explanation?

Both articles raised a red flag concerning Madoff, but there was no response. Neither from the news media nor from the SEC.

CONCLUSION

The Madoff Affair is an excellent documentary film. The crimes of Bernard Madoff are explained in a way that is easy to understand. The lack of activity on the part of the SEC is documented, but not explained, because it is difficult or impossible to explain.

If you are interested in the history of the modern world – in particular the world of banking and investment – then this film is something for you.

PS # 1. Ripped Off: Madoff and the Scamming of America is a documentary film that was shown on the History Channel in April 2009.

PS # 2. Madoff is a movie that was shown on US television (ABC) in February 2016. The leading role is played by Richard Dreyfuss. The Wizard of Lies is a movie that will be shown on US television (HBO) in 2017. In this version the leading role is played by Robert De Niro.

PS # 3. Unraveled is a documentary film (from 2011) about Marc Dreier, a former Manhattan attorney, who was arrested in December 2008 for orchestrating a massive fraud scheme that netted over 700 million dollars from hedge funds. In July 2009 he was sentenced to twenty years in prison.

*****

Bernard Madoff

(currently serving a sentence of 150 years in prison)

*****

Chasing Madoff (2011)

 

Chasing Madoff is a documentary film from 2011. Here is some basic information about it:

** Written, produced and directed by Canadian filmmaker Jeff Prosserman

** Based on the book No One Would Listen by Harry Markopolos (2010, 2011)

** Run time: 90 minutes

Bernard Madoff is a former money manager, who was arrested for fraud in December 2008. In June 2009 he was sentenced to 150 years in prison.

This film is not so much about Madoff and his economic crimes, it is more about a small group of persons – “the fox hounds” - who were convinced that Madoff was a crook and who tried in different ways to stop him. They contacted the SEC, but they would not listen to them. They contacted the mass media, but they would not listen to them, either. Their attempts to stop Madoff went on for almost a decade, from May 2000 until he was arrested in December 2008.

In the end, Madoff was not brought down by the fox hounds, nor the SEC or the media. He was brought down by the market, by the general economic crisis of 2008, which meant that he could not find the new clients nor the new money that he needed to sustain his operations. At that point he confessed to his sons who reported him to the FBI. He was arrested the following day.

An on-screen message at the beginning of the film says: “Unfortunately, a true story.”

Several witnesses were interviewed for the film. They can be divided into three categories: the fox hounds, former Madoff investors, and other witnesses.

THE FOX HOUNDS

** Harry Markopolos, former chief investment officer, Rampart Investment Management

** Frank Casey, former senior vice-president of marketing, Rampart Investment Management, Harry’s boss

** Neil Chelo, former portfolio manager, Rampart Investment Management, Harry’s assistant

** Michael Ocrant, reporter, former editor of MAR Hedge (a newsletter about hedge funds)

** Gaytri Kachroo, lawyer, head of corporate department, Donovan Hatem LLP, Harry’s lawyer

FORMER MADOFF INVESTORS

** Madoff account 46-225657

** Madoff account 48-245899

** Madoff account 24-45678

** Madoff account 56-259984

** Madoff account 85-238586

** Madoff account 4-245711

OTHER WITNESSES

** David Kotz, inspector general, SEC

** Sergeant Harry Bates, Whitman Police Department

** Louis and Georgia Markopolos, Harry’s parents

** James Ratley, president, Association of Certified Fraud Examiners

** Elaine Drosos, Venus Pizza

PART ONE

In 1999, Frank Casey heard about a money manager in New York, who offered his clients a stable return on their investments of ca. 1 per cent per month. He went to New York and found out that the name of the money manager with the magic touch was Bernard Madoff. He got the name from Rene-Thierry Magon de Villehuchet, who was an important person in the world of finance.

When Casey returned to Boston, he talked to Harry Markopolos about it. He said to him: look what Madoff is offering his clients. We should do the same. How does he do it? Markopolos studied the documents that Casey had showed him and after a while he concluded: it is a fraud, it is a Ponzi scheme. When Markopolos asked his assistant Neil Chelo to check the numbers, he came to the same conclusion. From that moment the trio decided that they had to do something to stop Madoff.

In May 2000, Markopolos sent a document with his conclusions to the SEC. There was no response. In early 2001, Casey met with Michael Ocrant. They talked about Madoff, and Ocrant decided to join the trio. By now the small group hunting Madoff was a quartet. Ocrant promised to publish an article about Madoff in his newsletter, which he did. The article was published on 1 May 2001. One week later, an article with similar suspicions was published in Barron’s, a weekly paper about the financial market. The second article was written by Erin Arvedlund (while her name is mentioned, she is not interviewed in the film).

The members of the quartet believed that these two articles would change everything. They were wrong. There was no response. The media did not pick up the story. The SEC did not start an investigation.

As time went by, Markopolos began to fear for his safety. He acquired a permit to have a firearm. He also felt he should hire a lawyer. When he met with Gaytri Kachroo, he asked her to be his lawyer. She agreed. Now the quartet hunting Madoff was a quintet.

In the film we follow the fox hounds – primarily Markopolos – in their efforts to stop Madoff. When Madoff was arrested in December 2008, it was soon revealed that Markopolos and his friends had been trying to alert the SEC for several years, and that no one had listened to them. Now Markopolos got his chance. He was invited to testify before a House Committee. He was also given an award by the Association of Certified Fraud Examiners.

As explained in the film, the story about Madoff included a sad PS: Rene-Thierry Magon de Villehuchet decided to take his own life. Casey had tried to warn him about Madoff, but he had insisted that Madoff was completely honest. Villehuchet had not only placed his own assets with Madoff. He had also advised many of his rich friends to do the same. Some of them had invested millions with Madoff. Feeling responsible for the tragic loss that these people had suffered, he decided that there was only one solution left for him.

PART TWO

Chasing Madoff got mixed reviews on Amazon, all the way from one star to five stars. I can understand why, because this film is a curious blend of something great and something terrible. There is a great story here. But it is told in a terrible way. There are many problems with this film, many things are strange and puzzling, many things do not make sense, many things do not add up.

First of all, Markopolos is full of himself. His behaviour is abrasive and arrogant. He claims he knew at once that Madoff was a fraud: “It took me five minutes to figure it out.” He is self-righteous. Again and again he has this attitude which says: “I told you so.”

Secondly, he is paranoid. He has this idea that Madoff is going to kill him or more precisely send a professional hitman to kill him in order to silence him. He gets a permit to carry a firearm. We see the policeman who helped him with this. When we see him practice shooting, he has a rifle. Why would you get a rifle to protect yourself? It is not exactly a handy weapon. Later we see him with a gun.

He also gets a bullet-proof vest, because he thinks he needs protection. We see the policeman who helped him with this. Before driving anywhere, he checks under the car to see if anybody has planted a bomb there. While driving, he checks the rear-view mirror to see if he is being followed by someone who wants to kill him. Obviously, these scenes are re-enacted after Madoff was arrested.

He is paranoid. He thinks somebody is out to get him, but it is not true. Moreover, his paranoia does not make any sense. Why did he decide to get married and to have three kids, if he thought he was a target of a professional killer? How clever is that?

When talking about his family, he says: “I was way too young when I got married. I was only 42.” This is a strange statement. Are you too young to get married when you are 42? Most people would think you are more than old enough.

When Casey asks Markopolos if he is sure Madoff is a fraud, Markopolos is offended: “How can you not believe me?” But later he tells us that he asked his assistant to check the numbers to make sure that he was right.

When Casey tells Ocrant about Madoff, Ocrant is shocked. Apparently, he had never heard about him before. But later Ocrant says: “I had known Madoff on and off, throughout the years.” This does not add up.

When former Madoff investors appear, they are only identified by their account number. This is probably in order to protect their identity. But the names are listed at the end of the film, during the credit roll. What is the point of this? At first the names are not given, but later they are given anyway. This is very strange. This does not make any sense.

PART THREE

When Markopolos says he fears for his life, his words are accompanied by a picture that shows some people carrying a coffin at a funeral. When he says he is afraid somebody is going to kill him, his words are accompanied by a picture which shows a mafia-style execution. This happens several times. But these pictures have nothing to do with him. As far as we can tell, nothing bad ever happened to him or his family. The pictures used in the film are dramatic but completely irrelevant.

At one point Markopolos wants to protect his documents from the SEC. He is afraid they will raid his house and seize his computer and all his documents. Why is he afraid of that? The SEC already has his documents. He himself sent them to the SEC several years before. Why is he afraid? His fear does not make any sense.

He drives to the nearest pizza restaurant, in a highly agitated state of mind, and says: I have to use your fax machine! I have to send some documents! We see the waitress in the pizza restaurant who helped him with this.

But why would anyone send a long document via a fax machine? It takes forever, because you have to send it one page at a time. Why not send the document as an attachment to an email? This method takes less than a minute. Once again, we have a scene which does not make any sense.

Towards the end of the film Markopolos tells us that he does not regard himself as a hero. He is simply a citizen who did the right thing. But in the same scene we see him with the twins and one of them says: “My dad is my hero.”

The thing is: Markopolos was right about Madoff, and he has the right to say so. But his attitude, his behaviour, his manners do not work in his favour. Strictly speaking, his attitude is irrelevant. The only thing that matters is this: was he right? And the answer is: yes, he was right.

However, when you are making a movie about Markopolos and his crusade against Madoff, you have to think about how the leading character comes across on the screen. You want him to seem convincing, to seem credible, you want the viewer to like and trust him, and this is rather difficult when Markopolos behaves like an arrogant know-it-all who has nothing but contempt for those who do not agree with him or do not understand him.

Why did Jeff Prosserman use the re-enacted scenes to show the paranoia, including the picture which shows the people carrying a coffin at a funeral and the picture which shows a mafia-style execution? These elements are counter-productive. They damage the film. Without these elements the film would have been better and shorter.

CONCLUSION

The story about the fox hounds – Markopolos and his friends who are trying to tell the truth about Madoff and his crimes while no one would listen – could have been a great documentary film. But the film that Prosserman made is far from great. It is marred by scenes, which do not make any sense, which are strange, which are puzzling and sometimes completely irrelevant.

I understand the negative reviews and I have to agree with them. There is a great story here, but it is told in a terrible way. What a shame! This film is fatally flawed. It cannot get more than two stars. If you wish to know about Madoff and the financial crisis of 2008 there are other sources which are much better.

PS # 1. For more information, see the following films:

** Ripped Off: Madoff and the Scamming of America. This film was shown on the History Channel in April 2009.

** The Madoff Affair. This film was shown on US television (PBS) in May 2009. It is an episode of the long-running program Frontline (season 27, episode10).

PS # 2. For more details about Madoff, see the following books:

** Bernie Madoff: The Wizard of Lies by Diana Henriques (2011)

** Too Good to Be True: The Rise and fall of Bernie Madoff by Erin Arvedlund (2010)

PS # 3. Madoff is a movie that was shown on US television (ABC) in February 2016. The leading role is played by Richard Dreyfuss. The Wizard of Lies is a movie that will be shown on US television (HBO) in 2017. In this version, the leading role is played by Robert De Niro.

*****

 

Bernard Madoff (born 1938)

Currently serving a sentence of 150 years in prison 

*****

Unraveled (2011)

 

Unraveled is a documentary film about Marc Dreier, a former Manhattan attorney, who was arrested in 2008 for orchestrating a massive fraud scheme that netted over 700 million dollars from hedge funds. This crime is often referred to as a Ponzi scheme. Here is some basic information about it:

** Produced by Marc H. Simon and Matthew Brian Baker

** Produced by Miranda Bailey and Steven Cantor

** Directed by Marc H. Simon

** Released on DVD in 2011

** Run time: 81 minutes

Marc Stuart Dreier (born 1950) was arrested in 2008. In 2009 he was sentenced to twenty years in prison. This film was shot during sixty days while Dreier was under house arrest in his own apartment, waiting for his sentence to be announced.

The prosecutor had asked for a sentence of 145 years, but the judge did not follow this suggestion. If Dreier lives long enough, he has the chance of meeting with his children when he is released from prison after serving for twenty year (or less, if the sentence is reduced for good behaviour).

PART ONE

In this film we see Dreier, who does most of the talking. He looks back at his life and his career. He pleaded guilty to the charges against him and in the film he repeats his confession. He did commit the crimes for which he was accused.

He “borrowed” money from some of his clients in order to finance his lavish life-style, which included a large apartment in New York, a large house on the beach in the Hamptons, an expensive boat, and an expensive car.

The lavish life-style was not only something that he wanted, it was also something that he needed in order to impress potential clients and to convince them that he was a successful attorney.

In order to pay back what he had “borrowed” from earlier clients, he would “borrow” from later clients. It was a never-ending circle. In order to continue, he needed more clients and more money.

When he was arrested, his life was turned upside down. It fell apart. While he was in house arrest, he had a chance to think about how and why this happened. Hence the title of the film: Unraveled.

Dreier has a son, who is seen in the film, but most of the conversation between father and son concerns something that they are watching on television. During the sixty days of house arrest, Dreier was not allowed access to the internet. He had a landline telephone and he could watch television. Armed guards were present at all times.

Dreier also has a daughter, but in 2009 she was still a minor and therefore she is not seen in the film. Dreier says he regrets hurting his family, but otherwise he does not want to talk about the members of his family.

In meetings with his attorney he discusses how long the prison sentence might be. They also discuss conditions in prison. Dreier hopes he will be placed in a minimum-security prison (which he was).

Another financial “wizard” Bernard Madoff is mentioned several times. Madoff, who was sentenced shortly before Dreier, was given 150 years in prison. Obviously, no person can serve this sentence in full. According to the judge, Dreier is not in the same category as Madoff, and this is why he decided to give him a shorter sentence.

PART TWO

Unraveled received some good reviews: on IMDb it has an average rating of 60 per cent. On Rotten Tomatoes it has a rating of 64 per cent. The official trailer includes three endorsements:

** Debbie Lynn Elias, Culver City Observer, says: “A #1 must-see film… You will be on the edge of your seat.”

** Stephen Farber, the Hollywood Reporter, says it is “one of the most incisive” documentaries about the financial crisis.

** Sarah LaBrie, LA Weekly, says it offers a “mesmerizing glimpse inside the mind of a white collar thief.”

I understand the positive reviews, but I cannot agree completely with them. For two reasons:

# 1. The film is one-sided, because we only hear Dreier’s side of the story. Even if he confessed, it is still one-sided. I think it would have been nice to hear from at least one of the victims in this case or perhaps from some independent observer of the financial scene.

# 2. Sometimes the film is a bit slow. Some scenes are worth-while, because something substantial is being discussed, but other scenes are not so interesting, because nothing much is happening or because the conversation is trivial. It seems the director just let his camera roll for hours and hours, and some of the trivial stuff ended up in the film as well.

Dreier is a symptom of serious problems in the financial sector in the US. His case reveals two negative elements. The first element is that this lawyer was ready to commit some serious crimes. The second element is that the financial oversight (the SEC) was so poor or non-existent that he was able to commit these crimes for several years without getting caught.

In the end he was not stopped because the financial authorities caught him, but because one of his numerous clients became suspicious of his activity. As we can see from this and other cases, the financial oversight was completely inadequate.

CONCLUSION
Unraveled is an interesting film, and I would like to give it a good rating, but I cannot forget the flaws mentioned above. I have to remove one star for each flaw. Therefore I think it deserves a rating of three stars.

PS # 1. For more information about the crisis in the financial sector, see the following items:

** The Madoff Affair. This film is an episode of the long-running program Frontline (season 27, episode 10, May 2009)

** Ripped Off: Madoff and the Scamming of America. This documentary film was shown on the History Channel in April 2009.

** Chasing Madoff (2011). This documentary film is written, produced and directed by Canadian filmmaker Jeff Prosserman. It is based on the book No One Would Listen by Harry Markopolos (2010, 2011)

PS # 2. Madoff is a movie that was shown on US television (ABC) in February 2016. The leading role is played by Richard Dreyfuss. The Wizard of Lies is a movie that will be shown on US television (HBO) in 2017. This time the leading role is played by Robert De Niro.

*****

 

Marc Dreier in his New York apartment

(this picture is a still from the movie)

*****