All language subtitles for Chasing.Madoff.2010.720p.BluRay.x264-BiQ

Wall Street
is one big turf war.

The basic concept
of Wall Street,

which sometimes the regulators
lose sight of,

is, it's a for-profit
enterprise.

By benefiting one person,

you're disadvantaging
another person.

[indistinct conversation]

I had no inkling that

anything was gonna
change my life that day.

Okay, guys, let's get ready
to go to karate.

Come on.
Get your stuff.

Let's go.

Wall Street veteran
Bernie Madoff

has been arrested
and charged with running

a $50-billion
Ponzi scheme.

This is one of the biggest
fraud cases ever.

His name is Bernard Madoff.

He is under arrest,
charged with running...

The SEC accusing
Bernard Madoff

and his investment firm...

You don't get to steal
that much money overnight.

I don't know
if you can answer this-

But he had 17 billion
under management.

How do we get up to that?

And his investment firm...

The SEC doesn't pay attention
to it.

Assumed the right things
were invested...

We lost everything.

We lost everything.

We are major crime victims.

Bernie Madoff stole
every dime we gave to him.

$1.3 million.
That's all gone.

The retirement is never.

I guess his addiction
was money.

The only sorrow he feels

is that he got caught,
and he's behind bars.

The government let us down.

They were supposed to watch him,
and they didn't.

What is the purpose
of the SEC

other than
to investigate fraud?

Where were they?

Shortly after
Bernard Madoff confessed,

I got a call from
the former chairman of the SEC

asking me to investigate
how come the SEC

did not uncover
Madoff's Ponzi scheme.

What the heck went on?

We did not bring
an enforcement action.

We're using the Madoff scandal
as a platform

to set the basis
for regulatory reform.

Nothing about this case
was ever believable.

It was always
the twilight zone.

And that's how you knew
it was the Madoff case,

'cause every time
you saw something,

it never made sense.

Joined Rampart August 1991.

Started out
as a portfolio manager

and worked for
the chief investment officer.

Harry's a loveable,
affable geek.

He's extremely bright,

magnitudes brighter than me.

And he can
make the numbers dance.

I mean, he looks at numbers,
and they sing a song to him.

Frank Casey was the horse

that did the work
on the money.

He was the moneyman.

My first impression
of Harry was, I would say,

maybe the crazy professor.

Neil was my backstop.

He would look at all the math,
all the formulas,

prove all the math,
all the formulas.

Check all the spreadsheets.

I was trying at the time

to build a new product
for Rampart,

and when Harry
mentioned to me

that he knew a fellow
down in New York

that had hired a manager,
a single manager,

instead of a group
of 30 or 35 of them,

who was putting out
a return stream

similar to what
I was trying to do,

this I had to go see.

That's when I went down
to New York

to meet the investor
that had hired this manager:

Thierry de la Villehuchet.

He said, "Well, I can't tell you
anything about him."

And that perked my ears up.

I had been around Wall Street
since 1974,

and very seldom do you ever hear
of a manager

that no one can talk about.

So I begged him

for the opportunity to compete
with this fellow.

He showed me
the return stream,

and I brought them
back to Harry in Boston.

Late '99, Frank comes back
from New York,

and he hands me
a marketing document.

Read the strategy description.

Looked at
the performance line.

It was straight up,
45-degree angle.

It looked like nothing from
finance that I've ever seen,

'cause the markets go up,
then they go down.

Harry looked at it for no more
than four or five minutes.

He turned to me.

He says, "Frank,
you know options.

You know this is a fraud."

[indistinct
police radio transmission]

And he said,
"Are you sure?

"Is your math good enough
to figure this out?

Can you reverse engineer it?"

And so I felt, you know,
a little bit offended,

and my pride was wounded.

"What do you mean,
something wrong with my math?

"These numbers don't exist.

"Don't you understand?

"You don't get straight lines
in finance.

It never happens."

I said, "Oh, but, Harry,
I need to believe.

Come on.
We got to compete."

So he began building
mathematical models

to show what the probability
would look like,

what the returns
would look like

if this guy was actually doing
what he said he was doing.

And after four hours,
I knew this was explosive.

This is gonna
rock the world.

Everybody's gonna
sit up and take notice.

I remember Harry looking
at the numbers and saying,

"Frank, if this guy was
a professional baseball player,

he would be hitting a .964."

It was pretty clear
that it was a fraud.

It took me five minutes
to figure it out.

Thierry de la Villehuchet
was a sailor,

and I'm a sailor.

We built a bit of a rapport
that first day.

I said to Thierry,
"How much is this guy running?"

He says, "Oh, I don't know.

I'd say $2 billion
or $3 billion."

So that made him
automatically

the largest manager
on Wall Street at the time,

and no one knew
that he was doing it.

He then mentioned
that his money manager

was Bernie Madoff.

I said, "Okay,
this is a massive fraud.

"It's the biggest fraud ever.

I better have somebody
recheck my math."

And so I gave my math
to Neil Chelo,

who was my assistant
portfolio manager at the time.

My initial thought was,
"Too good to be true,

but maybe I'm missing
something."

I needed to dig in.

So he checked,
and he ran through all the math.

Now, this wasn't gray area.

This was black-and-white.

This was fraud.

When I first saw
this portfolio-

seven times bigger

than the number of options
in existence.

So if you only have
this many options in existence

and you're
seven times larger,

that's a problem.

Harry said,
"Frank, you're an options guy.

"You know that
this can't be true.

It's got to be a fraud."

And then he says,
"I probably-

I figure it's even a Ponzi."

And I said, "Whoa.

That's a big word."

You're basically
robbing Peter to pay Paul.

It was called
a Peter-and-Paul scheme

before Ponzi came about
in Boston

in the late '20s,
early '30s.

What I do is,
I bring the money in,

and I'm always paying
everybody else-

the earlier investors-

with the money
that I'm bringing in.

You need an ever-increasing
flow of new victims

to pay off
the old victims.

You can build
that Ponzi scheme up

until it becomes so big
that its own weight crashes it,

because you cannot raise money
fast enough

to pay back all the people
you owe a return to.

I went to some
very sophisticated,

successful friends of mine

who are established
on Wall Street,

and they both suggested
different ways

in which to invest my money,

one of which was to invest
in the Ascot Fund,

which turns out,
unbeknownst to me at the time,

to be a 100% feeder fund
for Bernie Madoff.

And once the money
was put in,

you got these wonderful
monthly reports.

Every month, you were richer
than the month before.

What could be bad?

And life went on.

And we didn't take money out,
and it just grew.

And now, you got to remember
that this guy, Madoff,

he became
the chairman of NASDAQ.

I mean, this was a very
powerful, prominent man

who ran a major
trading company.

You didn't make
accusations lightly

against an individual
like that.

The fact that the market

goes down 300 points
or up 300 points,

take my word,
but for the most part,

you can ignore
all of that stuff,

if you're investing for
your retirement or whatever,

you don't have to get involved
in all these insane moves

that occur in the marketplace.

It's unfortunate for me

that I have to deal with this
every day.

And then Harry took it

to the Boston Securities
and Exchange Commission

in May of 2000.

The mission of the SEC
is to protect investors;

maintain fair, orderly,
and efficient markets;

and to facilitate
capital formation.

In the wake
of the Great Depression,

Ferdinand Pecora examined
high-profile witnesses

and uncovered many abusive
practices by the banks.

This led to the formation

of the Securities
and Exchange Commission,

the government body
that exists today

to regulate
U.S. financial markets

and to protect your savings.

I called Ed Manion
over at the SEC's Boston office.

And he said to them,

"I've got a fraud here
that you need to investigate."

You know,
our hope was that the SEC

was gonna quickly do something
about it.

I wasn't surprised
that Harry decided to push.

He never asked for counsel
before he went to the SEC.

He just did it.

He was calling

one of the most successful
people on Wall Street

a fraud in a Ponzi scheme,

and had that knowledge
become known,

he could have ruined entirely
someone's investment career.

Days passed.
Weeks passed.

Months passed.

And we never saw
anything happen.

Madoff just continued
to report good numbers.

What happened here?

We literally receive hundreds
of thousands of complaints

every year,
hundreds of thousands.

We were surprised,
I guess,

at the extent of the lack
of appropriate investigation.

You know, when we first
went into it,

we thought perhaps that
they had done certain things,

but Madoff
was able to fool them

and would always provide
false documents to them,

and there was almost nothing
they could do to uncover it.

But what we found was,

there were steps
they could have taken.

They simply didn't take them.

Our economy is in crisis.

We thought the enemy
was Mr. Madoff.

I think it's you.

You were the shield.

You were the protector.

How are we supposed
to stop Madoff?

He had many billions of dollars
to protect.

If he had found out about us,
that could have been dangerous.

And here's the reason

we were worried about risk
for Harry.

There was this fellow

that had blown the whistle

on a big mutual fund fraud
up in Boston,

and they found
that poor fellow beat

and left for dead
in a parking lot.

I think there was
a legitimate threat there.

I mean, Madoff
was a very powerful man.

And so Harry was fearful
for his life.

And he began finding ways
to protect himself.

Harry Markopolos and I
have known each other

since shortly after
Harry moved into town

and came into my office
due to the fact

of wanting to be issued
a firearms permit.

We talked about,

"Do you think
at any point in time,

"you might want
to kick it up a notch

and have it
for self-protection?"

You hate to think
about those things,

but you better
think about them.

I was asking
a lot of questions.

I was making
a lot of phone calls.

I figured, anybody
who was stealing that large

would go to extreme measures
to protect the scheme,

protect the organization.

And I was worried about getting
taken off the playing field.

You have to be
a real evil person to do this,

and no telling
where they're gonna stop,

where the line is
that they won't cross.

So you just have to assume
there is no line,

and you have to take extreme
measures to protect yourself.

So I was very frightened,

terrified.

He was a very good child

until he became three,

and then he got into
a lot of little mischief.

Questioned the teachers,
in fact.

He said that they didn't have
the correct question

to his answers.

Well, my school
was a very small, Catholic,

all-male preparatory school.

These are our trophies
from athletics.

You can see that we won
many district championships

and many, many state titles.

I mean, this school
has never been afraid

of playing much bigger schools
in sports.

We were never afraid
of backing down academically.

Whether it was our debate team
or our football team,

we would take on all comers.

Basically,
what they told us was,

you have to stand
for something,

and you have to be able to fight
for what you stand for.

I've fought many a time
and not won.

You know, most people
were bigger than me,

so you just get used to it.

I don't mind losing.

You just have to show up.

The management of Rampart
and even myself

were praying
that we could come up

with something to compete.

So Neil and I are talking
back and forth,

and we're complaining,
both of us,

about the pressure we're getting
from marketing.

And it's hard
to compete with someone

if you're competing
with a fraud.

We tried to develop
at Rampart

other products
that we might be able to get

Thierry de la Villehuchet
to market for us.

Thierry was a French nobleman
and a noble man.

He formed a company called
Access International Advisors.

And the word "access"
was the key.

He was getting you access,
if you were a foreign investor,

to some of the best
money managers

in the United States.

And I wanted access
to his people at Access.

Thierry showed me
pieces of paper,

and he said, "These are
the trade confirmations

I get from Bernie Madoff
every day."

And he was giving the papers
to clerks.

I said, "What are you
doing this for?"

And Thierry said,
"Well, I'm trying to make sure

"that these daily confirmations
that I get actually match up

with my monthly statements
that Bernie mails me."

All Bernie was doing

was coming up
with fake trade tickets

that reportedly show
that he was generating

those types of returns
that everyone wanted.

I said, "He makes up
these pieces of paper."

And then that's
when Thierry said,

"Frank, you just don't
understand.

We have done everything
to check this guy out."

You could have shut Madoff
down in one half hour

by just following up
on one of his allegations

that they were not
conducting trades.

As to the specifics
of the investigation,

I can't answer.

The most basic step
that one takes

in order to figure out
whether somebody is trading is,

you have these independent
third parties.

So when you conduct
a trade,

you have to clear it
through some third party.

So they asked Madoff
whether he clears through DTC.

He said, "Yes."

So he though-he said to us
that, you know,

he remembers that night,

that he knew, the next day,
the whole thing would come out.

But the SEC never called DTC.

They never requested
the information.

People were seeing
the SEC go in.

Nothing was found,
and they said,

"Green light
for investing with Bernie."

And they did.

They invested more money
with him.

The Security and Exchange
Commission gave a green light.

They said, you know,
"It's safe.

Put your money there."

So we put our money there,
trusting him

and mostly trusting
our government.

If our bosses knew

that we were pursuing
a case against Madoff,

they would have told us
to shut down the investigation.

So it would have been
a career risk for us

if we hadn't complied.

And, of course, we had
no intention of complying.

You can always find
another job,

but you always have to live
with yourself

if you don't do
the right thing.

Been out of the army,
at that point, five years.

You know, but I took an oath.

I took an oath to support
and defend the Constitution

and this nation
against all enemies,

foreign and domestic.

So I looked at Madoff
as a domestic enemy.

And Frank Casey,
he was in the army too

as an officer
just like I was.

He took the same oath.

We began building
an intelligence network.

We were trying to find people
who were invested with Madoff

since no one would declare that
they were invested with Madoff.

We knew pretty much every
broker that traded options.

We went out, and we spoke
to all these brokers.

They would
try to give up information

without disclosing too much
about their clients.

I would give up information
without disclosing

that I was actually hunting
Madoff.

And I would say simply
to some analysts,

"What do you know
about Bernie?"

You never even had to use
the last name.

And they would always
come back with,

"What do you know
about Bernie?"

And everyone
we talked to said,

"I don't do business
with Madoff,

"but I heard he's a huge player
in the options market.

Can you get me
an introduction?"

You didn't want a secret
getting out like this

because that could only
result in harm.

My wife knew.

We didn't have children
at that time,

and so, you know,
if the worst they're gonna do

is shoot my wife or me,
that's bad for us.

But at least Neil and Frank

can go forward
to the authorities,

and it makes the case
pretty compelling.

"Hey, Harry died
of acute lead poisoning

of the high-speed
multiple-entry-wound variety."

She's petite, well-spoken,
well-mannered,

well-educated,
a good conversationalist.

It was
a very strange wedding.

They had a band
in this Chinese restaurant

with a big dragon
across the wall,

but they had a Greek band.

That's Harry for you.

I was way too young
when I got married.

I was only 42.

I really didn't know
what I was doing.

And I started
the Madoff case

probably six
to seven months later.

We figured that since
we hadn't heard anything

from the SEC submission
in May of 2000,

we would try to blow the cover
off of this deal

and push the SEC
into action

by making it public.

You know, I was trying to get
the media to pay attention.

And the world doesn't know this,
but I went to Forbes.

I sent them 12 pages.

And we have a conversation,
and for some reason,

their publisher
killed the story,

didn't want to do it.

I have a fear.

I have a fear
of being mundane.

I enjoy the challenge.

And consequently,
when I came across Madoff,

it wasn't a big reach for us.

It was to level
the playing field.

It was the right thing to do.

Maybe you don't get
to become

the richest person
on Wall Street,

but you can surely
sleep at night.

It hurts to think
that I worked my whole life

to retire and do things
that I want to do,

and these are the things
that were taken away from us,

just culled out,
just taken away from us.

As a young adult,
I always thought that,

you know, going out and working
and doing the right thing

and saving my money

and sharing my life
with the woman that I love

was the American thing
to do.

And when...

When Madoff happened,
it just took it away,

stripped everything.

Think on reflecting
what the American public feels.

How are they supposed
to have confidence

that if somebody goes to you
with a complaint,

gives it to you
on a silver platter

with all of the investigation,
with all of the numbers,

with all of the data,
telling you exactly what he did,

how he did it, and why he did it
and how he knows that,

you don't know anything.

You're supposed to find it out
before it happens.

I was overseeing a conference
in Barcelona,

which we had started as we saw
the European market expanding.

And Frank was attending
that conference.

So we took a taxi together
to the hotel.

Mike starts the conversation

riding from the airport
to Barcelona with,

"I'm an investigative reporter,

"and I know most everyone
on Wall Street

"that's to be known-

"surely every hedge fund guy

because I write stories
on them."

He said to me, "And I'll bet
you a steak dinner in Barcelona

"that you don't know
every hedge fund.

In fact, I bet you..."

"That I can give you a name

that's running $3 billion
or more."

Sure, I'll take that bet.

And I said,
"It's Bernie Madoff."

Well, his head
whipped around so hard,

I thought it was
gonna come off.

If that was true,
it was a story in and of itself.

Nobody had ever heard
the name Madoff

mentioned in the same breath
as a money manager.

So he bought me dinner
in Barcelona.

Frank began to tell me

not only is Madoff managing
a lot of money,

but he was adamant
that it has to be a fraud.

Then he says,
"Frank, I'm going to write

"an investigative article
on it.

I'm going to uncover
this guy."

And then Mike became,
at that point in that cab ride,

the fourth group member
to try to hunt Madoff.

Here we had a respected
senior investigative reporter

from a major hedge fund
publication.

In fact,
it was the number one

hedge fund publication
out there.

Managed Account Reports,
that was it.

Yeah, hi.
This is Mike Ocrant.

He's on this case,
and he's on our team.

And he writes an article

that exposes this fraud
for what it is.

That should bring
the whole thing toppling down.

Right.
Oh, okay.

Mm-hmm.
Mm-hmm. Mm-hmm.

Well, we're gonna
figure that out.

He's talking to
the derivatives professionals

on Wall Street, and they all
said the same thing,

"Madoff's not for real."

Mmhmm. Mm-hmm.

And so he's ready
to go to print,

and then in April,
he gets that phone call

from Madoff himself.

We really don't know
who Bernard Madoff is.

I think he was
so powerful,

became so powerful,

people were afraid
to challenge him.

White-collar fraudsters
always seduce you.

They have the best resumes,
went to the best schools,

sit on all the right boards,

have all the right
country club ties.

They're political donors,
philanthropists.

They live in
the best neighborhoods

in the nicest homes.

You never suspect them.

It's only afterwards,
in retrospect,

that you see the evil
that they are

and the damage
that they cause.

It's not the little guys.

It's not the small firms
on Wall Street

that cause the big problems.

It's the big firms.

It's the big predators

and big predators
like Madoff.

I wasn't surprised

that he necessarily agreed
to an interview

because I had known Madoff
on and off throughout the years.

This has nothing to do
with the institution, I believe.

They spend too much time
thinking.

He was always known
as one of these rare people

at that level
on Wall Street

who would take calls
from journalists.

They would deliver
an order.

They now will own
1,100 shares of IBM,

and you would see them...

I didn't go in, necessarily,
with suspicions.

I went in really with,
you know,

here is a number
of very serious questions

people who are very
knowledgeable in the industry

have about what you're doing

and seeking a response
to those.

Well, in layman's terms,
he was essentially buying stock,

buying options,

betting that they would go up
on certain stocks,

and buying options
on certain stocks

betting that
they would go down.

The basic concept
of Wall Street is,

a person that is buying
a share of stock

is convinced
he knows something

that the other person
who's selling it to him

does not know.

The problem with it,

you'd have to be
very, very, very accurate

in picking the winners.

It's jus-
it's humanly impossible, really.

Essentially he was saying,
"We've watched and helped,

literally,
develop the markets in NASDAQ."

Our firm,
for example, alone,

we trade in excess
of $1 trillion a year.

"We've got this
incredible reputation

and knowledge
for using technology."

What we did was totally
automate the process.

I think at one point, he said,
you know, "Give us some credit.

We've been in business
for 40 years."

Today's regulatory
environment,

it's virtually impossible
to violate rules.

My immediate impression
was just,

you know,
"Here's a genuinely nice man."

It's, "According to Madoff,
according to Madoff,

according to Madoff."

He's had perfect
market timing.

Bullshit.

Hello.

How are you?

[man speaking indistinctly
over telephone]

He sounded
like a whipped puppy dog.

Yeah.

He called me up,
and he said, "Frank..."

So I got to tell you,

this guy was just
so comfortable in his skin

and so unconcerned
and so responsive.

Clearly, if you're
examining somebody

where there
is the possibility of fraud,

you can't take
that person's word for it.

I said, "Mike,
go back to square one."

And Mike says,
"You're absolutely right.

I'm gonna
write the piece."

He came out with
his investigative piece,

Madoff Tops Charts.

And it came out
on May 1st of 2001.

Mike wrote a great article.

It was scathing, scathing.

When we saw it published,
we gave each other high fives.

It was like, "Hey, Frank,
hey, Neil, it's over.

It's over."

You know,
"This thing is going down.

Markets are going
to sell off."

We said, "We got him.

This guy's going down."

Six days later,
Barron's goes to print

with Erin Arvedlund's
expose.

This could finally be it,
you know:

Madoff exposed
in a Main Street publication.

The SEC's gonna
come riding in.

The posse's in town.

You'd think that
the fund of funds reading this

would have pulled out,

that they would ask some
serious questions of Madoff.

You know, you'd think
they'd have teams in there

the very next day
after these articles appear,

and they don't do anything.

They just don't care.

We waited a week, two weeks,
three weeks, four weeks,

and we started
getting nervous.

You go to the movies.

You see the suspense-
drama thriller,

and you say, "Why don't they go
to the press?

"Why don't they go
to the press?

"Why don't they
get it on a newspaper?

That will end
this nightmare."

Well, that's what we did.

And then you're saying,
"How powerful is he

that the press
can't bring him down?"

And so it was back
to the drawing board.

So we, basically,
were going out

and finding other investors,

trying to figure out
where the money was coming from.

It was the only safe way
for us to proceed.

It was clear that the scheme
was getting much, much larger,

and instead of $3 billion
to $7 billion

like we figured it was
the prior year,

now it's $12 billion
to $20 billion.

We, in our view, had almost,
like, a handbook

that we had written

on how the SEC should have
looked at the situation.

I find it hard to believe

that if anyone at the SEC
looked at the evidence,

how they could have
just dismissed it.

Maybe someone at the SEC
was paid to look the other way.

I'm not participating
in the current examinations

or investigations
due to the fact

that a former employee

who was under
my chain of command

married a member
of the Madoff family,

and I attended the wedding.

When you first go into
the investigation, you think,

"Wow, they missed all these
red flags that were obvious.

Somebody may have been
paid off," you know,

or, "Somebody was offered a job
and kept quiet."

What percentage
of your employees

in those two branches-
Enforcement and Compliance-

leave the SEC and go to work
for a SEC-regulated entity?

I think fewer people leave
the SEC than they used to,

but when they do go,

they often go to a regulated
entity in the Compliance area.

Mr. Swanson was the lead
attorney on this case.

He leaves the SEC,
marries Mr. Madoff's niece.

Did you, for one minute,

think that maybe
you should go back

and look at
how he handled that case?

I probably
would have dropped it.

You know, I did my duty
as a good citizen once,

but Ed Manion said,

"Harry, my agency
is thicker than a brick.

You just need
to keep trying."

And so I resubmitted
in March 1, 2001.

So we're talking what,
ten months later?

And the returns
were not outsized.

I mean, there was
no flag there.

Anywhere between, like,
6% and 10% in a good year.

But I just thought,
"Well, that's, you know,

"not gonna make me rich,

but it's gonna
keep my money safe."

And that's kind of
how he always said:

"You know, we're not gonna
make you rich,

but your money
will be safe here."

I left Rampart
in the end of '01.

Harry was still struggling

to meet the desires
of the owners of Rampart

and develop a product

that Thierry
would actually invest in.

Well, my firm had requested

that I come out with a strategy
that could compete with Madoff.

So I did.
I developed one.

And it was a product that
had better returns than Madoff,

but it was real.

That was the big difference.

But it was highly risky.

Well, sure enough,
he got Thierry de la Villehuchet

to look at it, and he said,

"Oh, I think the clients
might like that."

And then he took Harry
in 2002

to meet with probably
20 different firms.

Each conversation would start
with Thierry de la Villehuchet

saying,
"Harry is just like Madoff,

only higher risk,
higher return."

The first bank said,
"Well, Harry,

"you know we have money
with Madoff,

"and he never loses us money.

You could lose money."

And every time they said that,
I was pissed.

I was pissed off that they
would tell people that.

"I'm nothing at all
like Madoff," I wanted to say,

"You fools.
Madoff's a crook.

I'm legit.
I'm real."

And they'd all tell me
the same story.

They'd say...

"Madoff's closed,
you know?

"He's not accepting
any more money.

"But we have a special deal
with him,

and he accepts our money
and only our money."

When you hear it
the first time,

you sort of believe it.

But when you hear it
time and time again,

you know it's a Ponzi scheme,

because what do we know
about Ponzi schemes?

You need new money coming in
to replace the money going out.

They were just basically
tentacles of an octopus.

Their job was to raise money
for Bernie Madoff

and yet keep the body
of the octopus hidden.

He turns away customers.

He doesn't take all comers.

You have to be graced by God
and graced by Bernie

before he'll take you
into his scheme.

And little did I know,
till the next day

when Thierry de la Villehuchet
told me,

that they had gone
to the polo fields,

and I'm sure
that they were there

to make a marketing pitch
to Prince Charles

to get assets for Bernie.

And Thierry de la Villehuchet
made a pointed comment.

He said, "Harry,
we would have invited you,

but we didn't think
you knew how to curtsy."

And I said,
"Thierry, I can do that.

"It's pretty easy.
It looks pretty lame.

"But I'm not gonna do that.

"I'm an American.

We don't bow to royalty."

And it's pretty clear to me
that Madoff is bigger in Europe

than he is in North America.

As we moved to Paris

and were going through
the Arc de Triomphe,

and Thierry says,
"Look up there.

See underneath
Napoleon's name?"

I'm looking at the names,
and I realize,

"Hey, that's who
I'm meeting with in Europe."

And I realized then,

it was royals
marketing to royals.

And I thought that
was pretty astounding

that these people were gonna
be drawn into the Madoff scheme.

We realized that
this is global in scope.

It's massive.

And somehow
when you count dollars-

and we were counting
the dollars-

but when you see all the people
behind the curtain,

that's when you get fearful.

He had a lot of powerful people
helping him, behind him,

that were standing to gain
a lot of money

by keeping
the Madoff scheme going.

And then you realize

the truly epic proportions
of the scheme.

When you look at who Madoff
was running money for,

it was all offshore banks.

And we know
that those monies are-

there's a percentage of I-
who knows how much-

3%, 5% of the money
may be criminal money.

That was dark money.

That was offshore,
untaxed, dirty money.

The other people that
love to use offshore accounts

are drug cartels,
terrorists.

So if Madoff is taking money
from organized crime,

and he gets caught,
he's gonna be killed.

So if he thinks
I'm gonna catch him

and turn him in
to the authorities,

he has a lot of fear.

Obviously, first of all,

this conversation
never took place, okay?

When they did
an examination for us,

they asked
all those questions,

which are standard questions.

And the answers
that I gave them,

which are the case,
are exactly what I'm giving you

and basically what
you should respond to them.

Obviously, not that-
we didn't have a conversation

and all of this stuff,

The best thing to do
is not get involved with-

that you send written
instructions, if possible,

'cause any time you say
you have something in writing,

they ask for it.

So the best thing to do
is to say

that it's a phone call.

At this point,
Harry got nervous,

because Harry was the guy
out front with the SEC.

So they knew his identity.

[indistinct police radio
transmission]

We were on our own.

We had no idea
we were on our own.

We had no idea
that the four of us

were the last line of defense
between Madoff and his victims.

Hell, we weren't even
the last line of defense.

We were the only line.

During the time that
we were developing strategies,

one of the meetings,
I was down in Thierry's office,

and I said, "Thierry,

what happens if we're right
and you're wrong?"

And he looked right at me,
and he said,

"Frank, I have all of my money
in this manager."

"I have most of my family money
in this manager.

"I have half the royalty
of Europe in this manager.

"I have every private banker
in Switzerland and France

"that I have cultivated
over my complete career

"in this manager.

"I cannot be wrong.

If I am wrong,
I am a dead man."

What's happening here
is a travesty

that I don't think anybody
can explain to somebody

who hasn't lived through it.

We lost our life savings.

I worked.
I kept a beautiful home.

I sold it.
I made a nice profit.

I put it into Madoff.
It's gone.

I could have just given

the woman that bought my house
the key and said,

"Here's a gift for you."

And that's basically, in effect,
what happened to me.

On December 17, 2002,

Eliot Spitzer was appearing
at the JFK Library.

Now New York State
Attorney General Eliot Spitzer.

He was pretty much
a big-time fraud fighter.

He was doing cases
against Wall Street

that the SEC was
too afraid to do.

Really, this is a debate
about the role

government should play
in defining the boundaries

of appropriate
business ethics.

Defining what it means...

I wanted to meet him
and pass off my documents.

I didn't want anything
to prevent me

from getting into that library
and seeing him.

My wife was gonna deliver twin-
twin boys in about three months,

a little over three months,

and I had enough risk
on the table already

with the SEC,

and so I didn't approach him
openly.

As the event's ending,

I put my gloves on,
and I pulled out the 9x12,

and I went over to the woman,
the JFK Library staffer.

I said, "Eliot Spitzer,

"the New York attorney general,
just spoke.

Could you hand this envelope
to him?"

And she made her way
over to him,

and I made a beeline
for the door.

I hotfooted it out of there
in the dead of night.

And I always pack
light or heavy,

depending on the situation,

and that night
was a heavy night.

When the twins were born
in 2003...

I became more concerned

because the case
was dragging on,

and the government
wasn't taking action.

Seems there's no way for me
to stop Madoff with my team.

And so I'm very,
very worried,

and I'm getting extremely
agitated and very nervous.

And it's a risky position
to be in.

And I didn't appreciate that
the government put me there.

I think Harry changed.

First of all,
he was no longer happy

being a portfolio manager

because now he's found
so many people in the industry

that are fraudulent
on this Madoff situation

that he just says,

"Hey, why am I playing
in finance?

I mean,
these are all crooks."

I found so much corruption
just in 2003,

in the finance industry.

I said, "You know,
Wall Street's so corrupt.

"I want to be on the other side
of this industry.

I want to go against
these guys."

So he just basically
got out of the industry.

He virtually left
the industry.

I met Gaytri at a Cambridge
Chamber of Commerce meeting

in Massachusetts.

She introduced herself.

She said, "Hello.
I'm Gaytri..."

"The Hindu goddess
of wisdom and knowledge."

I thought, "Wow,
that's a weird introduction."

I think that had
an impact on him.

And I think it drew a smile
as well.

Turns out she was

an international
transaction lawyer,

had been a Wall Street
deal attorney.

He explained to me
that he had been

to a bunch of law firms
to figure out

how to do this business
of fraud investigation

and to make money doing it.

I was doing cases
on a contingency,

but I wasn't getting paid
any kind of an hourly rate.

We batted around
a few ideas,

and he basically,
in five minutes, said,

"You're my lawyer."

She would take a look
at my cases

and help me negotiate the deals
with the attorneys

that I was
placing these cases with.

And they were typically
large cases,

several hundred million
and up.

Some were a few billion.

He had already figured out
the fraud element.

This is something that he seems
to instinctively gravitate to.

I had left the firm
in October of '01.

About a year and a half later,
I helped draft Neil Chelo,

Harry's assistant,
away from Rampart.

I was traveling nonstop,
meeting hedge fund managers.

It was very good
as far as me being able

to get further intelligence

and pass that on to Harry,

who wanted to hear anything
related to Madoff.

We would get an opportunity
to speak to risk managers

who controlled risk at big banks
and brokerage firms.

And I would occasionally
have conversations

with these people and raise
some of the red flags.

Some people took the hint,

and others shunned what
we had to suggest and said,

"Well, maybe, wink, wink,
nod, nod,

"he's doing something
a little wrong,

but he's our crook,
and he's paying us."

Madoff was very clever.

The feeder funds were making
millions and millions

and millions of dollars.

They were taking probably
over 90% of the fee pie,

and Madoff was keeping
the smallest piece for himself.

And that's where Bernie
was a genius,

in allowing everybody else
to participate in the fraud

and not trying to garner it all
for himself.

The feeder funds
had no economic incentive

to turn Madoff in.

They were making
too much money.

Click!

And the commission
has no idea

what the hell is going on.

Now, the reality of it is,
the stupidity of-

and we answer those questions
all the time.

Every time we get an exam.

And the issue that is-
our market making desk,

the information that we get
from our orders is meaningless.

The relationship
that we have

has been an established
relationship for a long time.

The commission knows
how we operate.

And even if they act stupid
on a phone call with you,

like, they're just trying
to find out

all this information,

they're full of shit.

There were probably
many people on Wall Street

that believed that Madoff
was a fraud

but just walked away
and did nothing about it.

I talked to people
at the big firms,

people that I trusted,

and they'd say,
"Harry, you're right.

"Bernie Madoff
has got to be a fraud.

"But I can't,
without my firm's permission,

"join you at the SEC.

If I do that,
I'll be fired."

But they did say,

"Look, you can have the SEC
contact me.

"If they contact me,
my firm will cooperate

"because we're under
SEC jurisdiction.

So they have to call me."

And do you know what?

The SEC,
they never made those calls.

I was speaking with a fellow
maybe in his mid-40s

at a financial institution
in Boston area,

and as I stood up to leave,
he says,

"What do you know
about Bernie Madoff?"

I said, "Who are you,
and why are you asking?"

He said,
"I married a woman

who's the sole heir
to a fortune."

"At the wedding,
Madoff came up to me afterwards

"and said,
'Now that you're family,

I'm gonna let you in
to my deal."

And he says,
"And I'm a financial guy.

"So I looked at the numbers
he was showing me,

"and I said,
'I don't understand

where he's getting
this return."

He says, "For going on
two years now,

"my father-in-law's
been calling me,

'This is a great deal
for you and our daughter."

So he says,
"I need some ammunition.

You got to help me
beat my father-in-law."

So I went home that night,

and I started writing.

And I email it to "Abe,"
I'll call him.

And I didn't hear anything
from Abe.

We saved.
We saved for this future.

We never wanted to be a burden
to our children.

And now
I wish I'd spent it.

I wish I'd lived it up,

because all our life savings,
in a blink of an eye,

just poof, gone.

The average person
should be aware

that when you get
a brokerage statement,

it's only a piece of paper

representing what
that person thinks they own.

October 29, 1929,
Black Tuesday.

The New York Stock Exchange
is in a panic.

Frantic investors
have scrambled

to unload their stocks
at any price.

Everyone wants to sell.

No one wants to buy.

When you see something
that big in your industry,

if you don't do something
about it-

clean up your industry-

your industry is gonna suffer,
and we saw that.

And that's why our financial
system came near to collapse.

It was because
no one said anything.

They saw the frauds going on,

and everybody
remained silent.

Well, that's just not my way.

I don't remain silent.

If I see a fraud,
I'm gonna stop it.

[distorted, indistinct
conversation]

It was clear that the scheme
was getting much, much larger.

So now we had
29 separate red flags.

And we'd expanded each of
the red flags dramatically.

I mean, you could have hired
an English major

who knew nothing
about finance,

given them the 29 flags,
and said,

"Pick three randomly,
go into Madoff's office,

and get the answers
to these three things,"

and they will uncover
the fraud.

We felt this was
the big last push.

And a few days later,
I'm meeting with Mike Garrity

and a few other people
from the SEC,

and it's clear
that Mike Garrity gets it.

He doesn't understand
the math,

so he has me diagram
every relationship.

And at the end of it,
he says,

"Harry,
this is very serious,

"and it certainly merits me
forwarding it to New York

as quickly as possible
with the utmost seriousness."

On my submission,
I didn't want to be identified,

because if they know
and any of them turn out

to be corrupt
and take money from Madoff,

I'm a dead man.

We keep waiting and waiting.

The commission knows
how we operate...

It was a road map
for the fraud,

and I'm just telling you,
"Go get it."

It's the case.

I already solved it for you.

All you have to do:
call my witnesses.

I gave you
their contact information.

And I'm also saying,

"How about if I offer
to go undercover

"and just go inside
the Madoff operation?

"If I do that,
I can ask a few questions

"and bust this thing wide open
in the space of an hour.

"Look at the math.
Check with a third party.

"All you have to do
is show up and ask a question,

and you'll get the answer
that solves the fraud."

They never showed up.

What the hell's going on?

I was like the boy
that cried wolf,

but there was a wolf.

It was never a false alarm.
I was always telling the truth.

There's the wolf.
It's Bernie Madoff.

Now, in this case,
you know,

Harry Markopolos provided
the complaint.

So he's the guy
who did have the experience.

But, unfortunately,

they didn't utilize him
the way they could.

What the heck went on?

Your mission, you said,
was to-was to...

Protect investors
and detect fraud quickly.

How did that work out?

What went wrong?

One guy with a few friends
and helpers

discovered this thing
nearly a decade ago,

led you to this pile of dung
that is Bernie Madoff,

and stuck your nose in it,
and you couldn't figure it out.

You have single-handedly
diffused the American public

of any sense of confidence
in our financial markets

if you are the watchdogs.

You have totally and thoroughly
failed in your mission.

Don't you get it?

I'm in New York now.

I'm in Madoff's turf.

He gets wind of this,
and I'm doomed.

Me, personally,

I didn't feel
the safety issue.

We never felt that threat.

But I had been, personally,
on the receiving end

of such a threat
once in my business career...

When I inadvertently
was referred in

by a lawyer to the mob.

I want to tell you,

it's a horrible thing
to have to live under.

I rotted out 12 shirts
over a period of two months.

When you're dealing
with professionals,

you don't get the warning.

The first warning you get
is the flash of light.

And that's the first bullet

that's gonna go through
your brain.

And it's usually gonna
be followed

by a second
within an inch.

It's called double-tapping.

I was very familiar
with double-tapping.

I had a military background,

and I knew
what a double-tap was.

It's two bullets to the head,
either the front or the back.

There's no warning.

It's just a flash of light.

Your brain
barely registers this,

and you're already dead.

I could tell something
had spooked him.

He was very spooked, scared,
white as a ghost.

So he started mentioning
this thing about Ponzi.

I said to him, I goes,
"Are you that scared

where you feel you might need
a bulletproof vest?"

I says,
"I have one right here."

We started talking about
carrying weapons.

I mean, this thing started
to mushroom to the point of,

you need self-protection.

What can a small little
department offer you, you know?

If nobody else
is believing you,

I mean, what's going on?

There are three things
you have to do

to survive
on the battlefield:

shoot, move,
and communicate.

The thing I was worried about
was the moving.

This thing was gonna
prevent me from moving.

I didn't want him
to leave here

without any protection,
but it was his choice.

When he left that day-

and this kind of
sticks out in my mind-

he said, "When somebody
finally believes me,

"when I get the right agencies
to believe me,

"this isn't gonna be
just the biggest thing

"in the state
or the country;

"this will be the biggest thing
in the world

that anybody will ever see."

They did not live
a normal childhood.

They grew up
very, very protected.

There's the security system
over there.

And I had a newborn
about to come

in April of that year.

Rah!

Everything was different.

Carrying a gun with you
is different.

And most people
don't do that.

That's not a normal
dad thing to do.

[speaking indistinctly]

We lived a different life.

There were places
we didn't go.

I liked to stay in state

because my pistol license
was only good for Massachusetts.

I needed to be armed.

And you didn't know where
the ambush was gonna come from.

You just knew
it was gonna be

a time and place
of their choosing.

My kids probably think
my minivan

must leak a lot of fluids

because I'm always underneath
the body carriage

checking it out for bombs.

Okay, guys.

Let's roll.

Harry first.

Have the window?

I didn't have
a normal lifestyle.

Fear is an amazing thing.

It gives you
a shot of adrenaline.

It gives you
the fight-or-flight response.

[echoing] Flash of light,
flash of light...

You're already dead...
Already dead...

You've reached
the point of no return

where you can't stop.

The easiest way out
is forward.

You can't go back

because you left too much risk
on the table.

If your security
wasn't good enough,

and if Madoff found out
about us,

I would have had
a decision to make,

and my decision
was pretty clear.

I'd go down and take out Madoff
before he took me out.

I mean, I'd made
the conscious decision-

I was gonna go down there
and kill him.

I went to a whistleblower
organization:

Taxpayers Against Fraud
in Washington.

And they put me in touch
with John Wilke,

a senior
investigative reporter

for The Wall Street Journal's
Washington bureau,

which was perfect for me.

Madoff would be focusing
to the south,

toward Philly or Washington,

thinking the whistleblower
is down there,

where I'm safe and sound,
hopefully, up in Boston.

There's this fellow
by the name of John Wilke,

and they call him
Mr. Front Page.

He was probably
the best investigative reporter

The Journal had.

I mean, he was that good.

A lot of stories he broke,
the people went to jail.

They were congressmen.
They were senators.

And Wilke is excited.

And he said,
"This is very interesting."

I said, "I have
a lot of documents."

The best thing to do
is not get involved...

He said, "Can you prepare me
some contact information

of other people I can contact
to verify the story?"

Harry says, "This guy's
going to do it.

"He's coming up,

"and he's going to write
the article,

"and it's going to go
on the front page

of The Wall Street Journal,"

I know that my only hope
for salvation

is The Wall Street Journal.

If they go to print,
I'm safe,

'cause Madoff
is gonna blow up.

If they don't go to print,
my life's forfeit.

Oh, I was in way too deep.

I couldn't give up
at this point.

My name's in New York.

The investigation's
off course.

The Journal has my story.

Wilke apparently
was reassigned

every time he wanted
to come up to Boston

to do the interviews
and work on the Madoff case.

And he made numerous plans
to come up and see me,

but someone higher up
at The Journal

killed the story.

It's a Pulitzer.

All a reporter had to say is,

"I want to cover it,
and I want to break Madoff."

Every time we've tried
to uncover this Madoff fellow,

the investigations
are stymied.

I mean, we went to the biggest
and the best.

And that was it.

There was no luck.

They didn't care.

"Too unbelievable.
Too big.

"We don't do stories
that big.

We don't believe
it's for real."

And we don't know,

is there someone high up
in the government

that is actually
stopping this?

When the agency in charge
of the capital markets

doesn't do their job

and when the press
doesn't do their job,

then where else do you go?

So we became jaded,
if you will, disgusted.

By, I'm going to say,
somewhere around 2007,

we were almost giving up.

At that point,
I was, you know,

willing to drop it,
in my mind.

Harry was just obsessed.

Here I am, armed to the teeth
and checking for bombs.

And I need something
to happen.

I need Madoff to go down,
so I can live my life.

I want to return to normal.

I'm the point person.

My name's out there,
no one else's.

So I'm living in fear.

I'm afraid.

Harry, you okay?

Wake up.
Wake up.

[whispering]
Okay, we got to be quiet.

We want to hear them
before they hear us, okay?

Okay, here.

You see all these
sticks here?

All these dead sticks?

If we step
on those dead sticks,

we'll scare the animals

because the stick will crack,
all right?

It will snap,
so we have to avoid that.

So you have to really make sure
you put your foot

where the sticks are not,
okay?

That's it.

Here, now,
what do we have here?

Let me show you.

These are deer droppings.

Poop?

That's deer poop.
That's right.

Now here-
Don't step on it.

All right, now,
there's two types

of animals
in the woods here.

There's predators,
and there's prey.

A deer is known
as a prey animal.

And there's predators like bear,
bobcat, and mountain lion

that would hunt these
and eat these.

To catch a predator,

you have to think
like a predator,

and you have to go
where they're going.

They're always looking
over their shoulder,

so you have to be very careful
when you sneak up on them,

'cause if they find out,
they could hurt you.

You understand that?

Yes.

- Good.
- Yep.

In retrospect, you know,
once my twins were born in 2003,

I should have stopped
the investigation.

I was a fool
to keep going forward.

If the government didn't care,
why should I?

But if you have
that attitude,

if citizens don't step forward
and contribute to society,

then society falls apart.

In 2008,
the world financial markets

really started
coming apart.

Investors around the world
were losing money on everything.

There was no haven.

People were withdrawing
their money from fund of funds,

from the feeder funds.

So I need money
from somewhere.

I've got to get the money.

Old Bernie,
Bernie never loses money.

We'll use Bernie
as our ATM.

He literally couldn't continue
the Ponzi scheme.

He ran out of money.

But it was nothing
that we did.

It wasn't the foxhounds.

It wasn't the team.

It was the marketplace.

So when Bernie
couldn't deliver,

he picked the time
of his own choosing

to say good-bye.

So how many documents
were destroyed?

How many cover-up stories
were built

before he decided
to call it quits?

I had no inkling
that anything

was gonna change my life
that day.

Okay, guys, let's get ready
to go to karate.

Come on.
Get your stuff.

Let's go.

Go.

Both: Yah!

Come on.

Oh, nice.

I'm listening
to the voice mail,

and it says, "Harry,
Bernie Madoff's been arrested.

"He's in federal custody,

"$50-billion Ponzi scheme.

"You're not gonna
believe it.

Congratulations.
You got him."

And so I knew that I needed
to get home as soon as I could

because I had one enemy
left to fight,

and that was the Securities
and Exchange Commission.

And I knew, back home,

I had unprotected back there
lots and lots of documents

that would incriminate the SEC
to no end.

I knew that if the SEC
would try

to seize my computers
and documents that night,

there was gonna be
shooting.

And we had rehearsed
what I call a battle drill,

where if somebody did pierce
the premises,

I'd go down to the first floor
and confront the suspects.

My wife would remain posted
at the top of the stairs.

Anybody coming up the stairs
that wasn't me,

she'd just keep shooting
until she ran out of ammo.

I was gonna protect
those documents.

I knew they had
a lot to hide.

I just rushed into the house,
run upstairs to my office,

and I start collecting
documents.

So Harry is on the phone
very excited, very animated.

"What do I do?

"I have all this stuff.
I'm emailing it to you.

Can you safeguard it?"

And my immediate reaction
was that I was scared.

"Yes.
What do we do?"

She goes, "I don't know.

"I have to think about this.
This is big.

No one's ever done this."

And I said, "Yeah."

And so I was emailing documents
all through the night.

I didn't sleep because I knew
my risk factor was high.

I thought eventually
the SEC would know

that they needed
to move on my house

and get those documents
out of there

and seize my computers.

And I get a phone call,

"Are you Harry Markopolos?"

And I said, "Yes, I am.
Who is this?"

And he said,
"It's Greg Zuckerman

"of The Wall Street Journal
calling.

Are you the Madoff
whistleblower?"

I said,
"You damn well know I am.

"You've had my stuff
for three years.

"You've been sitting on it.
You didn't do anything with it.

Of course I am."

"I just wanted
to confirm this

"because CNBC
is reporting the existence

of a Madoff whistleblower."

[announcer speaking
indistinctly]

And then the fear
went through me.

I said, "Oh, sheesh."

And he said, "Calm down.
Calm down."

"I'll work with you
on the story.

"Once your story is out,
you're safe.

Do you have any documents
you can send me?"

When Harry came in
that night,

he was completely
just out of his mind.

He was all disheveled,
very white,

frazzled, and he started-
he called me over.

He's like,
"I need to talk to you.

"I need to talk to you.

I need to borrow
a fax machine."

And I'm like, "For what?"

And he's like, "I have to get
these papers off.

"I have to get them
to The Wall Street Journal,

"It's a matter
of life and death.

"I don't know-if something
might happen to me,

I have to get rid of these;
can you"-

he was going on and on
and on.

He points up to the TV,

'cause at that point,
we had the news on,

and it was-Bernie Madoff
had turned himself in.

He had information
and documents

that he had to fax over
right away

to a reporter for
The Wall Street Journal,

And so we're there
for 90 minutes

trying to fax
all these documents.

And we finally
get them through,

and I'm on the phone
with Greg Zuckerman.

He says, "Harry, I got
every last single one of them.

Thank you."

Wall Street veteran
Bernie Madoff

has been arrested
and charged with...

His name is Bernard Madoff,

The SEC accusing
Bernard Madoff...

And Greg Zuckerman's
working the story hard.

He's calling me up.

And he goes, "Are you sure
you're for real?"

And I said,
"Why are you asking?"

And he said, "Cause this stuff
is too good to be true.

"You're telling me
you gave this

to the government,
and they did nothing?"

And I said, "Yeah,
you're talking about weeks

"and months and years,

hundreds and hundreds
and hundreds of hours."

And that was sort of
the stumbling block

for the first few days.

He couldn't believe
that my stuff was that good,

and the SEC ignored it.

He just couldn't fathom

how it could go over
their heads like that.

He never figured it out,
until...

I was very concerned
to learn this week

that credible allegations
about Mr. Madoff

had been made
over nearly a decade

and yet never referred to
the commission for action.

"Mea culpa.

"We had known about this case.

"We had credible
and specific warnings

"for a period
of at least a decade

"that we didn't pay
any attention to.

"Our staff failed miserably.

"They never brought this
to the commission's attention

"for any action.

"I've tasked the SEC's
inspector general

to launch an immediate
investigation."

And at that point,
at that instant in time,

as soon as
that was released,

The Wall Street Journal
believed everything I said.

The press was relentless.

There was constant requests
coming in.

And I just had to ignore them

because I was being invited
to testify

before the House
Capital Markets Subcommittee.

And I had already
been told that I was,

and I'd gotten contacted
by the SEC's IG.

We wanted to understand
from his perspective

how his interactions
with the SEC were.

"We want to make sure
we get the accurate story.

Can you help us, Harry?"

I said, "Sure, Mr. Kotz,
I'd be happy to help you."

The night that Bernie blew,
my phone rang.

Beep!

Hey. Hi.

How you doing, Harry?

And he said, "Madoff blew.

"We were right.
We're vindicated."

What?
You're kidding me.

My second cell phone rings.

Hold on.
My other line's ringing.

Hold on.

Michael, I got Harry
on the other line.

Then my house phone rings,

and my wife says,
"It's a business call.

And he won't
identify himself."

And it was Abe.

And Abe said,
"Are you talking to Harry?"

And I said, "Yes."

He says, "Well, first of all,
I want to tell you guys,

"I want to thank you,

and I want you to convey this
to Harry and Mike."

He says, "Thank you for
your efforts for nine years.

"And thank you, personally,
Frank,

for trying to save
my butt."

I said, "Well,
what happened, Abe?"

He said, "I read it to my father
word for word,

my father-in-law."

And he said, "The man sat down,
and he said,

"This is incredulous.

"I can't believe it.

"Bernie's been
a friend for life.

"I don't believe it.

"I won't believe it.

"Bernie would never do this
to us.

"Your guy has it wrong.

"He probably did his research,
but he's off base.

He's wrong."

He says,
"We just lost everything."

I said,
"Abe, I'm so sorry."

Madoff is expected
to plead guilty

to ripping off investors
to the tune of $50 billion.

He surrendered because
he had made too many enemies

in too many
different countries.

To steal billions
and billions of dollars,

it has to take
a very special kind of person.

He had no place to run,
no place to hide.

He'll never get it.

He really will never get it.

For him,
it's all about money.

He didn't mount a defense
in court.

He just copped
a guilty plea.

And he went down
without talking.

As the news came out,
we were just overly shocked.

We never conceived
that an investor

could come in directly to Madoff
and invest.

That's just not the way
Wall Street works.

Everybody's a victim
of their training,

and we were
institutionally trained.

And so we had blinders on,

and we totally missed
the individual angle, totally.

Totally missed it.

These people typically
went all in, 100%.

So the individual investors
oftentimes just got wiped out.

Tens of thousands of victims
were damaged beyond repair

for no other reason

than putting their trust
in the wrong person.

The man had no need
to take down charities.

He had no need
to take down people.

And for that, the man
ought to burn in hell.

And, of course,
we came on a sad postscript.

After Bernie Madoff
imploded...

Police discovered Rene Thierry
Magon de la Villehuchet

dead in his Manhattan office
early Tuesday.

7:00 in the morning,
I believe,

an employee was not able
to get in,

asked security to go up
and open the door.

Security did go up
and open the door,

and they found the man
at his desk.

Police say
he committed suicide,

They say both wrists were...

He took some painkillers.

He took a box cutter.

He cut his arms like this.

He stuck them into a trash can
and bled out.

He wrote, apparently,
a note that said,

"I understand that
if you fail your friends,

your clients, then you must
face the consequences."

It's out of fashion today,

but that's the way
noble people go out.

And he made a horrible mistake,
and it cost him his life.

I thought he committed suicide
because he was wiped out.

I've come to find out

that that probably
wasn't the reason.

We had warned Thierry
and his senior staff,

and they ignored
our repeated warnings,

and now we know why.

Bernie was paying top dollar
for new victims,

and so he got
lots of new victims.

If one believes that

it's an old man and a dog
in a back room

that perpetrated this fraud,
then they're very naive.

No man could build
this empire alone.

He set up, effectively,
an infrastructure

where people were doing
all his dirty work for him.

And he had his capos,

and he had his lieutenants,
and he had his soldiers.

And they were all out there
in the feeder funds

and the fund of funds,
doing his bidding.

There were multiple
feeder funds set up,

not only in the U.S.,
all around the world.

They took the money,

and now they're trying
to get away with the money,

and we shouldn't let them
get away with it.

They need to be in prison.

The government's out there
chasing terrorists,

and the financial terrorists
are getting away

with financial murder.

I don't have billions
of dollars.

I don't live in a mansion.

I don't own any property
in the Bahamas.

And I'm like you.
I am you.

'Cause they didn't just
take money from us.

Bernie Madoff took away
part of our real lives.

The plans, the hopes,
the dreams

for what we were going to do
in retirement

are shambles
at this stage.

They'll never be recovered.

There's not enough time left.

If it happened to me,
it could happen to you.

This all
could have been stopped

if the Securities
and the Exchange Commission

had done their job.

When you lose confidence
in anything-

and God forbid we lose
confidence in the U.S. dollar-

the repercussion
is going to be horrendous.

We meet today to continue
our review

of the $50-billion
Ponzi scheme

allegedly perpetrated
by Mr. Bernard Madoff.

And we are pleased to have
Mr. Harry Markopolos.

I was pissed.

I was so angry
at what they did.

I was eight and a half years
their doormat,

and I finally get a chance
to shoot back.

Well, hell, I'm gonna do
a lot of shooting.

Mr. Markopolos,
it's all yours.

Thank you, Mr. Chairman.

Good morning.

Thank you
for inviting me here

to testify before
your committee today

regarding my nine-year-long
investigation

into the Madoff
Ponzi scheme.

I gift wrapped
and delivered

the largest Ponzi scheme
in history to them,

and somehow
they couldn't be bothered

to conduct a thorough
and proper investigation

because they were too busy
on matters of higher priority.

If a $50-billion Ponzi scheme

doesn't make the SEC's
priority list

then I want to know
who sets their priorities.

The current staff has led
our nation's financial system

to the brink of collapse.

The SEC is also captive
to the industry.

The SEC continues
to roar like a mouse

and bite like a flea.

They haven't earned
their paychecks,

and they need
to be replaced.

This concludes
my oral testimony.

Thank you, Mr. Chairman.

Thank you very much,
Mr. Markopolos.

We're delighted with your
willingness to come forward.

We thank you for that.

We want to work
with you closely

as we move on
toward regulatory reform.

I would like to just say,
for the record,

that I see you
as a modern-day Greek hero.

You've done your country
a great service.

Thank you, Mr. Chairman.

It's been a singular honor.
Thank you.

Thank you very much.

Well, the goal
was to tear down the SEC

and take them
to the lowest point

in their 75-year history

so that they could rebuild.

So, yeah, I wanted to hold
the SEC accountable.

I was damn angry.

I wanted to make that clear
to that agency,

that they were a total,
miserable failure.

In the SEC, I don't think

anybody's been held accountable
personally there.

Several people
have been allowed to resign.

I think
that wasn't good enough.

I think they should have been
fired and disgraced.

They are systemically
incompetent,

not qualified
to hold those jobs.

And the SEC was really mad.

Lots of crooks that are gonna
be under arrested in the SEC.

They're not sure
what to make of it.

The twins think that
Madoff was a bank robber

and I stopped him
and I caught him,

which is not what happened.

And-but that's what
a six-year-old understands.

My dad is my hero.

And they see people
come up to me in restaurants

and shake my hand
and tell me that I'm a hero,

which...

I'm no hero.

So they're not sure
what to make of it.

I don't compare very well
to Spider-Man,

who they really love.

So I think 10, 15 years
down the road,

they'll understand.

Today we're in Las Vegas

for the Association
of Certified Fraud Examiner's

20th Annual Fraud Conference.

And it is the premier event
of the year for fraud examiners.

Each annual conference,

our CFE of the Year award
is presented to a CFE

who has demonstrated
outstanding achievement

in the field
of fraud examination.

He's receiving this award
because he has demonstrated

the character,
the quality that we expect

out of a certified
fraud examiner.

To say he was the obvious choice
is an understatement.

Ladies and gentlemen,

it is my privilege
to present to you

Mr. Harry Markopolos.

I feel that
I'm a $65-billion failure.

My name is next
to that failure.

It's a bit harsh,
but it's true.

We didn't save anybody.

I think part of the reason
he takes it personally is,

he tried so hard
for so long.

I mean, I don't know what else
Harry could have done.

You know, I feel like a fraud
getting this award.

I just don't think
I'm worthy.

I was pretty depressed.

I mean, this was
the largest case in history.

It was nothing
but a massive failure.

I was holding myself
responsible.

People call you a hero.
I just don't like that.

I just feel if you're doing
what you're supposed to do,

that's your duty.