Harry Markopolos, the portfolio manager-turned-Madoff investigator, appeared on MSNBC’s Morning Joe yesterday morning to discuss his role in the investigation a day before the release of the movie “Chasing Madoff” based on his book (see video above). Markopolos went to the Securities and Exchange Commission seven times between May 2000 and April 2008 to warn investigators that Madoff was a fraud, and even presented them with a document titled “The World’s Largest Hedge Fund is a Fraud.”
Markopolos was a derivative portfolio manager himself, before his inability to compete with Madoff led him to cast a skeptical eye. “His returns were perfect,” Markopolos said. But “it took me five minutes to know [the fund] was a fraud, and it took four hours to prove it,” he writes in his book, “No One Would Listen,” published in 2010.
Not only wouldn’t the SEC listen, but Madoff’s investigators turned a blind eye to his warnings, as well.
“Clients always believed Bernie because Bernie was so seemingly wealthy he didn’t need to steal,” Markopolos said. “That’s what it is with all white-collar predators; they seemingly have no need for the money but they take it anyway.”
Some of those clients, of course, were prominent real estate players including Prudential Douglas Elliman Chairman Howard Lorber, Sterling Equities Chairman Fred Wilpon and CB Richard Ellis Chiarman Stephen Siegel.
Both Markopolos and Madoff attribute the SEC’s failure to recognize the fraud to systemic incompetence, and Markopolos said that’s partly due to the government underpaying and understaffing regulator positions. Today, he said, the SEC encourages whistleblowers, rather than ignoring them, and wouldn’t have let Madoff’s scheme endure so long. “They learned a great deal from the failures of the Madoff case.”