Jim Campbell, A77, talks about the multi-billion-dollar Ponzi scheme in the new Netflix documentary based on his book
Bernie Madoff walking to his Manhattan apartment after a court appearance on December 17, 2008. “He was a classic narcissist, and like a narcissist, he would make himself out to be a victim,” says Jim Campbell. “He had a very compartmentalized brain.” Photo: AP Photo/Jason DeCrow
When Bernie Madoff was arrested on December 11, 2008, his Ponzi scheme that had taken in over $65 billion collapsed, losing many investors their life savings. Madoff had been involved in investment fraud for decades, promising steady returns and no losses ever, always escaping detection by the authorities, despite plenty of warnings.
The story is more than a decade old, but it has found new life in Madoff: The Monster of Wall Street, a popular new docuseries on Netflix. The series is based on the 2021 book Madoff Talks: Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History, by Jim Campbell, A77. He is a co-executive producer for the series and appears throughout it, explaining who Madoff was, and how he ran both a legitimate business and the secretive Ponzi scheme.
As part of his research for the book, Campbell, host of the nationally syndicated radio shows Business Talk with Jim Campbell and Forensic Talk with Jim Campbell on the Biz Talk Radio Network, conducted extensive email correspondence with Madoff, and interviewed his wife and lawyer, among many others.
He spoke with Tufts Now about Madoff, the Netflix series, and his outlook on reforms to prevent such frauds in the future.
Tufts Now: Bernie Madoff got away with a Ponzi scheme for decades. How did that happen?
Jim Campbell: There’s this image of him as a Wizard of Oz behind the curtain, but it’s not really true. In a Ponzi scheme, there’s no real investment activity—more money has to come in than goes out, and that can’t survive by definition.
“You know what his exit strategy was? I think in the end, he figured he’s going to die, and it would be all over. He wouldn’t be around to see it,” says Jim Campbell. Photo: Courtesy of Jim Campbell
So how the heck did he do it? He was enabled by four groups of what I call co-conspirators. The first is the big four investors—Jeffrey Picower, Norman Levy, Carl Shapiro, and Stanley Chais. When Madoff got in trouble—when he was in a cash crunch as more people took money out than were putting in—they bailed him out, and it gave them the power to extort returns from him, from the less wealthy investors. Picower took out $7 billion, by far the largest amount far more than Madoff himself.
The second group are what I call the willfully blind, the hedge funds, called feeder funds. They would take money from investors and place it with money managers that met certain investment criteria. They took a fee of 1% of assets, while the money manager got 2% of assets, plus 20% of all gains as a fee. Bernie gave that 2% and 20% back to the feeder fund managers—essentially a massive bribe in return for not asking any questions.
The third group, what I call the unwitting co-conspirators, are the likes of the Securities and Exchange Commission. The SEC did five separate investigations and never found the Ponzi scheme.
The final group is what I call the witless. Bernie hired a small group of high school graduates who enabled the operation for 40 years, creating fake records, moving money around, and never figured out it was a Ponzi scheme.
Most of his victims were people he met socially through Jewish organizations, right?
Yes, 85% of his victims were Jewish—they trusted him. He was known as the Jewish T bill—as reliable as a U.S. Treasury bill, a financial obligation that carried the full faith and obligation of the U.S. government.
You had many email exchanges with Madoff and have done a tremendous amount of research on him. What’s your take on him personally? What led him do this to his family, and to all these other people?
It was not greed. He had to be the go-to guy. He was a classic narcissist, and like a narcissist, he would make himself out to be a victim. He had a very compartmentalized brain. He had built a very successful and prominent legitimate business that was worth $3 billion, but also ran the Ponzi scheme. He was brilliant, with total recall, had a low-key charisma, and was a pathological liar.
You mentioned the big four investors, and especially Picower. They all seemed to know what was going on. Did they?
They knew that he was doing illegal stuff. Each of them were doing illegal things, tax evasion, and more. Picower would call Madoff telling him to create a record of trades to look like he had losses that would balance out his gains, so that he wouldn’t have to pay taxes on them.
The four of them did not know that it was a Ponzi scheme per se, because otherwise they wouldn’t have left their money there. They figured he was cheating, using insider knowledge from the legitimate side of his business, where his firm was a market maker for stocks.
Did any of those big four investors, or the feeder funds getting the fee kickbacks, ever get punished for their cheating?
None of the big four went to jail, and none of the feeder fund guys. Madoff, his brother, and some of the guys on 17th floor—where the Ponzi operation was based—went to jail. Picower raked in $7 billion from Madoff, and after he died in 2009, the government left his wife with a couple of billion, and she’s continued to run the Picower Foundation, whose very foundation had been based on fake returns. They all had to give money back for the victims of the fraud, but no prison sentences.
A good lesson from this is that if it’s too good to be true, it probably isn’t true.
I say, don’t trust something that you don’t understand. Don’t trust something that predicts continuous gains in the stock market. The thing is, at the end, Madoff was paying returns of about 11% a year on the investments. Well, the stock market has done 9% a year for 100 years. I say, buy a stock index fund and sleep at night—and take responsibility for your own finances.
Ponzi schemes inevitably fail. Madoff must have realized this; did he feel like he was just in too deep?
His legitimate business was making money on commissions, which they earn whether the market was up or down. But at the very beginning of his career, as a sideline he invested some customers money, originally like 20 people. And he lost money—he realized he can face investment losses. He literally could not psychically accept that. Instead of doing the right thing, which is get the hell out of the business, he pyramided it up, worse and worse and worse. He couldn’t get out.
You know what his exit strategy was? I think in the end, he figured he’s going to die, and it would be all over. He wouldn’t be around to see it. That’s why he wouldn’t let his kids into the secret of the Ponzi scheme. He kept telling them that when he died, the investment side would unwind and they’d give all the money back to investors.
One of the people you speak to in your book says that Madoff was basically at root a conman—do you agree with that?
I once told Bernie that I thought he was so good at the deception because he’s the anti-con conman, because of his approach. He always told people, “I don’t want your money. I don’t need it. Don’t come into my fund.” It’s funny, 14 out of 20 banks in Europe who were funneling money to Madoff each thought they had exclusive access to his fund.
Let’s talk about the Netflix series. What was it like working with director Joe Berlinger? Where did you film your part in it?
Joe Berlinger is the number one true crime Netflix director—he has done stuff on Ted Bundy, Whitey Bulger, Jeffrey Epstein, Ghislaine Maxwell. He’s an unbelievably talented guy. I’m so honored that they ran with the whole story—it’s very factual. People are blown away by that. Last week it was number two in TV shows in the nation on USA Today, which is pretty amazing.
We filmed at Parlay Studios in Jersey City. It was in massive place. It was Joe’s idea to recreate the 19th floor, where the legitimate business was, and the 17th floor, where the Ponzi scheme was. In many ways that division reflects Bernie’s brain, because he ran one of the most ethical businesses on Wall Street and the biggest criminal enterprise, side by side at the same time. And you look at the floors, they’re completely different too.
What’s to stop the next Bernie Madoff from pulling a large-scale scam?
The simple answer to that is to look at what happened with the collapse of FTX. That wasn’t a Ponzi scheme, but who would’ve predicted that? A guy who again looked ethical, altruistic—the CEO Sam Bankman-Fried. Who would have thought that one of the straighter or supposedly most secure exchanges would be allegedly a complete fraud?
About Ponzi schemes specifically, the SEC devised criteria to safeguard against them, and Harry Markopolos, who early on uncovered the Madoff Ponzi scheme but who was never listened to—he feels the new criteria would catch 90% of Ponzi schemes, except if they’re offshore where regulation is weak—then you could maybe have another one.
That doesn’t conflict with what I just said about FTX. So yes, it can happen again and it will happen again. It’ll just be a different kind of thing, whether it’s FTX or something else.
Given what happened to his family—both sons died before he did, his brother in prison for a decade, and Madoff himself died in prison in 2021—it’s like a Greek tragedy.
In the Netflix series, it tells how Jewish custom is burial within 24 hours in the ground, but Bernie was cremated. His ashes ended up in an urn in a lawyer’s office, because the family refused to accept them. That’s the ultimate end of the story.
