For Bernie Madoff victims, ‘betrayal still hurts’ years later

[CUOMO]

(NewsNation) — Kathleen Carolan doesn’t often think about how she and her husband lost millions in Bernie Madoff’s Ponzi scheme, unless there’s a catalyst for remembering.

There’s just such a catalyst now: A new Netflix docuseries, “Bernie Madoff: The Monster of Wall Street,” that chronicles the rise and fall of the now-deceased Madoff, who scammed investors out of more than $60 billion. The financier was arrested in 2008, pleaded guilty to 11 counts of financial crimes in 2009 and died in prison in 2021 while serving a 150-year sentence.

One of his clients was Carolan and her husband, Gordon Bennett, who trusted Madoff with their retirement savings. At one point, they thought their account value was $3 million.

“It still hurts. You know, we’re in pretty good shape now, but I have to say I do think of all the money I would have had” if Madoff actually invested it, Carolan said. “The betrayal still hurts. I don’t think that’ll ever go away.”

Carolan and Bennett are featured in the Netflix docuseries and spoke to NewsNation’s “CUOMO” on Wednesday about how their life changed more than a decade ago, when Madoff’s fraud was exposed. They were two of nearly 5,000 investment clients who believed Madoff’s wealth management firm was generating healthy gains even in years the stock market was negative.

In reality, Madoff wasn’t investing anything. Instead, he deposited the money into a business account at Chase Manhattan Bank, and when someone requested a withdrawal, he’d pay it out with other investors’ funds.

For Bennett and Carolan, their account statements painted a picture of a regular stream of income.

“That was the seductive thing about Madoff,” Bennett said. “He wasn’t promising the moon, he was promising just a nice, steady return, and that’s what we’re living off of.”

Complaints and warnings about Madoff’s firm date back decades. In multiple instances, the Securities and Exchange Commission found no wrongdoing.

He was, in the words of Diana B. Henriques, a “trusted criminal” who was able to go undetected for years. Henriques is a journalist and author of “The Wizard of Lies: Bernie Madoff and the Death of Trust,” one of the first published accounts of Madoff’s fall after his arrest.

The four-part Netflix docuseries premiered Jan. 4, and Henriques said it may prove beneficial in making a new generation of investors aware of the criminals such as Madoff.

“The lesson of the Madoff story is really: This is what a Ponzi schemer looks like — charming, successful, widely admired, facile at telling lies and winning your trust,” Henriques said.

Madoff’s scheme began to unravel in 2008, when the market took a downturn during the financial crisis. Unable to fulfill investors’ withdrawal requests, he told his sons the firm was on the brink of collapse.

They alerted authorities when Madoff suggested they pay $170 million in bonuses to employees two months ahead of schedule. He was arrested the next morning.

The arrest came too late for Bennett, who criticized regulatory agencies for not doing more years prior.

“The people that were in the SEC were incompetent, and they were too, I guess, awed by Madoff, who had chaired the NASDAQ and had done actually some very good inventive things with electronic trading,” Bennett said. “They just brushed over all the red flags that were there.”

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