Bernie Madoff managed to keep the biggest Ponzi scheme in history going for decades, but, when the FBI finally came knocking at his door on Dec. 11, 2008, he told them he had been expecting them, newly released FBI files show.
Madoff told the agents that he had been preparing to turn himself in before they got there, as he had decided he “just couldn’t go on,” the files released by the FBI in response to a Freedom of Information Act request revealed.
But he wasn’t motivated by feelings of guilt for the thousands of clients whose savings he had decimated through his fraud. “I’m broke,” he said, making it impossible to keep his scam afloat.
Madoff died in federal prison in April 2021 at the age of 82 after 11 years behind bars marked by rapidly declining health before he succumbed to kidney failure.
When Madoff was first arrested it was estimated that the losses related to his scam were as high as $65 billion, with some 41,000 clients having lost money. That figure was later substantially lowered to around $18 billion when phony paper profits were deducted from the total. At the time of his death, investigators said they had managed to recover $14.4 billion of it.
Madoff had revealed the stunning scam to his sons, Mark and Andrew, the day before his arrest, and they had contacted the FBI. The next morning at 8:03 a.m., agents appeared at the door of the Upper East Side penthouse that Madoff shared with his wife, Ruth.
According to the agents’ report, Madoff politely invited them in, and, when they asked if he knew why they were there, he said he did. When asked whether there was an innocent explanation for it all, Madoff replied: “There is no innocent explanation,” the report stated.
Madoff then gave a brief overview of the scam he had been running for decades, admitting that he had used client money to pay out other clients looking to sell their positions or close their accounts rather than through genuine investment returns, a Ponzi-scheme hallmark.
He said that as the economy disintegrated amid the financial crisis that had set in earlier that year, his fund had become “insolvent,” and he was unable to continue with his fraud.
Madoff was adamant from the start that he was solely responsible for the fraud. “It’s all me doing it,” he said.
He then told agents that he expected “to go to jail,” and handed over his passport. He was then arrested and taken to federal court in lower Manhattan.
The arrest triggered a frantic sequence of events, with teams of agents rushing to Madoff’s office in the Lipstick Building in Manhattan, a backup office in East Elmhurst, Queens, and a voluminous storage facility in Queens to recover thousands of boxes of files.
Madoff pleaded guilty just three months later to charges of securities fraud, money laundering and perjury and was sentenced to 150 years in prison.
As his health declined and he was deemed terminally ill, Madoff applied for compassionate release. The judge in the case rejected the appeal, arguing that Madoff “was never truly remorseful, and that he was only sorry that his life as he knew it was collapsing around him.”
From the archives (June 2013): Madoff: Don’t let Wall Street scam you, like I did