By Michelle Singletary
Sunday, May 3, 2009
The infamous Bernard L. Madoff will no doubt be a boon to the book industry.
With great speed, publishers will turn out books by financial reporters and historians analyzing Madoff and his methods in conning a great many people and institutions, including a senator, major financial companies, universities, Nobel laureate Elie Wiesel, movie stars, and the charity established by movie director Steven Spielberg.
In "Catastrophe: The Story of Bernard L. Madoff, The Man Who Swindled the World" (Phoenix Books. $14.95), Deborah and Gerald Strober dip into the perspective of the unknown individual investors, many of whom saw their life's savings vanish. It's the billions of dollars lost by these poor souls that anger the Strobers.
"It appears now that Bernard Madoff did not distinguish between his wealthy clients and the so-called little people, making him an equal opportunity thief," the couple write.
The Strobers' book, one of the first rushed out on Madoff, is the May pick for the Color of Money Book Club.
If you haven't taken the time to devour the many news reports on Madoff's dealings, the Strobers' book will catch you up. Its initial printing didn't include the money manager's March appearance and sentencing in federal court, so be sure you get the updated version.
Madoff pleaded guilty to 11 felony charges, including securities fraud and investment adviser fraud, in what was an elaborate Ponzi scheme. No one really knows how much he stole, but reports put it at an estimated $65 billion.
Madoff, a former chairman of Nasdaq, used clients' funds to pay other clients who sought to redeem their investments.
"I am so deeply sorry and ashamed," Madoff told U.S. District Judge Denny Chin. "I am painfully aware that I have deeply hurt many, many people."
"Catastrophe" is an intriguing, straightforward account of a man whose deception lasted decades. The Strobers, whose previous books include biographies of Billy Graham and Rudy Giuliani, ask lots of questions they can't answer given the quick publishing schedule. Instead, the book is filled with media reports supplemented with more than two dozen interviews in an attempt to understand the man behind the con.
We learn that Madoff would turn away some potential investors to give an air of exclusivity that in turn heightened his allure to other investors.
Brilliant plan when you think about it. It played right into people's need to get what others can't have. It's like women who vie to be the first to strut around carrying trendy handbags that others can't get or afford.
"From the vantage points of Manhattan, the Hamptons, and Palm Beach, Madoff observed his wealthy neighbors, joined their exclusive clubs, established their trust, and soon had them literally begging to be given the opportunity to invest," the couple observes.
As the Strobers conclude, it was stunning how little people knew about how Madoff made money for them.
The authors explain that Madoff exploited the fact that "most of the individual investors and institutional representatives lusting to gain his attention were not very interested in learning the truth of how he operated. He knew they ached to buy into his mystique -- and at his price."
And what a price so many paid. Some of the hardest hit by this Ponzi scheme were philanthropic organizations. The Strobers also spend a fair amount of time discussing the generations of wealth that were wiped out because of Madoff and the impact on the victims. It's heartbreaking.
One particular gem in the book is a letter written by whistleblower Harry Markopolos, who tried to warn the Securities and Exchange Commission that Madoff was running a scam. The 2005 letter, titled "The World's Largest Hedge Fund is a Fraud," is excruciatingly detailed and complicated, and yet I read every word.
You could spend hours on the Internet finding much of what the Strobers present in their book. Or you could save yourself the time and read the Strobers' account of the man who made off with a bundle.
It is easy to be a member of our book club. We don't meet -- in person, that is. We do come together near the end of the month for a live online discussion. Even if you haven't had a chance to read or finish the book, join me at noon May 21 at http://www.washingtonpost.com. The Strobers will take your questions about their research on Madoff. As a bonus, every month I randomly select readers to receive a copy of the selected book, donated by the publisher. For a chance to win a copy of "Catastrophe," send an e-mail to firstname.lastname@example.org. Please include your name and address.
-- By mail: Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.
-- By e-mail: email@example.com.
Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.