How mad was Madoff?

Madoff: The Man Who Stole $65 Billion

By Erin Arvedlund

Published by Penguin, 2009

Available at Asia Books

Reviewed by Paul Dorsey

Recessions, the economist John Kenneth Galbraith once said, "catch what the auditors miss". In her recounting of the Bernard Madoff debacle, Erin Arvedlund also quotes a Wall Street ratings-agency executive: "Had the stock market not crashed, Madoff might never have been revealed."

Such is the less-than-satisfying silver lining to the gloomy storm seeded by Madoff, history's biggest thief, who ruined lives and bankrupted charities so he could collect fine wristwatches.

At his trial last March, just before he was jailed for a century and a half, Madoff turned to his gasping victims in the courtroom and apologised. Again, no one was satisfied.

He'd refused to cooperate with investigators and he pleaded guilty, meaning all his dirtiest secrets went with him to prison. In the weeks preceding his arrest, he and his wife squirreled away as much of their ghastly wealth as they thought possible.

Madoff moved forward his firm's annual Christmas party to the night before his expected arrest, and though glum at the event, declined to tell his staff why - that the empire was about to collapse and they'd soon be out of work.

His sons called the police the next morning. He knew the cops were coming and still didn't change out of his pyjamas.

"Madoff," Arvedlund writes, "even consulted Martha Stewart's jail counsellor, who had helped her cut the best deal on which location to serve out her insider-trading prison sentence."

"Madoff: The Man Who Stole $65 Billion" is an engaging book about a crime for the ages that's nevertheless been completely overshadowed by the scale of corporate corruption disclosed in its wake.

Arvedlund has expanded the article she wrote for Barron's magazine in 2001, a story that she repeatedly cites as one of the first alarm bells sounded about Madoff, even though she admits he offered her nothing solid to go on.

 The problem with the book is that, chapter after chapter, it sticks to the popular modern format of magazine articles - a rambling, descriptive, set-the-scene introduction and drawn-out profiles of the main characters.

It's hard to tell the red meat from the red herrings - between the essential details and what's inconsequential - until you've chewed through everything. This gets tiresome very fast.

At no point is the book chronological, and the meandering digressions pile up annoyingly in a tale that, with its roots in high finances, can't help but be complicated enough already.

That said, Arvedlund does a fine job of explaining the densely knotted web of high finances, including the stacks of strata where hedge-fund managers hide their loot. If you've never dabbled in the stock market, you'll get a good idea here of its appeal and its perils.

The heart of the book beats for the people Madoff swindled, not the rich and famous ones but the average folks. The Madoff Victims Coalition maintains a list of 14,000 "casualties", many of whom lost all their savings. They're currently waiting to see if Securities Investor Protection Corp will find them adequate compensation - and whether the government will bring to justice any of Madoff's "enablers".

Whatever losses they recoup or justice they see in the courtoom in the future cannot repair the damage done to the whole of society by one greedy man.

"Madoff," writes Arvedlund, "personified all that was false, all that appeared to be upside-down in the world. Homes weren't worth what was once thought, stock prices stopped going up, all assets seemed to collapse in value at the same time.

"In the midst of the financial crisis, the Madoff scandal gave Americans - and people all over the world - just one more reason not to trust Wall Street or the government that was supposed to keep it in check ...

"For if Uncle Bernie couldn't be trusted, who could?"