No One Would Listen: A True Financial Thriller by Harry Markopolos (i wanna iguana read aloud .txt) 📕

I do in-depth reporting and sometimes a story’ll take me several months. So if you’re in a hurry, I’m probably not the right person for you to be talking to.

“On the other hand, when I do land a story it usually ends up on the front page.” As I found out, John Wilke was one of the best investigative reporters in the newspaper business. He wrote about antitrust cases, crooks in Congress malfeasance, the Chinese vitamin industry, and corruption in the financial industry. He had put people in jail. After our first conversation I began following his stories, and he turned up on the Journal’s front page so often that I nicknamed him Front Page Wilke, which he loved.

It was clear to me that Pat Burns was right: Wilke was obviously the right reporter for this story. He had reliable sources inside the financial industry, so he could do the necessary background investigation; he knew the difference between puts and calls and had law enforcement connections who would act on his reporting; and he was based in Washington, D.C., rather than New York. That made me feel a lot safer. I had been taught in the army to camouflage the direction of the main attack, so if a Washington-based reporter broke the story, hopefully Madoff would be looking south and never suspect that the article had originated northward from Boston. Finally I sent him all my material.

We spoke on the phone often, and finally he decided to pursue the story. John never made a commitment that the story would run, but certainly he gave me every indication he was going to investigate and see where the facts took him. Eventually I went to a Taxpayers Against Fraud conference in Washington and snuck out to meet secretly with him at a local bar—naturally.

We sat in a corner for several hours. Wilke asked all the right questions, the questions the SEC had failed to ask: Who is involved? How do you know? Where did you go to find out? Who did you speak to? Who, what, when, where, and how much? (Especially how much?) Finally, as I wrote to the team, “Right now he’s jammed with a front page story exposing fraud by a major mutual fund family which involves an aerobics instructor (sounds like it’ll be sex with financial fraud so it’ll be juicy). Once that story hits, Bernie is next.”

Based on the discussions I’d had with Wilke, I continued, “The current thinking is that this story can’t just be a rehash of the Ocrant article in MARHedge and the Barron’s article which Madoff somehow survived. They’re going to want to dig deep, real deep, and it looks like they’re going to investigate BM’s entire 40-year career looking for dirt. This could take several weeks.”

Bernie is next; that’s what Wilke had told me. And if Charlie Brown’s Lucy had been standing there holding the football right in front of me I couldn’t have been more confident we finally were going to take down Bernie Madoff.

What I did not know for sure at that time was that the SEC had finally decided to investigate Madoff. As I’d told Ocrant, I’d heard rumors that something was happening, but no one—and that includes Ed Manion and Mike Garrity—would provide any details. The report issued in September 2009 by the SEC’s inspector general, David Kotz, confirmed many of my suspicions—as well as my worst fears—about what was going on inside the SEC. Whereas Garrity had sent my report forward and stated that it was about the most complete filing he’d ever seen, and in the Boston office I was regarded as a “credible” person, the New York office treated me and my submission with disdain. Basically, according to this 477-page report, Meaghan Cheung’s team was incapable of winning a game of Clue if they were given all the answers, which is pretty much what happened in this situation. For example, the only thing about my red flags that concerned Doria Bachenheimer, the assistant director of enforcement, was the fact that Madoff’s earnings were so consistent. As she told Kotz, “I was trying to come up with a theory of what he was doing, so I was thinking was this like an accounting case, is this like cookie-cutter reserves, does he have money somewhere else? When he said he had these other accounts, I just thought let’s get the records and see if there is some way he’s smoothing earnings. I don’t even know if you can do that. I was wondering.”

Once again, your tax dollars at work.

Bachenheimer sent my submission to Simona Suh, an attorney on the enforcement staff. Suh had even less experience in this area than Bachenheimer; in fact, this was the first time she had led an investigation. She had never been involved in a Ponzi scheme and had no idea how to proceed. So I guess this was on-the-job training to prepare her if a really big case came in.

Bachenheimer told the inspector general that she didn’t really think I was credible because I didn’t work for Madoff and hadn’t invested with him. As she said, Markopolos “was not an employee and, as far as I knew, received no information from Madoff.” In other words, Madoff didn’t tell me he was running a Ponzi scheme. As for all the red flags in my report, she thought they were only “theories” and that “it wasn’t something we could take and bring a lawsuit with.... We had to test it and substantiate it.”

This was from the assistant director of enforcement. What did she think enforcement meant?

As Bachenheimer explained, “It’s very challenging to develop evidence that something is going wrong until the thing actually falls apart.”

In case you’re wondering, I am quoting word for word from the inspector general’s report.

Cheung claimed she was skeptical about my claims because “I remember thinking after I spoke to him that he wasn’t technically a whistleblower because it wasn’t inside information so that was, I think,