No One Would Listen: A True Financial Thriller (58 page)

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Authors: Harry Markopolos

BOOK: No One Would Listen: A True Financial Thriller
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The Madoff investigation, which he started in early 2000, was his first financial fraud case. He’s been hooked ever since.
Acknowledgments
 
Many people contributed to this book, so it’s hard for me to consider it a singular effort. To my friends and teammates Frank Casey, Neil Chelo, and Michael Ocrant for your willingness to risk it all over so many years under the very worst circumstances. You contributed so much to this story that you deserve as much credit as I do for exposing the Madoff fraud and the weaknesses of the Securities and Exchange Commission (SEC). Your dedication to our nation’s core values speaks volumes about your character. I have led many whistleblower teams over the years, but never one that faced danger like this team did; yet each of you pressed on regardless. And you did it for zero compensation because it was the right thing to do, proving that some things are just so important that you know you have to do them for free. This country needs to produce more good citizens like you, because right now the bad guys are winning. I hope this book inspires others to follow in your footsteps.
 
To my personal attorney, Dr. Gaytri Kachroo. Thank you for representing me pro bono and sharing your experiences about this case. You have always been able to see three steps into the future and outthink our opponents.
To my wife Faith for allowing me to work on this case even after realizing how dangerous it had become. I promise I will never do another case that puts our family at risk. If I had known how bad this case would get I would never have pursued it. No husband should ever have to ask his wife to defend the second floor armed with a pistol.
To David Fisher, who put up with the five of us and our too many edits and rewrites. No one knows organized crime better than you do, and that’s what this was at its core—a criminal conspiracy that spanned the globe. It was a pleasure working with you. To Frank Weiman, our literary agent, whose patience we tried and tried again.
To the following partners at the Boston office of McCarter & English LLP, thanks for preparing me, pro bono, to testify before Congress: Burt Winnick, the Honorable Paul Cellucci, and Bill Zucker.
To Phillip Michael, my main
qui tam
attorney and confidant in working with so many brave whistleblower teams. Thanks for being a world-class enforcement attorney! Thanks also to the whistleblowers on Cases 81, 89, 92, 93, 94, 95, and 96. You are unsung heroes defending our nation’s citizenry against those companies that would loot this nation’s tax dollars. Thanks also to attorney Mike Lesser at Thornton & Naumes LLP for carrying on without me while this book was written.
To Pat Burns, Jeb White, and all the
qui tam
whistleblower attorneys at
TAF.org
for fighting the good fight against crooked corporations. Thank you for everything you’ve taught me.
Thanks to Joe Wells and Kevin Taparauskas at the Association of Certified Fraud Examiners for the excellent training and timely advice.
To Sergeant Harry Bates of the Whitman Police Department. Thanks for your help planning my personal security and keeping it a secret all these years. And my entire family thanks the townspeople of Whitman, Massachusetts, for being so protective and supportive after this case became public. I apologize for all the commotion this caused the town.
To my father Louie, thank you for teaching me to stand up and fight no matter the size of the opponent. You watched me lose and you were okay with it even while I was ashamed. To my mother Georgia for being a stay-at-home mom and superb educator.
To Colonel Michael N. Schleupner, my former battalion commander, thank you for the example you set for me. Your moral courage in always doing the right thing has always inspired me. Ditto for Colonel Ken Pritchard, Lieutenant Colonel James Berger, and Lieutenant Colonel Mike Tanczyn. I witnessed each of you stand up for what was right, and it hurt your military careers in the National Guard and Army Reserve but you did the right thing anyway. Moral courage is often the hardest to come by, and no one gives you a medal for having it; but without it the world quickly falls apart.
To some of the many good people in the financial services industry who helped me with this investigation: Dan diBartolomeo (Northfield Information Services), Andre Mehta (Cambridge Associates), Dave Henry (Carruth LLC), Nick Marfino (ConvergEx), Joel Kugler (Meridien Partners), Matt Moran (Chicago Board Options Exchange), Bud Haslett (CFA Institute), Tom Huber (Glenmede Trust), and Jeff Fritz (Oxford Trading Associates). Your help was invaluable in pursuing the case.
At Citigroup, thanks to Charlie Miles and Holly Robinson for your astute observations. To Leon Gross, thanks for your expert analysis; I wish the SEC had bothered to call you—things might have been different if they had. All of you were helpful at various points during my team’s investigation, proving that plenty of honest people work on Wall Street.
I would like to thank the following people at Goldman Sachs for teaching me all about derivatives math: Dr. Joanne Hill, Dr. Emanuel Derman, Rebecca Cheong, Michael Liou, Jack Lehman, Mark Zurack, and Amy Goodfriend.
To the late John “Front Page” Wilke of the
Wall Street Journal
for your courage and inspiration on all those corruption cases you broke. Real investigative journalists are a rare breed, but you were one of the best. I miss you.
To Gregory Zuckerman of the
Wall Street Journal
and Ross Kerber of the
Boston Globe,
thank you for reporting the story when it first became public. You two went on faith and trusted me instead of the SEC as the case was breaking.
To Andy Court, Keith Sharman, and Reuben Heyman-Kantor at CBS News’
60 Minutes,
thank you for allowing me to explain to the victims what happened. Your investigative skills are unparalleled, and you discovered information that you wisely never reported because you know the difference between news and sensationalism.
To Diane Schulman for rescuing me in my time of need and to your husband John Davidow and Curt Nickisch of National Public Radio’s Boston affiliate for your in-depth reporting. To Eric King of
King World
News—thank you for teaching me how to interview.
To the men of Cathedral Prep in my hometown of Erie, Pennsylvania, thank you for your overwhelming support. Thanks especially to Chris Haggerty and my math teachers: Stanley Brezicki, Joanne Mullen, the late Sister Mary Denise, and the late Sister Mary DePaul.
To Ed Manion, thanks for believing me over the years and urging me to stay on the case well past the point of reason. To Mike Garrity, thanks for doing your best to get others in the agency to listen.
To SEC Inspector General H. David Kotz. You are my hero. I’d love my three young sons to turn out just like you. Your hardworking inspector general team restored my faith in government. Thanks to Deputy Inspector General Noelle Frangipane, David Fielder, Heidi Steiber, Christopher Wilson, and David Witherspoon. Your dedication to the truth won out. If the SEC really does adopt all of your recommendations, your work will have been worth it—otherwise it will be business as usual at the SEC, and our nation can’t afford that.
To SEC Chair Mary Schapiro, thank you for having the moral courage to allow the SEC inspector general’s report to be issued as written despite what must have been overwhelming pressure from the senior agency staff to heavily censor it instead.
To all of the FBI agents tirelessly working on this case in order to bring the guilty to justice. Personal thanks to special agents (first names only) Keith, Steve, Julia, Rob, and Paul. The case is in good hands now. Godspeed, keep your chins up, and go where the evidence leads you—because this case is surely the case from hell. No matter what you do, you’ll never get them all. Just try to catch as many as you can. That’s all anyone can ask of you.
And now I would like to make some very important acknowledgments on behalf of each member of the investigation team: Frank Casey, Neil Chelo, and Michael Ocrant, as well as my attorney, Gaytri Kachroo. This story would not be complete without them and their supportive friends and families.
Frank Casey wishes to thank his wife Judy and the late Major Peter W. H. Van Dine, who taught him the skills and responsibilities of leadership when he was a Reserve Officers’ Training Corps (ROTC) cadet at Penn State.
Neil Chelo wishes to acknowledge his parents, Benjamin and Sevinc Chelo; brother John and daughter Sarah Chelo; as well as George Devoe Jr., CFA; Robert Ferguson, CFA; Scott Franzblau; and Jeremy Gollehon.
Gaytri Kachroo thanks her children, Kirin and Maya Kachroo-Levine; her brothers, Leeladher and Vidyadher Kachroo; her sister-in-law, Andrea Gauntlet; and her mother, Mohini Dhar Kachroo. Big thanks to Martha Minow; Mark Byers; Representatives Kanjorski, Frank, Arcuri, Ackerman, and Garrett and their incredibly helpful staffs; Mary Schapiro; David Kotz; Javier Cremades; and the executives of the Global Alliance.
Michael Ocrant thanks his wife Gail and son Max.
Last but not least, acknowledgments on behalf of David Fisher go to editors Meg Freeborn and Bill Falloon, who did such wonderful work under real pressure, as well as to Nancy Rothschild and the rest of the fine people at John Wiley & Sons. Thanks also go to Frank Weimann and Elyse Tanzillo of the Literary Group International.
David also wishes to thank Randall Arthur, Linda Yellin, George Cole, and Patricia Black of Wallin, Simon & Black; the entire Hicker family; his wife, Laura Stevens; sons Taylor Jesse and Beau Charles; Belle, their dog; and Buck, the Hall of Fame cat.
HARRY MARKOPOLOS
 
Index
 
 
Absolute Return
 
Absolute return strategy
 
Access International Advisors .
See also
de la Villehuchet, Rene-Thierry
 
Accounting firms
 
Ackerman, Gary L.
 
Adelman, Jim
 
Adelphia case
 
Advisors Act
 
Affinity scheme
 
Alarm systems
 
Arthur Treacher’s Fish and Chips Restaurant
 
Arvedlund, Erin
 
Asian investors
 
Association of Certified Fraud Examiners
 
Audit opinions
 
Avellino & Bienes
 
 
Bachenheimer, Doria
 
Bank foreclosures
 
Barron, Charles
 
Barron’s
 
Bates, Harry
 
Becker, David
 
Benchmark Plus fund
 
Bergers, David
 
Bernard L. Madoff Investment Securities LLC,
 
Bid/ask spreads
 
Black box strategy
 
Bloomberg terminals
 
Boilermaker’s Union
 
Bounty program
 
Broker-dealer profits
 
Brown, Jerry
 
Broyhill, Paul H.
 
Broyhill All-Weather Fund
 
Bull spreads
 
Burns, Pat
 
Bush administration
 
 
Call options
 
Capito, Shelly
 
Casey, Frank
 
background of
 
careers at Rampart
 
Chicago Art Museum
 
continued activities of
 
and Dave Fraley
 
discovers Bernie Madoff cash needs
 
discovers fraudulent trades
 
discussion on Bernie Madoff
 
and Harry Markopolos
 
helps Neil Chelo relocate
 
impact of Bernie Madoff case on
 
leaves Benchmark
 
leaves Rampart
 
London based funds of funds avoids Bernie Madoff
 
on Madoff operations
 
meets Mike Ocrant
 
meets Paul H. Broyhill
 
meets Scott Franzblau
 
and mobsters
 
on Ponzi scheme
 
on Ponzi scheme vs. front-running

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