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Back to Podcast EpisodesBernard Madoff and the Largest Fraud in Financial History (Part Two)
The shocking story behind the biggest swindle in the history of Wall Street.
But, if many of Madoff’s clients were happy to not question his returns and process, the cynical, highly competitive and data driven world of Wall Street always invited scrutiny of its biggest stars, even if this was the result of envy or alienation. In Harry Markopolos, one found an individual motivated by both market place rejection and a competitively brilliant grasp of financial marketplace analytics. In 1999, Markopolos was employed as a portfolio manager by Rampart Investment Management, a small Boston, Massachusetts options trading shop that managed a modest amount of money. Markopolos was quite familiar with Bernie Madoff, his firm having marketed a split-strike conversion product that he helped develop. Unfortunately, the product did not generate particularly good returns and was eventually scrapped, Markopolos additionally both intrigued and frustrated by repeated stories of the phenomenal performance generated by Bernie Madoff. If you’re so smart, why the hell can’t you do what Bernie does? His hard boiled, Boston sales compatriots constantly needled him. To a quant like Harry Markopolos this was the ultimate put down and challenge, but there wasn’t much he could substantively do about it.
That changed when a senior co-worker named Frank Casey, returned from a New York sales call he had taken with Rene-Thierry Magon de la Villehuchet at Access International Advisers. Villehuchet not only managed money for some of Europe’s most high profile aristocrats he was literally a member of the French nobility himself. In his sixties, he was a client of Bernie Madoff’s since 1985, and rebuffed Casey’s sales pitch with glowing accounts of Madoff’s consistent high returns and reporting process that purported to send daily updates of all transactions performed on behalf of Access’s accounts. Casey then played the only sales card he had left, asking why Rene-Thierry allowed Madoff to hold the securities he purchased on Access’s behalf himself, as opposed to a third party custodian which was required for registered investment managers. Villehuchet’s answer was simple. Bernie M
Published on 2 years, 4 months ago