Ponzi Supernova
January 15, 2017 8:58 AM   Subscribe

“At one point, he cornered the hot chocolate market,” Fishman told MarketWatch. “He bought up every package of Swiss Miss from the commissary and sold it for a profit in the prison yard. … He made it so that, if you wanted any, you had to go through Bernie" ... “He’s a star in prison. He stole more money than anyone in history, and to other thieves, this makes him a hero,” said Fishman, a journalist who spoke with Madoff extensively. Bernie Madoff manipulated the market for hot cocoa mix at his prison

From the Grauniad: Never-before-heard Bernie Madoff tapes reveal details of ruinous Ponzi scheme

Part of the media hubub around "Ponzi Supernova," a new audio series from Steve Fishman being published by Audible.
posted by chavenet (42 comments total) 23 users marked this as a favorite
 
This special status isn’t new. In 2011, his daughter-in-law Stephanie Madoff Mack revealed that she had sent Madoff a bitter letter explaining all the things he was missing out on. He responded, she said, by explaining he was “quite the celebrity,” and that other inmates treated him like a Mafia don, calling him “Uncle Bernie” or “Mr. Madoff.”

“I can’t walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up,” Madoff reportedly wrote to her. “It’s really quite sweet, how concerned everyone is about my well being.”

Madoff Mack came forward about the letters the year after her husband, Bernie Madoff’s eldest son, committed suicide.


I guess it would be too much to expect a sociopath to show remorse, but for fucks sake.
posted by percor at 9:05 AM on January 15, 2017 [73 favorites]


Coincidentally, HBO's The Wizard of Lies, starring Robert DeNiro and Michelle Pfeiffer as Bernie and Ruth Madoff, premieres in May.
posted by Doktor Zed at 9:06 AM on January 15, 2017 [3 favorites]


They liked him so much they made him judge of the puppy kicking contest.
posted by The Underpants Monster at 9:16 AM on January 15, 2017 [10 favorites]


Is this available to actually listen to without needing an Audible subscription?
posted by hippybear at 9:17 AM on January 15, 2017 [1 favorite]


Madoff and all of these scumbags who got off in the 1980s with slaps on the wrist (Milken etc.) should have been gibbeted from the lampposts on Wall Street as warnings to others, IMO.
posted by entropicamericana at 9:29 AM on January 15, 2017 [22 favorites]


I'm just waiting for him to corner the market in Egyptian cotton.
posted by flabdablet at 9:31 AM on January 15, 2017 [9 favorites]


It reminds me of a quote from the novelist Sigrid Undset, from dialogue on an otherwise unrelated matter: "if a man knew no yearning for God and God’s being, then he would thrive in Hell, and we alone would not understand that he had found his heart’s desire."

I'm not religious; I just see a man thriving in Hell. It's not possible to punish people who lack the capacity to feel guilt without doing something unspeakable, and we really, really must not do what that would take. What we do to them, we do for the sake of the rest of us, and so we should be very careful; but generally, we aren't.
posted by Countess Elena at 9:34 AM on January 15, 2017 [56 favorites]


This special status isn’t new. In 2011, his daughter-in-law Stephanie Madoff Mack revealed that she had sent Madoff a bitter letter explaining all the things he was missing out on. He responded, she said, by explaining he was “quite the celebrity,” and that other inmates treated him like a Mafia don, calling him “Uncle Bernie” or “Mr. Madoff.”

“I can’t walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up,” Madoff reportedly wrote to her. “It’s really quite sweet, how concerned everyone is about my well being.”


Take a look at the prison where he is 'incarcerated'. It's a white collar crime country club. Of course he is their hero.
posted by srboisvert at 9:38 AM on January 15, 2017 [15 favorites]


Yeah. Put him in the general population in Rikers and then read me his letters.
posted by Splunge at 9:53 AM on January 15, 2017 [24 favorites]


Huh... He's George Sr.
posted by codacorolla at 10:00 AM on January 15, 2017 [27 favorites]


The Swiss Miss thing seems as concise an example of capitalism as any; create a system which enforces scarcity of a desired item in order to help profits flow from the many to the few.

(You don't even need to make something, is the really amazing part! Imagine Madoff being handed a cacao bean and a length of sugar cane and trying to corner the hot chocolate market. Ah, to be a fly on the wall of that prison kitchen.)

Of course, the Marketwatch article doesn't call the ridiculously small-time Swiss Miss thing violence or theft, despite the fact that citizens' violations of prison rules regarding the import of Swiss Miss would be met by violence, and Madoff's using the cocoa as a lever to gain power over other people. It's just a clever and harmless little business.
posted by Greg Nog at 10:09 AM on January 15, 2017 [19 favorites]


Capitalism: It's just a clever and harmless little business.
posted by hippybear at 10:12 AM on January 15, 2017 [26 favorites]


Or maybe it's violence and theft...
posted by Kirth Gerson at 10:21 AM on January 15, 2017 [3 favorites]


Madoff's using the cocoa as a lever to gain power over other people

That's the thing that seems weird to me. I mean, "country club" or not it's still a prison with some seriously bad people in it -- real no-shit mob bosses -- and it surprises me a little that fucking around with their small comforts hasn't gotten him shanked.
posted by ROU_Xenophobe at 10:29 AM on January 15, 2017 [14 favorites]


This is actually kind of awesome. It's what I'd like to see happen to all corporate criminals. I mean, if you fine them 10 million dollars, it's the cost of doing business. Lock em up in real prison, it costs tax payers a shit ton more money for non violent offenders and they're still not remorseful or rehabilitated (I don't think we ought to be putting anyone in "real" prison as it's run in the US today, violent or not, but that's another story).

But put them away for good someplace where they can scratch their itch with monopoly money manipulating the commissary market and let us laugh at their harmless antics. Hell, broadcast it on tv with ad revenues going to pay restitution to the victims.
posted by Slarty Bartfast at 10:42 AM on January 15, 2017 [11 favorites]


Also,

1. Steal billions of investors' money in pyramid scheme
2. Ruin thousands of lives
3. Get caught and get sent to country club prison
4. Corner hot chocolate market
5. Profit!
posted by Slarty Bartfast at 10:47 AM on January 15, 2017 [9 favorites]


But put them away for good someplace where they can scratch their itch with monopoly money manipulating the commissary market and let us laugh at their harmless antics. Hell, broadcast it on tv with ad revenues going to pay restitution to the victims.

Reminds me of the prison in "Minority Report."
posted by rhizome at 10:54 AM on January 15, 2017


This special status isn’t new. In 2011, his daughter-in-law Stephanie Madoff Mack revealed that she had sent Madoff a bitter letter explaining all the things he was missing out on. He responded, she said, by explaining he was “quite the celebrity,” and that other inmates treated him like a Mafia don, calling him “Uncle Bernie” or “Mr. Madoff.”

Huh... He's George Sr.

"I'm doing the time of my life!"
posted by Orlop at 11:08 AM on January 15, 2017 [11 favorites]


I don't think prisons should work like this. Give the people their damn hot chocolate and honey buns or whatever. I hate hearing about this stuff it just gets me right in the mirror neurons.
posted by bleep at 11:34 AM on January 15, 2017 [10 favorites]


it surprises me a little that fucking around with their small comforts hasn't gotten him shanked.

well, fingers crossed!
posted by poffin boffin at 11:51 AM on January 15, 2017 [3 favorites]


...Says Madoff. This sounds like bullshit to me.
posted by borges at 12:05 PM on January 15, 2017 [6 favorites]


When does he get out? Seems to me he'd be a natural for the Trump cabinet.
posted by zadcat at 12:10 PM on January 15, 2017 [8 favorites]


Presidential pardon!
posted by jenfullmoon at 12:38 PM on January 15, 2017 [3 favorites]


and it surprises me a little that fucking around with their small comforts hasn't gotten him shanked.

His fellow prisoners are likely not people who struggle to refill their commissary accounts (or get contraband delivered).
posted by srboisvert at 12:39 PM on January 15, 2017 [3 favorites]


i can't help but wonder if madoff got trump caught up in his scheming but trump was/is too stupidly vain to admit that he got taken for a multi million dollar ride.
posted by poffin boffin at 12:59 PM on January 15, 2017 [5 favorites]


“One of the most important things about this story is that it is a mistake to view him as an outlier,” Fishman told MarketWatch. “He profited from the way financial systems work, which is a point most people don’t really grasp. He wasn’t a freak. He was sustained by the system, embraced by it, because it profited from him.”

The most glamorous and important sector of our economy, as a matter of routine, produced someone exalted by the people we see fit to put into prison
posted by Ray Walston, Luck Dragon at 1:07 PM on January 15, 2017 [4 favorites]


I think that Trump would have had to actually have money of his own to give Madoff, rather than big talk and empty promises.

On the other hand, there's no better mark than a con man ...
posted by phack at 1:07 PM on January 15, 2017 [1 favorite]


I don't think prisons should work like this. Give the people their damn hot chocolate and honey buns or whatever.

Unfortunately, the likelihood of the prison-industrial complex ever giving up a rentier opportunity without a huge struggle and scads of counter-lobbying is vanishingly small.
posted by Halloween Jack at 2:09 PM on January 15, 2017


I think Trump and Madoff were basically doing the same thing and probably saw each other coming.

The difference is that Madoff was offering a consistent and generous return while Trump was screwing over anyone he could, from the wedding caterer to the investors in his latest public offering, so Trump didn't have to kite it quite as high or fast to keep it going. Still, I tend to believe Trump has been upside-down ever since the Atlantic City casino empire bankruptcy, and it's only been his talent selling his name to newer marks that has allowed him to keep the whole jet and skyscraper lifestyle going. And like Madoff, Trump has had to go overseas to find those new marks, because nobody in the US will give him a loan any more.

As I remarked elsewhere, if you have a billion dollars in assets but they're the collateral on a billion and a half in loans, then I have more money than you do because I have more than zero.

I think this is the reason Trump couldn't properly divest his investments when he won the election. Winning the election wasn't the plan and it became a major problem for him; you can't divest if you are underwater. He can at least trust the kids to keep the big secret as they keep it going in his stead.
posted by Bringer Tom at 2:11 PM on January 15, 2017 [28 favorites]


Are Madoff's prison fans ............ Berniebros?
posted by grobstein at 2:29 PM on January 15, 2017 [4 favorites]


“One of the most important things about this story is that it is a mistake to view him as an outlier,” Fishman told MarketWatch. “He profited from the way financial systems work, which is a point most people don’t really grasp. He wasn’t a freak. He was sustained by the system, embraced by it, because it profited from him.”

“One of the most important things about this election is that it is a mistake to view Trump as an outlier,”. “He profited from the way the corporate media works, which is a point most people don’t really grasp. He wasn’t a freak. He was sustained by the system, embraced by it, because it profited from him.”
posted by Beholder at 2:35 PM on January 15, 2017 [4 favorites]


Is this going to be another Trump thread? Seriously?
posted by indubitable at 3:09 PM on January 15, 2017 [7 favorites]


every thread will be a trump thread until we drive him and his gang of venal sycophants into the sea
posted by poffin boffin at 4:01 PM on January 15, 2017 [36 favorites]


Set dressing was also important: on the credenza behind his desk, Madoff displayed a sculpture by the renowned artist Claes Oldenburg of a giant black screw, listing a little to one side. The 1976 sculpture, called Soft Screw, drew nearly $50,000 at Sotheby’s when Madoff’s assets were sold off after his disgrace.

When financial regulators visited his firm’s offices, Madoff put the Soft Screw away.


I see what he did there.
posted by mandolin conspiracy at 5:07 PM on January 15, 2017 [1 favorite]


Most of the financiers who brought down the system got away with it. Madoff is the token whom we can put in a cage and laugh at his cute antics.
posted by Obscure Reference at 5:26 AM on January 16, 2017 [2 favorites]


i can't help but wonder if madoff got trump caught up in his scheming but trump was/is too stupidly vain to admit that he got taken for a multi million dollar ride.

I don't think that makes much sense. My sense is that Trump has always had every available penny tied up in his various ventures. His ego is much too big for him to make the decision that someone else could get a better return than he could.

As I remarked elsewhere, if you have a billion dollars in assets but they're the collateral on a billion and a half in loans, then I have more money than you do because I have more than zero.

That really depends on how the assets and loans are valued. If you have a billion dollars worth of real estate that's yielding 12% financed by long term debt that costs you 6%, you're not really half a billion in the red.
posted by atrazine at 5:46 AM on January 16, 2017 [1 favorite]


That doesn't even rise to the billion dollar level. Homeless people living on the street with no debt have more money than many Americans. Student loans, car payments, rental lease, or worse, a mortgage.

Being worth $0 might be better than being worth -$100,000 on paper, and hey, being unemployed gives your all sorts of free time, but now that it's winter, I don't want to live in a tent on the street with no heat, sewage, or electricity. It's preferable to be in debt. If you're worth more than me, congratulations.
posted by fragmede at 7:10 AM on January 16, 2017


Homeless people living on the street with no debt have more money than many Americans. Student loans, car payments, rental lease, or worse, a mortgage.

Then why aren't we asking them for a dollar?
posted by Splunge at 3:19 PM on January 16, 2017 [1 favorite]


That really depends on how the assets and loans are valued. If you have a billion dollars worth of real estate that's yielding 12% financed by long term debt that costs you 6%, you're not really half a billion in the red.

This is true, and is similar to the reality fragmede mentions that your debt may be paying off in giving you a place to stay and other benefits. But the thing is, Trump acts exactly like someone who habitually kites checks. The stiffing of contractors, even for what should be relatively paltry amounts, is the kind of habit you develop when cash flow is an issue. I've seen at least two rich foreigners claim that they rescued him from bankruptcy (one by buying his stupid yacht when he was in a bind) only to be screwed over by him later.

And the piece de resistance of his bad business judgement, spending so much on the Taj Mahal that it bankrupted his Atlantic City casino empire, shows that Trump may simply have no real idea how to balance revenue and interest. Some of the things he does, like licensing his name for other peoples' buildings, generate pure revenue, but some of his most outlandish spending like the yacht and planes don't make him a dime. When he is spinning a deal I don't think he has any interest at all in how it dovetails with his other revenue and expenditure streams, and the aggregate risk. If he isn't upside down he is much closer to the line than he pretends to be. We know he has billions in outstanding loans from China and Russia, but we don't know the amount or terms or what those loans were for. At this point the possibility that those new loans are paying off the old loans his revenue can't keep up with seems very likely. That would explain why he doesn't dare release too much financial information and why he can't properly divest. The overall pattern of looking for new chumps offshore having worn out his welcome in the US also has a Bernie Madoff smell to it.

What separates Trump from Madoff is that Madoff offered a generous and consistent return, whereas Trump screws over anybody he can to avoid paying them. Trump also has some real revenue, such as the rent and licensing deals. This means he may not need to spin the Ponzi scheme up quite as fast as Bernie did. But would it really make sense for someone who has a billion dollar net worth to screw over a wedding caterer for $30K, and personally explain to them that there's nothing they can do about it and he'll destroy them if they sue? You do shit like that when $30K is kind of important to you.
posted by Bringer Tom at 3:59 PM on January 16, 2017


You do shit like that when $30K is kind of important to you.

Or when screwing over everyone you can is important to you. My understanding of Trump's business practices is that the only contractors or vendors he pays are the Mafia-connected ones. It warms his "heart" to fuck everyone else. Now that he's going to be President, maybe he'll start trying to screw the Mafia, too.
posted by Kirth Gerson at 5:57 PM on January 16, 2017 [1 favorite]


Now that he's going to be President, maybe he'll start trying to screw the Mafia, too.

Oh that would be joyous. The ghost of JFK is rubbing his hands in glee.
posted by Bringer Tom at 8:02 PM on January 16, 2017


From Reddit:
"IRL convict here that spent time at FCI Butner with Madoff. There are several things to point out here:

1) The prison commissary has limits on the amount of particular items you can buy unless they're trying to sell out of something because a supplier stopped carrying it or it's an item that rotates out occasionally. Madoff can only spend $270 /month at the commissary. He has a card, linked to his ID number, that debits money from his prison account, he doesn't get cash.

2) Buying items at the commissary and then reselling them at a markup is a common practice. It's called "running a store". Not everyone has the outside support or a good prison job to buy stuff on commissary. So if you got a hankering for some Ramen and Mackerel what do you do? You hustle up some stamps. Prison economy is run on the currency of "stamps". Literally US First Class postage stamps. A book (20 stamps) is worth $7.00 in prison to other prisoners. You can buy and sell goods and services with other inmates based on this. Want a nice hand drawn card for your mom for mother's day? Someone will draw one up for 10 stamps. He can then use those stamps to go buy some Raman from the "store man". Markup is usually 50%, or called 2 for 3 (you get 2, you pay back 3).

3) Madoff could hoard all the hot chocolate he wants but realistically he wouldn't make much money off of it anyway. Demand for Swiss Miss packs isn't ravenous in jail and, just like out here, you can out price yourself out of the market.

I know the guy is a scumbag and deserves to probably be in a lot worse place than he is. The Butner prisons are pretty relaxed, as is the case with most federal pens. Madoff stories are just a grab for readers who like to know if he's got beaten up or shanked. I can tell you this, Madoff is just another old white guy in a tan shirt and pants with a white name tag in a sea of sameness. For those of you that like to see justice take solace in this; the tame prisons are the ones where the loneliness and despair weigh the most. When you don't have to worry about other people and getting stabbed, all you're left with is yourself, by yourself. Bernie Madoff has that to look forward to for the rest of his life."
posted by Blasdelb at 3:18 AM on January 19, 2017 [1 favorite]


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