Personal Finance
Richard Behar exchanged emails with Bernie Madoff for a decade
Richard Behar
Courtesy: Lizzie Cohen
You probably haven’t heard Bernie Madoff‘s name in awhile, but that doesn’t mean the infamous fraudster’s story is over, or the pain he inflicted.
Irving Picard, an 83-old court-appointed trustee, still spends his days trying to claw back money from the those who benefitted from Madoff’s Ponzi scheme, and to reduce the staggering losses of others.
More than 100 legal battles over the greatest known fraud in history still rage on.
Richard Behar, who has just published a new biography, “Madoff: The Final Word,” is also still trying to understand how Madoff’s mind worked. What allows a person to rip off Elie Wiesel, who survived the Holocaust and went on to become a main chronicler of it? Or to sit with his wife, Ruth, in a theater and enjoy a movie while knowing that he’s erased the life savings of thousands of people all over the world?
Those questions haunted Behar — who tells CNBC he has long been fascinated by con-artists. So long after most other reporters had turned their attention elsewhere, he reached out to Madoff while the financial criminal served out his 150-year prison sentence in North Carolina.
Richard Behar’s book ‘Madoff: The Final Word.’
Behar started by sending his condolences to Madoff, whose son, Mark, had just died by suicide in Dec. 2010, the second anniversary of his father’s arrest.
Shortly after, an email subject line popped up in Behar’s inbox: “Inmate: MADOFF, BERNARD L.” That message was the start to a decade-long relationship between the two men, including roughly 50 phone conversations, hundreds of emails and three in-person visits. When Madoff died in April 2021, Behar was still writing the biography. Madoff often complained to Behar that he was taking too long on the book.
“He once joked that he’d be dead when it came out, which of course turned out to be true, although I never planned it that way,” Behar said.
CNBC interviewed Behar, an award-winning journalist and contributing editor of investigations at Forbes, over email this month. (The conversation has been edited and condensed for style and clarity.)
‘He never asked me one personal question’
Annie Nova: You write that you’re an investigative reporter with “a special fondness for scammers.” Why do you think that is?
Richard Behar: I’ve always been mesmerized by how the brains of scammers work. I’m especially intrigued, maybe obsessed, with scammers who steal from people who are very close to them — like Madoff did.
A scamster who I visited in prison in the 1990s did something similar. Until Bernie’s arrest, this guy ran the lengthiest known Ponzi scheme ever, for 11 years. He was orphaned and raised by an aunt and uncle, and yet financially devoured them, as well as his cousins, his wife’s parents, his best friend — even a nun who he charmed with his alleged faith in god. I wasn’t raised by my biological parents either, and spent my childhood in foster homes. I couldn’t pretend to imagine doing that to people who stepped up to care for me, but it’s endlessly fascinating to me. Maybe that’s where that fondness for scammers is rooted.
Bernard Madoff arrives at Manhattan Federal court on March 12, 2009 in New York City.
Stephen Chernin | Getty Images News | Getty Images
AN: Did Madoff take any interest in your life?
RB: Through a nearly decade-long relationship, he never asked me one personal question. That was mind-boggling. I’d sometimes give him openings, like telling him I grew up in a town not far from his hometown — with a similar but poorer Jewish subculture — but he said nothing. He couldn’t care less. I asked a psychologist about this, and she theorized that Bernie was such a malignant narcissist that he couldn’t “hold my reality, he could only hold his own.” I couldn’t be a three-dimensional human being to him, because if he can imagine that, he’d have to imagine the school teacher who has lost a pension.
AN: What was the most remorse you saw him show over what he’d done?
RB: I once asked if he could ever forgive himself for the Ponzi itself, and he said “No, never.” He insisted he felt great remorse for those who he stole from. But I never totally felt it. Never a tear. I asked why he didn’t cry at his sentencing, and he snapped: “Of course I didn’t cry; I was cried out.”
‘Prison was a great relief for him’
AN: How did Madoff say life in prison changed him?
RB: He never talked about it. He once described himself as feeling numb. I said, “I can’t imagine what it would be like.” He replied, “You don’t want to know, you don’t want to know.”
In some ways, I think being in prison was a great relief for him. Running a half-century Ponzi has got to be exhausting. In prison, he’d typically wake up in his cell at around 4 a.m., make coffee in bed with an instant hot water machine, then read, or listen to NPR until breakfast. He worked in the kitchen, then the laundry room and then oversaw the inmates’ computer room.
That last job cracked me up because he told me he could barely turn a computer on in his office, which should have been a red flag to everyone at the company that he wasn’t actually trading stocks.
AN: You write that he was seeing a therapist in prison. Do we know often this was, or for how long it lasted? Did it seem to be helping him?
RB: He ended one phone chat abruptly because he had to get to one of his weekly appointments with his psychologist. When he called me afterwards, I asked how it went. He laughed and said it was helpful, that she was a “terrific lady” and that he thinks he should have done therapy years before. But even if the sessions were helpful, he said he never found the answers he sought about why he did the fraud and why he hurt so many people.
NEW YORK – MARCH 12: Financier Bernard Madoff passes the gathered press as he arrives at Manhattan Federal court on March 12, 2009 in New York City. Madoff was expected to plead guilty to all 11 felony charges brought by prosecutors on financial misdoings, and could end up with a sentence of 150 years in prison.
Chris Hondros | Getty Images
He was disturbed by press reports that called him a sociopath. He said he asked his therapist, “Am I a sociopath? A lot of clients were friends and family — how could I do this?” Bernie claims that she told him that people have the ability to compartmentalize, like mobsters that kill and then go home and hold their kids.
You just put it out of your mind. I asked if she came up with a diagnosis. He said, no, just a compartmentalizer. Maybe she told him that to make him feel better since he wasn’t ever getting out.
AN: For so many years, it sounded like Madoff was just waiting to be caught. Is that right? Did he always know he wouldn’t be able to get away with this? What was living in that suspended state like for him?
RB: Bernie said he was under constant stress over the Ponzi, and would talk out loud to himself sometimes in the office, because of the pressure. One of his biggest outlets for relieving the stress was sitting in dark theaters with his wife Ruth, he said, watching movies twice a week. He also said he deluded himself into thinking some “miracle” would come along to bail him out of the Ponzi, but that he knew for at least the last decade before his arrest that he’d never get out from under it.
The only time he truly relaxed, he said, was on weekends when he was out on his yacht. I interviewed a former FBI behavioral analysis expert who suggested Bernie felt safe on the boat because he could see 360 degrees around him, all the way to the horizon, so he’d have a lot of forewarning that a threat was coming.
‘Not a single investor’ had complained to the SEC
AN: You paint a really interesting portrait of the figure of Irving Picard, an 83-year-old court-appointed trustee, who has spent years trying to get money back for Madoff’s investors. Has this been Picard’s only job over the years? Why has he made this his life mission?
RB: Picard rarely talks with the press. I was just chatting with John Moscow, a former chief white-collar crimes prosecutor for the Manhattan DA’s office who worked on some Madoff cases for the trustee. He said: “Irving is a very faithful public servant.” He’s laser focused on his task. John’s words were: “He’s not manic about it, but he’s very close.”
In my book, I quote a former federal prosecutor saying that you can probe this case for 50 years and still not get to all the truths, but Picard isn’t interested in that. It’s been his only bankruptcy case since four days after Bernie’s arrest in 2008. He is ferocious towards net winners who won’t return funds, but he can be a soft teddy bear with those who don’t have the money for him to claw back. He may let them pay it over time, or he’ll take someone’s house but leave them a life interest in it.
AN: What do you think people get most wrong about Madoff?
RB: A lot of people who lost money get it wrong by blaming him entirely, rather than looking in the mirror and asking themselves how they could have put themselves in such danger. Madoff’s consistent and high returns were simply not possible. Even so, many net losers think the government owes them because the SEC didn’t capture Bernie. But that agency’s mandate has never been to protect people from stupid investment decisions.
Financier Bernard Madoff arrives at Manhattan Federal court on March 12, 2009 in New York City. Madoff is scheduled to enter a guilty plea on 11 felony counts which under federal law can result in a sentence of about 150 years. (Photo by Stephen Chernin/Getty Images)
Stephen Chernin | Getty Images
I mentioned to you that I went to a prison back in the ’90s to visit the guy who had the longest-running Ponzi prior to Madoff’s arrest. Just like Bernie, that swindler could not have done it without a big bank’s complicity. In that case — an 11-year-long Ponzi — an investor reached out to the SEC to complain that he’d lost money even though he’d been guaranteed a preposterous 20-25% return. The scamster was arrested the following day.
In Bernie’s case, not a single investor over the half-century of his fraud contacted the SEC. They were too busy splashing around in the gravy.
Rep. Jason Smith, R-Mo., speaks during a House Oversight and Accountability Committee impeachment inquiry hearing into U.S. President Joe Biden on Sept. 28, 2023.
Jonathan Ernst | Reuters
House Republicans have advanced trillions of tax breaks as part of President Donald Trump‘s economic package.
After debating the legislation overnight, the House Ways and Means Committee, which oversees tax, passed its portion of the legislation on Wednesday morning in a 26-19 party line vote.
But the battle over the deduction for state and local taxes, known as SALT, remains in limbo.
The text released Monday afternoon would raise the SALT cap to $30,000 for those with a modified adjusted gross income of $400,000 or less. But some House lawmakers still want to see a higher limit before the full House vote.
While the SALT deduction is a key priority for certain lawmakers in high-tax states, the current $10,000 cap was added to help fund the Tax Cuts and Jobs Act, or TCJA, of 2017.
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Following the vote, House Ways and Means Committee Chairman Jason Smith, R-Mo., said in a statement that Ways and Means Republicans will “continue to work closely with President Trump and our House colleagues to get the One, Big, Beautiful Bill that delivers on the President’s agenda to his desk as soon as possible.”
The full House vote could come as early as next week. But the legislation could see significant changes in the Senate, experts say.
House Republicans’ proposed tax cuts
The House Ways and Means Committee legislation includes several of Trump’s campaign priorities, including extensions of tax breaks enacted via the TCJA.
If enacted as drafted, Republicans could also deliver no tax on tips and tax-free overtime pay. But questions remain about the details of these provisions.
Rather than cutting taxes on Social Security, the plan includes an extra $4,000 deduction for older Americans, which may not fully cover Social Security income, according to some experts.
The $4,000 deduction costs $90 billion over 10 years, compared to $1 trillion for exempting Social Security income from tax, Garrett Watson, director of policy analysis at the Tax Foundation, wrote in a post on X Tuesday.
“Tax filers with no other income sources outside of Social Security would typically see little benefit, while others may see bigger gains from this idea,” he wrote in that thread.
The House Ways and Means bill also extends the maximum child tax credit of $2,000 enacted via the TCJA, and temporarily raises the tax break to $2,500 per child through 2028.
However, some policy experts have criticized the proposed credit design since lower earners typically can’t claim the full amount.
The proposed legislation “did nothing for the 17 million children that are left out of the current $2,000 credit,” Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities’ federal fiscal policy division, told CNBC.
Stephanie Phillips | Getty Images
“Markets go up and down, but students’ goals remain the same,” said Chris McGee, chair of the College Savings Foundation.
529 plan popularity has soared
In 2024, the number of 529 plan accounts increased to 17 million, up more than 3% percent from the year before, according to Investment Company Institute.
Total investments in 529s rose to $525 billion as of December, up 11% from a year earlier, while the average 529 plan account balance hit a record of $30,961, data from the College Savings Plans Network, a network of state-administered college savings programs, also showed.
“The industry is coming off its best year ever in terms of new inflows,” said Richard Polimeni, head of education savings at Merrill Lynch.
However, “in terms of the current market volatility, that creates some concern,” he added.
Even as concerns over college costs are driving more would-be college students to rethink their plans, college savings accounts are still as vital as ever.
Roughly 42% of students are pivoting to technical and career training or credentialing, or are opting to enroll in a local and less-expensive community college or in-state public school, according to a recent survey of 1,000 high schoolers by the College Savings Foundation. That’s up from 37% last year.
As a result of those shifting education choices, 69% of students are expecting to live at home during their studies, the highest percentage in three years.
Despite those adjustments, some recent changes have helped make 529 plans even more worthwhile: As of 2024, families can roll over unused 529 funds to the account beneficiary’s Roth individual retirement account, without triggering income taxes or penalties, so long as they meet certain requirements.
Restrictions have also loosened to allow 529 plan funds to be used for continuing education classes, apprenticeship programs and student loan payments. For grandparents, there is also a new “loophole,” which allows them to fund a grandchild’s college without impacting that student’s financial aid eligibility.
Managing 529 allocations in a volatile market
For parents worried about their account’s recent performance, Mary Morris, CEO of Commonwealth Savers, advises checking the asset allocation. “What you need to think about is assessing your risk appetite,” she said.
Generally, 529 plans offer age-based portfolios, which start off with more equity exposure early on in a child’s life and then become more conservative as college nears. By the time high school graduation is around the corner, families likely have very little invested in stocks and more in investments like bonds and cash. That can help blunt their losses.
Pay attention to your fund’s approach toward shifting from stocks to bonds, Morris said.
“If you are in a total stock portfolio, you may not want that ride,” she said: “You don’t want to get seasick.”
If the market volatility is still too much to bear, consider adjusting your allocation.
“One strategy is to start de-risking a portion of their portfolio and reallocate a portion into cash equivalent, which will provide a protection of principle while also proving a competitive return and peace of mind,” Polimeni said.
Still, financial experts strongly caution against shifting your entire 529 balance to cash. “The worst thing an investor can do in a down market is panic and sell investments prematurely and lock in losses,” Polimeni said.
Often that is the last resort. In the wake of the 2008 financial crisis, only 10% of investors liquidated their entire 529 accounts, and 20% switched to less risky assets, according to an earlier survey by higher education expert Mark Kantrowitz.
How to help 529 assets recover
For those who must make a hefty withdrawal for tuition payments now due, Polimeni suggests considering using income or savings outside the 529 to cover immediate college expenses, and requesting a reimbursement later.
You can get reimbursed from your 529 plan for any eligible out-of-pocket expenses within the same calendar year. “Using that strategy gives another six to seven months for the market to recover,” Polimeni said.
Another option is to tap a federal student loan and take a qualified distribution from the 529 plan to pay off the debt down the road. However, if you’re thinking of taking out private student loans or a personal loan that starts incurring interest immediately, you may want to spend 529 funds first in that case, and defer that borrowing until later.
Once you have a withdrawal plan, you can — and should — keep contributing to your 529, experts say. Not only can you get a tax deduction or credit for contributions, but earnings will grow on a tax-advantaged basis, whether over 18 years or just a few.
“The major advantage is the tax-deferred growth, so the longer you are invested, the more tax-deferred growth you will have,” Polimeni said.
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