Personal Finance

Richard Behar exchanged emails with Bernie Madoff for a decade

Published

9 months ago

July 30, 2024

Business Finance News

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.”

Disgraced investor Bernie Madoff dies in prison at age 82

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.

Personal Finance

Consumers are making different financial choices in response to tariffs

Published

13 hours ago

April 22, 2025

Business Finance News

The Apple Fifth Avenue store in New York, U.S., on Monday, Feb. 24, 2025.

Michael Nagle | Bloomberg | Getty Images

Even as a pause on reciprocal tariffs has been put into effect, consumers are already anticipating the pressures of higher prices.

A majority of Americans — 85% — have concerns about the tariffs, according to a new NerdWallet survey of more than 2,000 individuals conducted this month.

Among top concerns of consumers is that the new policies will impact their ability to afford necessities and that the U.S. economy will fall into a recession.

Meanwhile, cracks in consumer confidence are showing elsewhere.

The University of Michigan’s consumer survey shows sentiment has dropped by more than 30% since December among persistent worries of a trade war. The latest reading for April fell 11% from the previous month, which was worse than expected.

The worries are not unfounded, experts say. Tariffs could cost the average household $3,800 per year, the Budget Lab at Yale University estimates.

“Most Americans are worried about tariffs, and it’s actually impacting their spending plans,” said Kimberly Palmer, personal finance expert at NerdWallet.

In the next 12 months, a significant portion of individuals surveyed by NerdWallet plan to make changes to their spending habits, with a notable shift towards saving more.

Specifically, 45% plan to spend less on non-necessities, 33% intend to spend less on necessities, and 30% plan to save more money in an emergency fund. However, a smaller percentage, 14%, anticipate paying less on their debts.

The tariffs come as consumers were already struggling to pay for groceries and other essentials amid higher prices, according to Palmer.

“These tariffs are adding to that financial stress and basically forcing people to make some difficult decisions,” Palmer said. That includes scaling back on travel and planned big-ticket purchases like a car.

Emergency savings is ‘most important’ priority: expert

New economic pressures may prompt income to be eaten up by rising prices and competing interests, according to Stephen Kates, a certified financial planner and financial analyst at Bankrate.

Consumers may have to make tough choices between saving, investing and paying down debts.

“If you have nothing [saved], start with the emergency fund,” Kates said.

Individuals should strive to have at least one month of essential expenses set aside at the very minimum, Kates said. Ideally, that would be more like three to six months’ living expenses, he said.

James Gorman: Trade policy has definitely been a shock and will affect how the Fed behaves

That way, if a job or other income loss happens, consumers can protect themselves from going into debt, Kates said.

For individuals who already have racked up debt balances, prioritizing emergency savings still makes the most sense, Kates said. And if you’re choosing between emergency savings or saving for retirement, emergency savings should still be the highest priority, he said.

To be sure, that doesn’t necessarily mean individuals should ignore their other goals.

Kates discussed using what is called the “debt avalanche” strategy.

The focus is on paying down the debt with the highest interest rate first — while paying minimums on the others — then move on to the account with the next highest rate, and so on. That can provide an immediate return and help free up money in household budgets, Kates said.

When it comes to retirement savings, it’s important to make sure individuals are contributing enough to take advantage of a match, if their employer offers one, he said.

Personal Finance

Trump said tariff revenue could replace the income tax. What experts say

Published

14 hours ago

April 22, 2025

Business Finance News

In this aerial view a forklift drives among stacked shipping containers in Hamburg Port on April 15, 2025 in Hamburg, Germany.

Sean Gallup | Getty Images

Tariff tax base is ‘a lot smaller’ than income tax

Some policy experts have questioned how much revenue the duties could bring in, compared to the federal income tax.

“The tariff tax base is a lot smaller than the income tax base,” Kimberly Clausing, a senior fellow at the Peterson Institute for International Economics, told CNBC.

In 2023, the U.S. imported $3.1 trillion of goods. By comparison, the government levied tax on more than $20 trillion in incomes, according to a report she co-authored last summer.

White House trade adviser Peter Navarro in late March estimated tariffs could raise roughly $600 billion a year.

But that figure “is not even in the realm of possibility,” Mark Zandi, chief economist at Moody’s, told CNBC earlier this month. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”

To compare, the IRS has collected $1.14 trillion in individual income taxes for fiscal year 2025 through March 31, according to Treasury data.

“Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax,” Clausing co-wrote in the Peterson Institute for International Economics report.

Plus, at higher tariff rates, people will buy fewer imported goods, which reduces revenue, Clausing told CNBC: “That’s part of the point of the policy.”

The Trump administration did not respond to CNBC’s request for comment.

Consumer behavior influences tariff income

As tariff rates increase, other factors can decrease how much revenue the U.S. ultimately collects, experts say.

“The administration seems to think that every time it raises the tariff rate that it can collect more revenue,” Tax Foundation’s Durante said. “And that’s not always the case.”

Direct tariff revenue is lowered by behavioral and other economic factors, Durante detailed in a report earlier this month.

Seeking safety amid market volatility: Strategies to keep your money safe

The Tax Foundation estimates that a 10% universal tariff would raise $2.2 trillion through 2034. However, the same tariff would reduce U.S. gross domestic product by 0.4%, which impacts revenue.

The International Monetary Fund on Tuesday reduced 2025 U.S. growth projections to 1.8% from 2.7% based on trade tensions.

Personal Finance

What student loan borrowers need to know about involuntary collections

Published

16 hours ago

April 22, 2025

Business Finance News

U.S. Secretary of Education Linda McMahon smiles during the signing event for an executive order to shut down the Department of Education next to U.S. President Donald Trump, in the East Room at the White House in Washington, D.C., U.S., March 20, 2025.

Carlos Barria | Reuters

In a Wall Street Journal op-ed, U.S. Secretary of Education Linda McMahon explained the U.S. Department of Education’s decision to restart collections on federal student loans that are in default — and what comes next for Federal student loan borrowers who are behind on their bills.

“On May 5, we will begin the process of moving roughly 1.8 million borrowers into repayment plans and restart collections of loans in default,” McMahon wrote in the op-ed Monday.

“Borrowers who don’t make payments on time will see their credit scores go down, and in some cases their wages automatically garnished,” McMahon wrote.

Next steps for borrowers

Federal student loan borrowers in default will receive an e-mail over the next two weeks making them aware of this new policy, the Education Department said.

These borrowers should contact the government’s Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.

The Education Department said it is extending the Federal Student Aid call-center operations with weekend hours as well updating a “loan simulator” to help borrowers calculate their repayment plans. There is also an artificial intelligence assistant, dubbed Aidan, to help with a financial strategy.

“We are committed to ensuring that borrowers are paying back their loans, that they are fully supported in doing so, and that colleges can’t create such a massive liability for students and their families, jeopardizing their ability to achieve the American dream,” McMahon wrote.

‘Be proactive’

Those borrowers who are behind in their required payments should avoid being placed in default by taking advantage of various options currently available to them to manage their education loans, advised Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.”

“Be proactive,” he said. “Best to take care of this as soon as possible, as the loan servicers’ and the U.S. Department of Education’s customer support will get busier the closer it gets to May 5.”

The Education Department has not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That relief period officially ended on Sept. 30, 2024.

“President Biden never had the authority to forgive student loans across the board, as the Supreme Court held in 2023,” McMahon wrote. “But for political gain, he dangled the carrot of loan forgiveness in front of young voters, among other things by keeping in place a temporary Covid-era deferment program.”

McMahon said restarting collections of loans in default was not meant “to be unkind to student borrowers.” Rather, the new policy intended to protect taxpayers. “Debt doesn’t go away; it gets transferred to others,” she said. “If borrowers don’t pay their debts to the government, taxpayers do.”

Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default.

“It really is time to start repaying again,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in a statement. “While a short repayment pause was justifiable early in the pandemic, that was five years ago — and it makes no sense today.”

President Donald Trump in March signed an executive order aimed at dismantling of the Education Department after nominating McMahon for Education secretary. Trump suggested that she would help gut the agency. As part of this overhaul, federal student loan management was then shifted to the Small Business Administration.

Along with changes to the student loan system, the Trump administration revised some of the Department of Education’s income-driven repayment plans, which put at-risk borrowers in “economic limbo,” according to Mike Pierce, executive director at the Student Borrower Protection Center.

“For five million people in default, federal law gives borrowers a way out of default and the right to make loan payments they can afford,” Pierce said in a statement. “Since February, Donald Trump and Linda McMahon have blocked these borrowers’ path out of default and are now feeding them into the maw of the government debt collection machine.”

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