"Chasing Madoff" long before feds did

When Bernard Madoff was arrested nearly three years ago for one of the largest cases of financial fraud in history, many couldn't believe it went undetected a long as it did.

Then it came out that one man uncovered the Ponzi scheme and went to the Securities and Exchange Commission five times to expose it to the agency.

That man is Harry Markopolos.

A walk past Manhattan's famed Lipstick Building provokes a strong reaction from Markopolos.

"So what do you call this building?" asked CBS News Business and Economics Correspondent Rebecca Jarvis.

"I call it Satan's lair," he said.

It's the building where his nemesis - Bernard Madoff, the perpetrator of the $65 billion dollar Ponzi scheme that ruined thousands of lives, used to work.

"He was stealing my clients, and I wasn't going to tolerate that. If you steal from a Greek, we come after you," he says.

His relentless mission to expose the scheme is chronicled in "Chasing Madoff," a movie hitting theaters this Friday.

"I was like the boy that cried wolf, but there was a wolf," Markopolos says in a line in the movie.

Markopolos, who had been managing a hedge fund worth millions of dollars, spent nearly a decade trying to convince the SEC that Madoff's investment firm was a fraud.

"My first submission was in May of 2000, and it basically explained how Bernie Madoff had to be operating a scam. His performance line went up at a 45 degree angle. It would be like a baseball player (with a) .964 batting average," he explained.

The quest to expose Madoff so consumed Markopolos that he feared for his life. The stakes were so high that he bought a gun and routinely would check his car for bombs.

"I realized then that Bernie was stealing from the Russians and the Colombians, and if he was doing that, that was a very dangerous game for him to play because, if they found it, they were gonna kill him," Markopolos said.

In December 2008, crumbling under mounting pressure in a struggling economy, Madoff was arrested - not because the SEC listened, but because Madoff turned himself in.

At a February 2009 hearing, lawmakers gave the SEC a tongue-lashing over its failure to catch Madoff.

"It was a very specific complaint. Not once, not twice, not three but, four, five times to the SEC," explained Rep. Carolyn Maloney (D-New York). "How many more times would a whistle blower have to bring complaints to the SEC for them to have investigated the Madoff case?"

"The SEC blew it, time and time again," said former New York Attorney General Eliot Spitzer. "They had it staring them in the face and they didn't see the obvious, whether it was because they didn't want to see it, whether it was pure ineptitude, whether it was corruption of some level. Who knows? Whatever it was, the SEC utterly failed."

Last week, Congress announced an investigation into SEC practices, in part because of the Madoff case.

But that's no consolation to Markopolos.

"We didn't stop Bernie Madoff, the financial collapse in 2008 stopped him. So nothing we did brought about his demise, and I wish we had, and we tried like hell," Markopolos said.

"The SEC may not have been listening to Harry back then, but they're certainly listening to Harry now," said Diana Henriques, author "The Wizard of Lies: Bernard Madoff and the Death of Trust." "This summer, they unveiled the new whistle blower program that we all mostly call 'The Harry Markopolo's Program.' I think, going forward, they will be much more attuned to the importance of people like Harry Markopolos and how much they strengthen the regulatory efforts."

But Markopolos thinks being a whistleblower still involves great risks.

"Usually, it's going to destroy their career, they're going to be retaliated against; they're going to be put on an industry black list, they're going to have to start on the bottom of a career ladder in some other industry," he points out.

Do you think this is your calling?

"It is. I thought it was Wall Street and I found out it was actually chasing bad guys on Wall Street, so it was totally different then what I expected, but now I have found my calling," Markopolos said.

As for Madoff, he is currently in a North Carolina jail serving a 150-year sentence.

But Markopolos says many more arrests should follow.

In addition, Markopolos tells Jarvis that he'd one day like to focus on Congress where he says he can find a lot more fraud.

To keep from getting ripped off, investors should heed Markopolos's advice, says Jarvis. "Ultimately, (Markopolos) says you have to be diligent. One thing he says is to get it in writing. And get your adviser, any adviser, to put for you in writing that there are no conflicts of interest."

What would a conflict of interest be? According to Jarvis, "You could potentially be in an investment that your adviser is making money off of losses on. So, let's say your adviser makes money when an investment loses and you make money when an investment wins -- that is not an investment you want to be in, and you want your adviser to put in writing exactly that -- that they are not involved in the investments and that you are safe and your money is protected," she adds. "It's one form, obviously. It's not the ultimate thing. Because Bernard Madoff was able to do this on such a grand scale. But it's one thing that will help protect you a little more."