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Crime, punishment, and the shame of being a Madoff

In 2011, Bernie Madoff's wife and son spoke publicly for the first time with Morley Safer about the Ponzi scheme that defrauded thousands
Ruth and Andrew Madoff, pt. 1 17:14

The following script is from "Madoff" which aired on October 30, 2011. Morley Safer is the correspondent. Deirdre Naphin Curran, producer.

Madoff...It is a name that will live in infamy...It's been nearly three years since Bernard Madoff confessed to running a $65 billion Ponzi scheme - the largest financial fraud in history. Thousands of trusting clients who felt safe investing with a financial genius were swindled. He hadn't invested a penny.

While Madoff is serving 150 years in prison, his family has had to deal with the consequences of his crimes. His wife Ruth, divested of most of her great wealth - and derided by a suspicious world. Their son Mark - dead. Driven to suicide by shame and accusations of guilt. Their other son Andrew isolated - trying to live with the disgrace.

Are they innocent or were they willing partners? For the first time since Bernie Madoff's arrest, his son Andrew and wife Ruth speak out about crime, punishment and the shame of being a Madoff.

Morley Safer: It's a tough name to live with.

Ruth Madoff: It sure is.

Ruth Madoff...

Safer: Do you feel the shame?

Ruth: Of course I feel the shame. I can barely walk down the street without worrying about people recognizing me.

And Andrew Madoff...

Andrew Madoff: From the very beginning of this whole episode-- I've had absolutely nothing to hide. And I've been eager, I would say almost desperate to speak out publicly and tell people that I'm absolutely not involved.

Andrew and Ruth Madoff speak out in the book "Truth and Consequences"- a more or less tell-all arranged by Andrew's fiancee Catherine Hooper. An attempt to separate the family from the father's crimes.

Safer: Is it dismaying for you that no matter what you say people aren't going to believe you?

Catherine Hooper: I think in many ways it is dismaying, but public opinion has to be something that doesn't matter to us. What matters to us is the truth.

Safer: It's really hard for people to believe that you didn't know, that you must have known.

Ruth: I can't explain it. I mean I trusted him. Why would it ever occur to me that it wasn't legal? The business was--his reputation was almost legendary. Why would I ever think that there was something sinister going on?

It was 1954 when Ruth Alpern met Bernie Madoff in Queens, N.Y.

Ruth: I just saw him and I was sort of swept away, I think.

She married him at age 18. They had two sons - Mark, then Andrew. Bernie was building up his money management business - a typical middle class family living on Long Island.

Ruth: We were both solid parents and valued our family and so proud of our boys. It was a dream, really.

Andrew: My father was certainly present as a dad.

Safer: Did he emphasize moral values at all?

Andrew: I wouldn't say that we sort of explicitly discussed values. But we certainly lived what I felt was a moral life, where there was a clear sense of right and wrong.

Exactly when Bernie Madoff went wrong is unclear. But as his reputation for delivering steady profits grew, the Madoffs began living the good life. A penthouse in Manhattan - homes in Palm Beach and the South of France - and yachts in both places. The family became celebrated for philanthropy and Madoff became a Wall Street big shot.

Andrew: He was a big figure in the industry. He was the chairman of Nasdaq. He was constantly being honored as "Man of the Year" of this organization and that. And that-- that had an-- an effect on me.

Both sons went to work as traders for their father's firm in the late 80s - a time authorities believe Madoff's Ponzi scheme was well under way.

Safer: Why would your father want to taint his sons by bringing them into a situation that could, well, spell disaster?

Andrew: You know, that's-- that's a great question. And that's something that-- that I really agonize over, as a son. You know, what my father did was-- so horrible. It's hard for me to understand that. And I'm not any closer to understanding it now than I was three years ago.

Bernard L. Madoff Securities employed over a hundred people but it seemed like a family business. His brother Peter and several cousins worked there. Mark and Andrew worked on the 19th floor of New York's Lipstick Building where they legitimately traded securities for the firm and for outside clients. The investment advisory business - the Ponzi scheme - was housed two floors below where their father never made any trades at all. He was simply creating phony paper statements that showed steady profits for his clients - his victims. Access to the 17th floor was highly restricted.

Safer: You musta been curious about why the 17th floor was such a secret place. When you or Mark asked him about his end of the business what did he say?

Andrew: It was always a very similar response. It was, "You guys have your business to worry about and let me worry about my business and the conversation would end there.

Safer: But people say there's no way these kids could not have had-- at the very least suspected something was going on.

Andrew: Well keep in mind these were completely separate businesses. We were executing hundreds of thousands of transactions a day. And that kept all of us incredibly busy. And it just didn't occur to me that he could be involved in any kind of criminal activity.

Andrew says his father would often walk his clients through the 19th floor to show actual trades being made.

Safer: You feel that the legitimacy of the trading business offered protection to what your father was doing?

Andrew: Absolutely. Absolutely.

Safer: That he was using you and your brother?

Andrew: Absolutely. It was one of the hardest things to come to grips with, in trying to get my head around this, was that feeling that I had been used-- almost as-- as a human shield by him. He-- it's-- it's unforgivable. No-- no father should do that to their sons.

[Bernard Madoff: You know the basic concept of Wall Street...]

He says he thought his father was a financial genius. There were suspicions about Madoff's remarkably consistent returns - but the SEC repeatedly cleared him of any wrongdoing. What troubled Andrew was his father's refusal to discuss any plans for a succession.

Andrew: His plan was that he had no plan. And he would say that when he dies, his end of the business dies. And again, it was always the-- the same response, "That's the way it is and it's not gonna change."

He ruled with an iron fist, but kept everyone happy with money. Steady returns for investors and for family an endless stream of cash. Andrew and Mark were paid multi-million dollar salaries and the boys went to their father for even more: for houses, business ventures and divorce settlements. Catherine Hooper says the Madoff benign dictatorship took some getting used to.

Hooper: It was an adjustment, getting to understand that the boundaries in Andrew's family were probably going to be different than what I was used to.

Safer: Did you feel that Papa Madoff was the boss?

Hooper: There's no question that he was.

Ruth: He could be a bully, without question.

Safer: But did you ever suspect along the way either strange behavior or somebody who was bottling up a secret or any of that--

Ruth: I never did. I never did. It didn't seem that way. There was nothing that would make me suspect anything. Sometimes I look back and I think as the years went on, he started to get more and more short tempered and maybe he just was having trouble, obviously, he had to have been.

In the fall of 2008 - the world economy began to implode and markets were in free fall - big investors wanted out. Redemption after redemption strained Madoff's scheme to its limits. On December 10th, 2008 - with only a few hundred million left of the billions invested with him - Madoff realized the game was over. He told his wife to transfer 10 million dollars from her brokerage account at the firm into a personal checking account.

Safer: Did you not wonder what on earth is happening here? Ten million dollars is a lot of money.

Ruth: It wasn't atypical for him to put money in an account and take it out. I didn't think anything of it, actually.

That same morning - Bernard Madoff called a family meeting in his office.

Andrew: And he started to try and speak to us and he couldn't. He sort of fell apart. Started to cry a little bit. And it was shocking to see that. I mean, this was not a man who was emotional in that way at all. He said that maybe it would be easier if we talked elsewhere, and suggested maybe we should go up to his apartment.

Ruth: He called from the office and said, "I'm coming home with the boys, I have something to talk about." Came in, we went into a room, four of us, and he said, "I have a confession to make. I've been running a Ponzi scheme." He said, "$50 billion dollars."

Andrew: He said-- "Everything I've been doing is all a big lie." He said-- he said, "The business is-- is a Ponzi scheme, and it-- the firm is completely insolvent. And I'm broke." And then he just started sobbing. And I was-- I-- I was shocked. I-- it was-- I felt like my head exploded. I mean, I-- I don't think if he had told me he was an alien I could've been more surprised. He said that the firm had liabilities of $50 billion dollars. It never occurred to me that his business had anything like that under management. It was-- it was shocking

Safer: Your mother, what was her reaction?

Andrew: She looked-- she looked shocked. She asked "What's a Ponzi scheme?" was her first question. She didn't even understand that. I think it was me who answered and said that, "It means that it's all fake. That Dad's-- you know, his-- he's not been doing what he says he's been doing." And he followed that up and said, "Yes. I've been lying to all of you-- all of these years. I've been lying to everybody. I've been lying to myself," he said. And--

Safer: And your brother?

Andrew: My brother was trembling with rage. He was absolutely furious. Mark was the first one to stand up and said, you know, "I'm outta here." And he stormed outta the room. And I-- I immediately followed him and walked out.

Safer: You know, there's a lotta people out there who are saying, or will be saying as they watch this, "This is all a charade. This was something that the Madoffs set up to get themselves off the hook." This--

Andrew: I wish it were. I wish it were. I wish none of this was real. You know, I knew-- I knew absolutely nothing about this-- before my father shared the information with me. And it was-- it was the most shocking and-- and terrible moment of my life.

Ruth: I was as stunned as they. I was kind of paralyzed. Bernie got up and said, "I'm going back to the office."

Safer: Was he emotional in any way?

Ruth: I don't remember that either, he must have been.

Safer: Apologetic in any way?

Ruth: Probably, yes. I-- sort of a blank now, I'm not-- hedging here, I don't-- I just simply don't remember every detail. I was in such a state.

Safer: But later that day, that evening, you both turned up at the office Christmas party.

Ruth: I know, he phoned me from the office and said, "We have to go to the office Christmas party." So I got myself together and went over there. We stayed a half an hour. And we just went home. And the next morning, the FBI was there to arrest him about 7:00 a.m.

Andrew and Mark Madoff had turned their father in. Shortly after the arrest, Ruth Madoff called Andrew, pleading with him to co-sign his father's $10 million bail bond.

Andrew: And I said, you know, "Forget it. There's no way. I mean, how could you even ask that question? No, I'm not signing that bail bond. That's crazy." And I was really-- I was very upset that she asked, because here I had just turned my father in to the authorities a day before. And now, it appeared that I was losing my mother as well because she was siding with him.

Ruth: I just wanted him to come home. I was so afraid.

Safer: Afraid of?

Ruth: I mean, the whole idea, going to prison is sort of unthinkable to me. I don't think I ever knew anybody that went to prison.

[Reporter: Mr. Madoff what do you have to say for yourself?]

Bail was eventually guaranteed by Ruth and Madoff's brother Peter and Bernie was released. All of his assets were frozen, but in a stunning breach of the court order barring the transfer of property - a large and extremely valuable envelope arrived at Andrew Madoff's apartment.

Andrew: I tore open the envelope and-- and-- and dumped it out. And-- it was absolutely heartbreaking. These were pieces of jewelry that I recognized. Things that I had seen my mother wearing over the-- over the years. And-- I couldn't-- I couldn't understand how she could do this. I mean, what were they thinking? And-- it wasn't until-- three years later, that I had a chance to ask her, "What were you thinking when you sent me that jewelry? I don't understand." And-- she told me that-- she and my father had planned to kill themselves. And they put together that package beforehand and sent it out.

Safer: Did they try to kill themselves?

Andrew: Yes, they did.

Ruth: I don't know who-- whose idea it was. But we decided to kill ourselves because it was-- it was so horrendous what was happening. We had terrible phone calls, hate mail. Just beyond anything. And I said, "I can't-- I just can't go on anymore." That's when I packed up some things to send to my sons and my grandchildren. I had some lovely antique things and things that I thought they might want. I mailed them, it was Christmas Eve, that added to the whole depression. We took pills and woke up the next day.

Safer: What did you take?

Ruth: I think Ambien.

Safer: How many?

Ruth: I don't even remember. I had-- I-- I took what we had, he took more.

Safer: Did you leave notes?

Ruth: No. It was very impulsive and I'm glad we woke up.

Safer: But you must have talked-- this is a rather large decision to make?

Ruth: It wasn't hard at the time. It was impulsive and I just wanted out.

When we come back, life in the Madoff apartment and the death of a son.

The sheer scale of Bernard Madoff's Ponzi scheme shocked the world. Thousands of individuals, charities and funds that on paper were worth a total of $65 billion were wiped out. What's more, some of his closest friends and family who had trusted him with their life savings faced ruin.

With Madoff now under house arrest the world staked out his penthouse on 64th street - obsessed by what might be happening behind the drawn shades.

Ruth: There were lawyers coming for meetings at the apartment. We watched a lot of television and I cooked.

Safer: Was there remorse? Was there--

Ruth: Yes, there was remorse.

Safer: Or was it sort of self pity?

Ruth: I think in a way he was relieved at the beginning that he was finished.

Safer: But you must have asked yourself a thousand times, "Why?" You-- you could have been a perfectly comfortable, even wealthy family.

Ruth: Without question.

Safer: Without this.

Ruth: I don't understand it. I don't-- it's hard for me to say this, but I don't think the money was the part of it, I think he got stuck, that's what he said. And he didn't have the courage to face-- face things when they might have been able to be faced on a much smaller scale.

Madoff repeatedly told authorities that he had acted alone.

[Crowd: Did your wife have anything to do with this sir? Get out of here!]

That his family knew nothing...but who would believe Bernie Madoff?

Hooper: I remember at some point, we were having breakfast and I said to Andrew, "You know, people will think that you were involved." And-- I think it had dawned on him, but it really hadn't sunk in. And as I said those words, he looked at me and said, "Do you really think that? That won't last. I mean, it'll become clear very quickly that we weren't involved."

Safer: Did you have any suspicion at all--that your mother might have been involved? Complicit in some way?

Andrew: No. Absolutely not. I never for a moment felt that my mother was involved in my father's crimes or was aware of it at all.

The rest of the world was skeptical while countless stories predicted the imminent arrest of Mark, Andrew and their Uncle Peter---

[Reporter: Do you have anything to say to the investors?

Ruth: No, I don't.]

Ruth Madoff seemed to get the worst of it. It was said she had an office at the firm, that she had been the bookkeeper.

Ruth: I was the bookkeeper. I was the receptionist. I worked for Bernie in 1961, when I graduated from college. And I left in 1963 when Mark was born, and then Andy, and I was a stay-at-home mom all those years. And later on, when the boys started to work there, we lived within walking distance and I had an office there where I took care of decorating things and house things and bills and managing those things. But I was never the bookkeeper after 1963.

Safer: Probably a majority of people can't believe that you can live with someone for 50 years and not know.

Ruth: It's hard for me to believe, too.

Safer: Had you known, would you have turned him in?

Ruth: I'm glad I didn't. That woulda been tough, but I-- I would have left. Whether I'd turn him in or not, I don't know. I like to think I would have, but I-- I-- I couldn't say. I'm being completely honest with you, I have to say.

She was vilified and shunned, harassed on the subway. The press hounded her with headline after headline. Her fiercest critics were her own sons.

Safer: From the time of your father's confession, I gather you had a certain degree of estrangement from your mother. How come?

Andrew: Well she and I barely spoke for two years. I struggled tremendously trying to understand her decision to stay by my father's side. I felt so angry with him. So I didn't understand her choice and I struggled with it as did Mark.

Ruth: I never thought of leaving. I don't know why I didn't, I just knew this man for so long, whom I loved for so many years. I didn't know what else to do, but stay there.

Three months after his confession, Madoff pled guilty. He was later sentenced to 150 years. Ruth Madoff agreed to forfeit $80 million and all her worldly goods. All the homes, boats, cars, art, furniture - even Madoff's slippers - were auctioned or sold.

Safer: You were allowed to keep $2.5 million. To a lotta people, that's a lotta money.

Ruth: It is. It's certainly enough for me. I've used a lot for legal fees.

Safer: There is a public perception, and I'm sure you've heard it, that there's gotta be a stash somewhere, you know?

Ruth: I've heard it, I've heard it.

Safer: That Bernie Madoff hid it somewhere, and that you know--

Ruth: I wish they'd find it and give it all back. My understanding of a Ponzi scheme is that when it's over, there's nothing left. I certainly don't know of a stash anywhere.

Though eight employees have been accused of helping with the scheme - no family members have been charged. But the bankruptcy trustee Irving Picard and his lead counsel David Sheehan are demanding that all the Madoffs cough up virtually every penny they have, claiming they quote "knew or should have known" about Bernie's crimes.

Safer: Would you agree with Mr. Sheehan, the lawyer for the trustee when Sheehan says, "You should be ashamed. That you should give every penny back."

Andrew: Well, obviously, I disagree with many of the assertions in the lawsuit that the trustee has filed against me. I'm hopeful that, in time, we'll be able to reach a settlement and I'll be able to put this behind me.

Picard says the sons' trading operation received millions from Bernie's Ponzi scheme. He is suing Andrew Madoff alone for $60 million - virtually every penny he earned, borrowed, or was given to him by his father over a 10-year period.

Safer: Let me ask a really intrusive question. How much are you worth as we speak?

Andrew: Well, I was fortunate over the years, running the business that Mark and I ran. It generated many millions of dollars in profits and enabled my brother and I both to live a comfortable lifestyle.

Safer: You haven't answered the question.

Andrew: I made, in-- in good years-- several million dollars. My life, at this point, is an ope-- is an open book. The details of my financial past have been laid bare completely in the lawsuit against me. I haven't enjoyed it. But that's the reality that I live in.

Safer: Do you fear ending up broke?

Andrew: I think that it's a very real possibility, but I am prepared to start over again and build myself back up.

[Reporter: Have you talked to your dad?

Mark Madoff: I have no comment. I'm sorry.]

But for Andrew's brother Mark, the weight of the lawsuits, attacks from the media and the shame became unbearable.

Andrew: He was absolutely obsessed with the news coverage. He would wake up every morning, immediately comb through the regular newspapers and that would be followed up by reading blog posts and comments. And I would say, "Look, you gotta-- you gotta shut off your computer. You gotta stop subjecting yourself to this because this is not helpful for you and it's not helpful for me. And if you keep doing this, it's just gonna lead to misery."

And it did. On December 11th, 2010, the second anniversary of his father's arrest, Mark Madoff hung himself while his two-year-old son slept in the next room. He said in his last email, "No one wants to hear the truth..."

Hooper: As soon as we saw the caller ID at that early hour on a Saturday morning, we both knew what had happened.

Safer: How did you react when you-- when you heard that?

Andrew: It was awful. I wish I could say I was shocked, but I wasn't. He had tried to kill himself a little more than a year before. And that was-- was absolutely devastating. And I had tried to talk to him, to understand what he was going through. It was very painful for me and very difficult for me, but I was making it through. And to see him struggling-- and-- and not making it was-- was terrible. We were-- we were very close. He was my best friend. And-- I-- I wanted to help him.

Ruth: The night before he killed himself, there was an awful article in the Wall Street Journal. I mean, I sort of-- I understood, I was going through those agonies of shame and it was terrible. To feel that we were always so proud of who we were and Bernie's success in the industry. It was-- was so difficult.

She blames herself for Mark's suicide. He'd wanted her to cut off all contact with her husband.

Ruth: I just wish, until my dying day, that I had done what he wanted. I don't know if it would have made a difference or not, but if I could change things, at least if I had tried, I would have felt a little better. I don't know if it would have mattered. It's the most awful thing that can happen to anybody. Suicide of a child.

After her son's death Ruth Madoff told her husband she was finished with him -no visits, no phone calls. That decision led to a reconciliation of sorts with Andrew.

Ruth: That's partly why I'm sitting right here. He and Catherine wanted to write this book, they thought it would be good if I was a part of it. And I agreed because I wanted to reconcile.

Neither Ruth nor Andrew will benefit from sales of the book. Catherine Hooper will.

[Safer: You lived just over miss the apartment?

Ruth: Not really.]

She lives a simpler life now - in a three room apartment in South Florida, but she remains Ruth Madoff - lawful wife of the greatest financial criminal in history.

Safer: Why haven't you filed for a divorce from this man?

Ruth: I don't know. It doesn't matter to me-- he's gonna die in prison. I certainly don't wanna find another man these days.

Safer: He'll probably see this interview. Are you concerned about--

Ruth: I was thinking about that. No, I'm not concerned. He should hear it.

Believe her or not, the thousands of victims may have little sympathy for Andrew and Ruth, but it can't be denied that they too are victims of Bernie Madoff.

[Safer: There's Mark and Andrew.

Ruth: In happier times...]

They lost a son and brother and will forever carry the shame of the Madoff name.

Andrew: What he did to me, to my brother, and to my family is unforgivable. What he did to thousands of other people, destroyed their lives--I'll never understand it. And I'll never forgive him for it. And I'll never speak to him again.

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