Madoff’s Maddening Jailhouse Interview

Diana Henriques has a huge get for The New York Times this morning: The first interview of Bernie Madoff since his 2008 arrest.

The headline: Madoff says banks and hedge funds “had to know” about his gargantuan Ponzi scheme. That jibes with what Irving Picard, the trustee who’s trying to recover money for Madoff’s victims, is saying about JPMorgan Chase.

Henriques scored the Madoff interview for an upcoming book and reports that:

He spoke with great intensity and fluency about his dealings with various banks and hedge funds, pointing to their “willful blindness” and their failure to examine discrepancies between his regulatory filings and other information available to them.

“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

Unfortunately, there’s less here than meets the eye. First, there’s the minor detail of Madoff’s credibility. More specifically, he refuses to say who he thinks knew about his fraud.

So while Madoff says things like this:

“I am saying that the banks and funds were complicit in one form or another and my information to Picard when he was here established this.”

There’s a big “but”:

Despite his many references to the complicity of others, he acknowledged in the Dec. 19 e-mail that he had not shared his information with the federal prosecutors working on criminal cases related to his fraud — although the trustee most likely would have done so, if Mr. Madoff’s information was relevant to the investigation.

Mr. Madoff wrote in an e-mail that while he was willing “from the beginning” to give prosecutors information “to help recover assets only, I refused to help provide them with criminal evidence.” In the interview he declined to discuss any of the criminal cases under investigation.

Why won’t Madoff discuss criminal evidence? We’re not given any possible reasons.

And this paragraph is interesting but ultimately confusing:

In a related e-mail on Jan. 12, Mr. Madoff cited out-of-court settlements that some banks and funds had negotiated with private Madoff investors over the last two years and claimed some settlements were made “to keep me quiet” about the role the institutions played in “creating my situation” and about the identity of the beneficial owners of some of their private accounts.

It’s unclear how or why bank and hedge fund settlements with investors would keep Madoff quiet in his jail cell.

But again, this is a huge scoop for Henriques and the Times.

Just how big is it? So big that the New York Post wouldn’t even mention its competitor’s name in its story rewriting the jailhouse interview. Boo. (h/t Pat Kiernan)

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,