No One Would Listen: A True Financial Thriller (37 page)
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Authors: Harry Markopolos
BOOK: No One Would Listen: A True Financial Thriller
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Finding John Wilke was going to be a problem. I knew that on Thursdays he was at Johns Hopkins University receiving radiation or chemo, or both, to fight his aggressive cancer. Medical facilities did not permit cell phones to be used around that equipment. I called anyway, three different times, and left a brief and nervous message each time.
I knew I needed to get my kids home as quickly as possible and start getting organized. I began running through checklists in my head, trying to prioritize. Minutes later my boys finished their lesson and we walked outside into a driving rainstorm. After the mandatory check for bombs underneath my vehicle I loaded the twins into the car. Five minutes later I was up in my office, digging out papers, making piles. The phone hadn’t stopped ringing, but I didn’t want to answer it. When it rang again I checked the caller ID and recognized a New York area code and figured it was one of my Wall Street derivatives buddies calling with the Madoff news. But when I answered, a voice I didn’t recognize asked, “Are you the Madoff whistleblower?”
My first reaction to that call was anger. “Who is this?”
“This is Greg Zuckerman of the
Wall Street Journal
,” the caller said. “CNBC is reporting the existence of a Madoff whistleblower. Is that you?”
Wall Street Journal
,” the caller said. “CNBC is reporting the existence of a Madoff whistleblower. Is that you?”
“You fucking damn well know it is,” I snapped. “You people have had this story for three fucking years and you didn’t do shit with it.”
“Well, I don’t know anything about that,” Zuckerman said. “But whatever happened before I’d really like to talk to you now.” I had never spoken to Greg Zuckerman, but with John Wilke unavailable I had no choice but to work with him. I needed to get my documents published, and whatever had happened in the past, the
Journal
was still the best place for that. So I needed Zuckerman almost as much as he needed me. I found out later that he’d learned my identity—and gotten my phone number—from Mike Ocrant, who considered him a reliable and ethical journalist.
Journal
was still the best place for that. So I needed Zuckerman almost as much as he needed me. I found out later that he’d learned my identity—and gotten my phone number—from Mike Ocrant, who considered him a reliable and ethical journalist.
Frank Casey, Neil Chelo, and Mike Ocrant were each going through similar experiences. I called Frank as soon as I could. He had just left his apartment in a high-rise on the Boston waterfront and was riding down in the elevator when I found him. “You’re not gonna believe this,” I said. I was calling from my office as I gathered my papers. “Bernie just blew up. He admitted the whole thing was a Ponzi scheme.”
“I’ll call you right back,” he said. Frank got out of the elevator and went right back up to his apartment. “He just crumbled,” I continued, and began filling him in on the few details I had learned. As we were talking, Frank’s other cell phone rang. It was Mike Ocrant, calling from New York. “Oh my God,” he said. “Did you hear the news?”
Frank was balancing two phones when his house phone rang. His wife answered it and indicated it sounded important. “I’ll call you back,” he told me and Ocrant. The insurance executive he’d met only weeks earlier and warned about Bernie was calling. “First of all,” the man said, “I want to say thank you. Thank you for everything you tried to do for me.”
Frank could tell from the sadness in his voice that the outcome hadn’t been good. “What happened?”
“I took your e-mail to my father-in-law and I read it to him word for word,” he said, his voice choking. “He said, ‘This is incredulous. I don’t believe it. Bernie would never do this to me; he wouldn’t do it.’ He wouldn’t do anything about it. We lost everything, absolutely every penny.”
“I’m really sorry,” Frank said.
“No, I really want to thank you for your effort,” the executive said, and after another few awkward words they hung up. Frank turned on the television to try to find out what was going on.
Mike Ocrant had been in a team meeting to discuss an upcoming conference. As he walked into his office his phone was ringing. It was a close friend, Hal Lux, a former top financial journalist who had joined the hedge fund industry and most recently had become a senior fellow at Harvard’s Kennedy School of Government, where he focuses on financial market research. “Did you hear?”
“Hear what?”
“You were right,” he said. “Your story was totally right. Madoff just got arrested for running a Ponzi scheme. You’re the man!”
Seven years too late,
Mike thought,
seven years too late.
A few minutes later he called Frank, who was talking to me. “Harry was right the whole time,” Mike told him. “It wasn’t front-running; it was a Ponzi.”
Mike thought,
seven years too late.
A few minutes later he called Frank, who was talking to me. “Harry was right the whole time,” Mike told him. “It wasn’t front-running; it was a Ponzi.”
“I know. I’m on the other phone with him right now.”
Neil had been having a very difficult day. Personal problems were hitting him hard and he was trying to escape into work. When he checked his e-mail, he found a message from a hedge fund manager with whom he’d been friendly for years. It was a cryptic message: “No Madoff, right?” Without knowing Madoff had collapsed, that message made no sense. Neil wondered if he had told this manager about our investigation. Maybe, but he wasn’t sure. So what did that mean—“No Madoff, right?”
He called the fund manager, who told him, “Check out Bloomberg. It’s the headline. Madoff turned himself in.” Neil turned and looked at the Bloomberg terminal. The headline confirmed it. Bernie Madoff had been arrested for running a $50 billion Ponzi scheme.
Neil took a deep breath, then turned away from the monitor and went back to work. The day was too hard for him to get any satisfaction from this. Later in the West Coast afternoon he began trading e-mails with me and the rest of the team.
When I told my attorney for my other fraud cases, Gaytri Kachroo, that Madoff had surrendered, she asked curiously, “Who’s Madoff?” I had never told her about this case, and at first she didn’t comprehend how big or serious it was. “This was my first case,” I explained. “I’ve been working on it for a long, long time.”
Her primary concerns were how it would affect me and how it would impact the cases on which we were working. “Just calm down,” she told me. “You have a responsibility to the whistleblowers on your other cases, so we need to go slow with this.”
As the story unfolded over the next few days, she began to grasp its significance. But it wasn’t until she was on an Air India flight to Delhi with her children that she finally got it. As she told me, she was stunned to hear the people sitting near her on the plane talking about me—in French. They’re talking
about
Harry, she thought.
That’s my client!
And when the plane landed in Paris for a stopover she bought a copy of the newspaper
Le Monde
—and found a story about me on the front page. That was also the first time she realized that her life was about to change, too.
about
Harry, she thought.
That’s my client!
And when the plane landed in Paris for a stopover she bought a copy of the newspaper
Le Monde
—and found a story about me on the front page. That was also the first time she realized that her life was about to change, too.
In Whitman, it would be almost a full day before Sergeant Harry Bates of the Whitman police department saw my picture pop up on the TV screen. He stood there with his mouth open, thinking, I
don’t
believe this. I do not believe this. This is the biggest thing to happen
around
here since ice cream! And he shook his head and smiled, knowing that nobody in the station was going to believe what he was about to tell them.
don’t
believe this. I do not believe this. This is the biggest thing to happen
around
here since ice cream! And he shook his head and smiled, knowing that nobody in the station was going to believe what he was about to tell them.
I knew I wasn’t in any personal danger from the SEC. But the only way that agency could emerge intact from this debacle was to prevent my submissions from being published. I was afraid they would raid my house under some security pretext and confiscate my computers and my documents and then find some flimsy excuse to get rid of them. I knew they had no criminal powers to stage that raid, but I also knew how desperate they must have been feeling.
I loaded a 12-gauge pump shotgun with double-ought buckshot, attached six more rounds to the stock, and draped a bandolier of 20 more rounds on top of my locked gun cabinet. Next I got out my old army gas mask in case they came in using tear gas. If an SEC raid team showed up, I only had to scare them or slow them down long enough for Sergeant Harry Bates and the Whitman police department to show up and take possession of my documents and computers. SEC staff aren’t armed, so while I didn’t think they’d try anything illegal, my military training kicked in and I prepared countermeasures for the worst possible course of action on the SEC’s part.
The
Wall Street Journal
was my way out. This time they were practically begging me for copies of my documents. I knew Greg Zuckerman by his byline. I’d read some of the stories he’d done. If I couldn’t get hold of John Wilke, Zuckerman would serve my purpose.
Wall Street Journal
was my way out. This time they were practically begging me for copies of my documents. I knew Greg Zuckerman by his byline. I’d read some of the stories he’d done. If I couldn’t get hold of John Wilke, Zuckerman would serve my purpose.
My safety lay in providing the
Journal
with copies of the same documents they’d had for three years. I was fighting an information war with the SEC; the army had taught me that in that kind of warfare it was vital to get out in front, to shape the battlefield for your own benefit. I decided to work with the
Journal
because I wanted the story to get out my way and by working with only one newspaper I maintained some control. I gave my story to the Journal because it fit my needs. I told Zuckerman that John Wilke had copies of all my documents and speculated that they were still on his computer or on the
Journal’s
server in Washington. Zuckerman explained that he was in New York and had no access to that material. “I need you to send it to me again,” he said. “Can you do it today?”
Journal
with copies of the same documents they’d had for three years. I was fighting an information war with the SEC; the army had taught me that in that kind of warfare it was vital to get out in front, to shape the battlefield for your own benefit. I decided to work with the
Journal
because I wanted the story to get out my way and by working with only one newspaper I maintained some control. I gave my story to the Journal because it fit my needs. I told Zuckerman that John Wilke had copies of all my documents and speculated that they were still on his computer or on the
Journal’s
server in Washington. Zuckerman explained that he was in New York and had no access to that material. “I need you to send it to me again,” he said. “Can you do it today?”
I wanted to laugh at him. Today? “You’ve had this material for three years,” I snapped. “I handed you a Pulitzer and you didn’t want it.”
Zuckerman paused. “That wasn’t me,” he said. I accepted that. I didn’t know anything about the internal workings at the
Journal.
As I had learned through my own work as an investigator, secrecy is absolutely vital. So it made sense that Wilke would not have mentioned the story he was working on to Zuckerman. Greg must have guessed what I was thinking—that the fact that John had dropped the story wasn’t going to look good for him—and he added, somewhat cryptically, “We gotta protect Wilke.”
Journal.
As I had learned through my own work as an investigator, secrecy is absolutely vital. So it made sense that Wilke would not have mentioned the story he was working on to Zuckerman. Greg must have guessed what I was thinking—that the fact that John had dropped the story wasn’t going to look good for him—and he added, somewhat cryptically, “We gotta protect Wilke.”
“Don’t worry about it,” I responded. “I never thought it was him.” I’d stored my Madoff documents in my dead cases filing cabinet so they wouldn’t get mixed up with more active cases. I spent the early evening hours digging them out and trying to put them into some kind of sensible order. I’d known that Madoff was going to blow someday, but I’d decided by the time that happened I would no longer be involved. I was never so happy to be wrong.
The only fax I had in my house wasn’t working. I wasn’t really comfortable using it, anyway. A lot of the documents I received and sent were intended to be secret, and at that time I didn’t have a secure phone line. I’d used the fax machines from different Staples and Kinko’s locations, but by the time I was ready to transmit they were all closed. I decided to go over to my local pizza restaurant, the Venus Cafe, figuring every restaurant must have a fax to receive lunch orders.
It was a miserable New England night. We were in the middle of a rain and ice storm, and power lines were going down in the western part of Massachusetts.
That figures,
I thought as I trudged through the storm carrying all my papers. I loved the Venus. My family and I spent so much time there that it was almost like our second kitchen. It’s owned and run by the Drosos family, and they knew me well enough to consider me the local eccentric. I was the guy who had been coming in for years telling bad Greek jokes and sitting at a table reading forensic accounting books.
That figures,
I thought as I trudged through the storm carrying all my papers. I loved the Venus. My family and I spent so much time there that it was almost like our second kitchen. It’s owned and run by the Drosos family, and they knew me well enough to consider me the local eccentric. I was the guy who had been coming in for years telling bad Greek jokes and sitting at a table reading forensic accounting books.
I rushed into the restaurant disheveled, dripping wet, and admittedly very agitated. There was a television set hanging above the bar, and a photo of Bernie Madoff was on the screen. “Elaine,” I said, “Elaine, that’s my case. That’s what I’ve been working on. I’m the whistleblower. Do you have a fax machine? I have to get this to the
Wall Street Journal
and I don’t want the wrong people to find out about it.”
Wall Street Journal
and I don’t want the wrong people to find out about it.”
“Now calm down, Harry,” Elaine Drosos said. “What’s going on?” I blurted out the whole story as quickly as I could. All I wanted to do was get to that fax machine. She listened intently, nodding from time to time, and when I was done she asked, “What’s a Ponzi scheme?”
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