John B. Whitaker, Dreher High and Presbyterian College grad and now financial advisor with Edward Jones, threw caution to the wind last week and attempted to explain to the Torch Club of Columbia how Bernard Madoff earned the title of “World’s Greatest Scam Artist” without revealing any envy or admiration of Madoff. Whitaker’s loyal wife, Jill, sat faithfully by his side during the presentation.

According to Whitaker, Madoff grew up in a modest, second generation, Jewish family in New York. He was an above average, likable, and happy boy. After one year at the University of Alabama, Bernie transferred to Hofstra where he received his BA in 1960 and later took some law courses at Brooklyn College.

In 1959, he married his high school sweetheart, Ruth Alpern, whose father, Saul, loaned him $50,000 to start his penny stock trading business which soon developed two sides, one legal and one illegal. The brokerage was legal and respected and within 15 years an industry leader. By 1986, Madoff was being paid $6 million to broker a deal.

The investment side of the business, however, was secretive and shady. It was located on the 17th floor of the Lipstick Building in NYC. He cleverly seduced rich and influential clients into investing with him by guaranteeing up to a 20% return per year. The money flowed in, and his clients received unbelievable and undocumented returns.

The Securities Exchange Commission investigated Madoff in 1992, forced him to register as an investment advisor, and made him return $500 million to his clients. Within a few years his client list bulged again with his carefully selected and well–placed friends at regulatory agencies (NASDAQ, NASD, SIFMA, SIPC), charities, political committees (Democratic and Republican), banks, and Wall Street firms.

There were red flags that signalled PONZI, but Madoff’s family and friends covered his back. Those who were getting rich from his scheming kept quiet. When the recession hit in 2008, the lack of new client input created a debt of $7 billion for Madoff, and his scheme fell apart. The money he had swindled disappeared. And the FBI finally moved in.

Madoff pleaded guilty to 11 federal offenses – securities fraud, wire fraud, mail fraud, money laundering, perjury, and making false filings with the SEC – on March 12, 2009. Inmate 61727054 had stolen $65 billion from 14,000 willing victims. He will get out of federal prison in the year 2159.

The Torch Club of Columbia meets monthly for tasty food and interesting lectures. Visitors are welcome. For information, call Ed Latimer at 803-776-4765.