The breathtaking financial fraud that made Bernie Madoff a notorious household name was revealed five years ago.
Madoff lost $17 billion in a Ponzi scheme, taking in money from friends, acquaintances, money managers, charities and investors ranging from the super rich to the middle class.
Madoff pleaded guilty and was sentenced in 2009 to 150 years in prison, but the case retains its hold on the public.
Five Madoff associates are now on trial in federal court in Manhattan, accused of actively participating in the long-standing fraud.
And a court-appointed trustee, who has recovered $9.5 billion, is trying to recover more money to parcel out to the victims.
One person who has an ongoing professional interest in the case is Lionel S. Lewis, a retired University at Buffalo professor of sociology.
Lewis, who studied higher education and social stratification, also has written about financial scandals and decided to study the Madoff fraud at the urging of a criminologist friend.
His book, “Con Game: Bernard Madoff and His Victims,” published in 2012, was based on his interviews with Madoff investors, a review of victim impact statements and other court documents and brief conversations with Madoff himself.
Lewis, who continues to research the case and has written several journal articles about it, compares the Madoff fraud to a play or to movies about gangsters and flimflam artists such as “Once Upon a Time in America” and “The Sting.”
In the end, Lewis said, “This is a sad story.”
Steve Watson: Why do you consider the Madoff fraud a con game?
Lionel Lewis: A Ponzi scheme is a kind of con game. There’s a whole literature in con games. We talked about “Once Upon a Time in America.” There’s a great movie, the Robert Redford, [Paul] Newman movie.
SW: “The Sting.”
LL: “The Sting.” They go through the bases. And this goes through the same bases, and it has the same kind of stages. First, you set it up. And then you, if you remember in “The Sting,” they have little placards through the different stages. And also, in biographies of con men, you find the same pattern. And so if you look at it as a con game, you see patterns. And that’s what we’re doing as sociologists.
SW: You also compare it to a theatrical performance.
LL: It is theater. People have roles. There are props. They’re acting.
SW: How do con men work, and what are common threads among history’s most successful con men?
LL: There’s a certain detachment from reality. They’re called sociopaths, but they’re really not sociopaths. They’re just lying. And Madoff, as I see it, was a poor investor. But very lucky. He told people anything that came to his mind.
SW: How did Madoff gain the trust of his victims?
LL: He let early investors make money.
SW: What does it say about Madoff that he willingly brought friends and acquaintances as investors into his scheme?
LL: He thinks he’s done people favors and they’re all going to get their money back, which they’re not.
SW: You believe it was luck, more than skill, that allowed Madoff to get away with his fraud for so long.
LL: I don’t think he was very skillful. ... His sons were very ordinary. He was very ordinary. Some of these con people are very, very clever. And very inventive. He’s not very inventive. He just kind of stumbled into all this.
SW: The Madoff victims seemed to let their greed overwhelm any skepticism they may have had about the high-flying performance of their investments. Do they acknowledge they allowed themselves to be duped by Madoff?
LL: They feel that they’ve been let down by the system. They’re not taking any responsibility. But after Madoff was sentenced, they turned their anger from him to the government, and the trustee.
SW: Why was Madoff the target of so much outrage, well beyond what was directed at people who played larger roles in the collapse of the financial system and the Great Recession?
LL: Because he personified this. [A Wall Street executive such as JP Morgan Chase’s CEO] Jamie Dimon is kind of a vague figure. The judge gave Madoff 150 years, which is bizarre. I guess it’s seen as a personal betrayal.