There's a treasure trove of embarrassments waiting to be discovered as 6,157 pages of documents are released by the US Securities Exchange Commission's inspector general, David Kotz.
Probably the most devastating is the jail interview conducted with Bernie Madoff himself, in which he expresses astonishment that he wasn’t caught much earlier than December 2008. He even had a word of fatherly advice for the investigators, telling them that the first step in uncovering any Ponzi scheme is checking on accounts with Wall Street’s central clearinghouse and dealings with the firms that were supposed to handle the trades.
All in all, there were at least six substantive complaints against Madoff, some as early as 1992, but the SEC every time failed in its basic duties. On at least two occasions Madoff thought it was all over. In 2004, when a routine check with a clearing house would have uncovered everything within minutes. Madoff presumes that he was saved by his seniority on the Wall Street. The next time, in 2006, he was actually forced to give investigators his clearance number, but, incredibly, no-one from the SEC followed up. Madoff ascribes that stroke of luck to the fact that the request was made late on a Friday, and somehow it just died over the weekend.
So, how did he manage to perpetuate his Ponzi scheme for so long? It appears that he was uniquely positioned as a powerful figure who had genuinely helped investors all over the world by democratising trading in the 1970s. He was also well served by his powerful connections with other big players, although all of them now deny ever being friends with him or even knowing he existed. (Even his wife, Ruth, who almost certainly knew everything, and benefited from it all, has famously disowned him.) It also helped that the SEC was chronically understaffed, and that the Bush Government dramatically loosened already lax controls over Wall Street. All of that – and an almost unbelievable string of lucky breaks.
What remains is a question that no-one can fully answer, probably not even Madoff himself: Why did he do it? He was already rich when he embarked on his one-way ride, one he must have always known could only end badly. What made him start a fund that will destroyed lives, cost more than $21 billion and caused pain all over the planet? Greed, hubris, pride, all these usual explanations sounds shallow and inadequate in this case.
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