Bernie In Prison

[Beer Chang]

Seems to be adjusting OK.

PAGE ONE DECEMBER 11, 2009 Bernie Madoff, the $19 Billion Con, Makes New Friends Behind Bars

By DIONNE SEARCEY

BUTNER, N.C. -- Bernard L. Madoff's life of country clubs and luxury homes ended when federal agents arrested him at his Manhattan penthouse apartment exactly one year ago. But he is adjusting to his new life behind rows of gleaming silver razor wire in this small Southern town.

Inmate No. 61727-054 shares an unlocked cell at the medium-security prison at Butner Federal Correctional Complex with a younger man named Frank. He wears khaki prison garb and has been spotted walking on an outdoor track. He plays bocce, chess and checkers. He scrubs pots and pans in the prison kitchen.

The architect of the biggest Ponzi scheme in history has served about five months of his 150-year prison sentence. WSJ's Dionne Searcey discusses Bernie Madoff's life in lockup.

The 71-year-old Mr. Madoff also is salvaging something that disappeared in the outside world the moment his fraud was exposed: respect. "To every con artist, he is the godfather, the don," says an inmate interviewed earlier this week.

Mr. Madoff has served about five months of a 150-year prison sentence for pulling off the largest Ponzi scheme ever. Losses suffered by Madoff customers are estimated at $19.4 billion.

"All things considered, he's OK," says Ira Sorkin, Mr. Madoff's lawyer. "He still suffers deeply for what he did."

A description of Mr. Madoff's prison life has emerged from interviews with current and former inmates at Butner and various lawyers, including some who have met with him in prison.

Officially, Mr. Madoff is just another inmate in a federal prison that houses men convicted of crimes including embezzlement, bank robbery, espionage and drug dealing. Nancy Fineman, who represented investors in a suit against his wife, Ruth Madoff, interviewed him this summer. She says he mentioned chatting with fellow inmates such as reputed Colombo crime-family boss Carmine Persico and Jonathan Pollard, an American imprisoned after admitting to spying for Israel more than two decades ago. Other high-profile inmates at Butner include former Rite Aid Corp. vice chairman Franklin C. Brown, who was convicted of crimes tied to accounting irregularities at the drugstore chain.

Prison spokeswoman Denise Simmons declined to comment on Mr. Madoff's life behind bars other than to say that all inmates are treated fairly. Several people in Butner (pop. 6,169) who run businesses frequented by correctional officers say guards have been told they'll lose their jobs if they talk to the media about Mr. Madoff. Mr. Sorkin declined a request to interview Mr. Madoff.

View Full Image

Philly.com

Ex-convict K.C. White says he sketched Bernie Madoff in Butner prison.

Butner Federal Correctional Complex has typical features of prison life, according to the Bureau of Prisons. Inmates rise at 6 a.m. and report for mandatory work duty by 7:30 a.m. An August prison log reviewed by The Wall Street Journal shows that he worked in a maintenance job at Butner at that time. Inmates are paid between 12 cents and $1.15 an hour, depending on the job, which could include groundskeeper, plumber or kitchen crew.

Lights are turned off at 11 p.m. There are gangs and a thriving black market for smuggled luxuries, a current inmate says, such as liquor, shrimp, chicken and cigarettes, which can fetch $10 apiece. Inmates can manufacture military clothing, take Spanish classes and learn heating and air-conditioning repair. Internet access is strictly forbidden, so inmates rely on the word-of-mouth prison rumor mill called "inmate.com."

The informal code of prisoner conduct is strict: Mind your own business. Don't try to find out anyone's inmate number because it could be used to determine a prisoner's criminal record, which is considered private. Don't walk uninvited into another inmate's "cube," or cell. Don't wake anyone who is sleeping. Don't change the TV channel when someone else is watching.

Shortly after arriving at Butner in July, Mr. Madoff told Ms. Fineman and her law partner that he was fending off inmates who wanted to make a buck off his notoriety. "People wanted his signature because they wanted to sell it on eBay, so he wouldn't sign anything," she says.

Back then, Mr. Madoff was sleeping in the bottom bunk and exercising every night by walking around the track. He didn't express interest in attending religious services, but told the two lawyers that he liked the food and people he had met in prison.

"To me, it was all like he was on stage," Ms. Fineman says, comparing the interview to a performance. "He was well-spoken and you could tell he thought about what he was going to say. He's just used to being in command and telling his story."

Some of Mr. Madoff's fellow inmates suspect he has money hidden somewhere and try to cozy up to him in hopes of learning its location. But correctional officers keep a close watch on Mr. Madoff and don't allow groups to crowd around him.

"He looks like the rest of us doing time," says the inmate who asked not to be identified. "He just acts like a normal guy."

Prison officials won't say who has visited Mr. Madoff, though one inmate says Ruth has made the 500-mile trip from New York.

View Full Image

Associated Press

Bernie Madoff arrives at Manhattan federal court in March. A year after he was arrested at his Manhattan penthouse, he is adjusting to prison life at Butner Federal Correctional Institution in North Carolina

Kenneth Calvin "K.C." White, whose prison sentence in Butner for bank robbery overlapped with Mr. Madoff's for several weeks this summer, says he met him in the line where inmates await medication.

Mr. White is an artist who painted several murals throughout the prison. Mr. Madoff struck up a conversation, saying: "You're the guy who does all the pictures around here," Mr. White recalls.

According to Mr. White, Mr. Madoff chatted about the fraud's aftermath, claiming he "carried" employees at Bernard L. Madoff Securities LLC for more than two decades, yet wound up with an astronomical prison sentence. "I guess he felt they turned their back on him," Mr. White says.

Still, Mr. Madoff seemed proud, walking around the prison with his head held high. "He carried on like he'd been doing time for years," Mr. White says.

Mr. Madoff asked Mr. White to paint his portrait, so the bank robber drew a fast sketch in the prison paint shop where Mr. Madoff worked at the time, according to Mr. White.

Mr. Madoff told Mr. White he didn't want to be depicted in his prison khakis, Mr. White says, so he drew him in a suit and tie.

Harlene Horowitz, who lost her Brentwood, Calif., home and other assets in Mr. Madoff's Ponzi scheme, says she thinks he should be in a tiny cell and barred from human contact.

"For someone who lived so high, he can't be happy in his surroundings," she says.

Write to Dionne Searcey at dionne.searcey@wsj.com

[Wino]

Seems like Bernie is adjusting to prison life. I bet he is doing better than many of the investors, that have been cheated out of their life savings.

[Beer Chang]

Of course no one should be cheated, but those that put ALL their money with Bernie were too greedy.

[Wino]

Seems like Bernie is adjusting to prison life. I bet he is doing better than many of the investors, that have been cheated out of their life savings.

Here is a story of one of Madoff's victim. She seems to have picked up the pieces in her life and gone on.

On Dec. 10, 2008, Alexandra Penney, the former editor of Self and Glamour magazines, was enjoying a second career as a professional photographer and artist. She had financial security, the apartment of her dreams in the Upper East Side of Manhattan and a sprawling studio in which she was launching her budding new career. The next day, she discovered that her investment adviser, Bernard Madoff, had massively defrauded his clients, including her. Over the next few months, Penney scrambled to sell her houses in Florida and Long Island, drastically cut back on her expenses and set off in a new career direction as a blogger and writer.

In her forthcoming book, The Bag Lady Papers: The Priceless Experience of Losing It All, Penney writes about her experiences dealing with the loss of her money and trying to rebuild her life. She shared some of the lessons of that experience with DailyFinance's Bruce Watson.

DailyFinance: After your money disappeared, you quickly began rebuilding your life. How long was it before you had another job?

Alexandra Penney: The next day. The morning after I found out about Madoff, I woke early, but couldn't look for work because nobody was open before 9:00. Then I remembered that my old friend Ed Victor was in London and would be up. Ed is a very prominent literary agent, and after I told him my story, he said that he would see what he could do. Ten minutes later, he called me back and told me that Tina Brown, an old colleague of mine from Conde Nast, wanted me to write a blog. So I just wrote about my experience, with no filter.

In your book, you talk about your luxurious lifestyle before Madoff defrauded you. What was the hardest luxury to give up?

Luxuries are easy to give up; the hard part is the things that you don't realize are luxuries. I found that the equilibrium and peace of mind that I got from having some money in the bank was a luxury, too. When that was gone, I was in a panic.

Before your Madoff experience, you had four properties that you owned or rented: a house in Long Island, a house in Florida, an apartment in Midtown and a studio. What happened to these places?

My landlord lowered the rent on my studio by a third, which made it possible for me to keep my work space. I'm trying to sell the house on Long Island. In the meantime, I'm renting it out. I sold the house in Florida and still have my apartment.

In the book, you spend quite a bit of time talking about Carmina, your maid. Does she still work for you?

Carmina still comes in for three hours a week. I do most of my own housekeeping, but she needs the money, and I need her. I couldn't not let her have income.

Suicide is a recurring theme in your book. After you learn about the Madoff scandal, one of your first impulses is to look into suicide, and your photographs after the event have also explored that. How have you dealt with those feelings?

After Madoff, I felt like I had lost control over my savings, my life and my identity. I felt like I had lost my dignity, my ability to do work. For example, I need a large work area, because the photographs that I work with take up a great deal of space, and it looked like I was going to lose my studio.

According to my internist, the realization that I could commit suicide -- along with the fact that I didn't do it! -- helped me regain my feeling of self worth and control.

Reading this book, it seems like this experience really helped you learn about what is valuable. Do you still hate Madoff?

I never hated him. I had a weird reaction: I was really angry one day after I spent 10 hours Xeroxing documents related to my case. Xeroxing isn't cheap!

Anyway, I never met the man; he was abstract to me. What I hated was the horrific feeling that I didn't have a cent in the bank.

What about your finances now? How is your life after Madoff progressing?

Well, the art market is improving, and I have a show in Chelsea that is going up soon. A friend of mine, Richard Story, is editor of Departures magazine, and he flew me out to Africa to do a story. I got to see amazing things that I never would have seen in my pre-Madoff days.

I was impressed with how quickly your son offered to put you up.

What a darling he is! His first words after Madoff were "Mom, you can come live with us."

And so many of your other friends jumped to your aid.

Isn't that amazing? People are so immediately thoughtful and generous. Before I knew it, I had friends saying: "Can you do this?" "Will you come here?" "Here's some work for you to do!"

Three of my friends -- Richard Story, Alex Mays and Patty Matson -- all jumped to my aid. They literally came to my apartment and told me that "we have to find ways for you to make money." Richard helped me with the Departures story, Patty sent art collectors to my studio and Alex helped me when I was first learning to write my blog.

And Ed Victor. Ed is like my guardian angel. How many agents call you every day to see how you're doing? When I think of Madoff's other victims, poor old women who never worked, I'm so completely lucky.

The Bag Lady Papers: Madoff Victim Alexandra Penney Writes About Rebuilding Life, Finances - DailyFinance

[Bob]

Of course no one should be cheated, but those that put ALL their money with Bernie were too greedy.

Yes, some clearly were simply greedy. And I'd hope that one lesson a lot of people would learn about the Madoff scandal is that the old axiom of "never put all your eggs in one basket" is not something to be usually ignored. I shook my head when I kept hearing the recurring theme by some of the investors that "all" their investments were with Madoff (and I read one story that one of the bright investors actually had borrowed some of the money he invested with Madoff).

My comments are not meant to minimize Madoff's major culpability here but to simply state that investors ought to act reasonably to protect their own interests. After all, at least where I come from, every "investment" is a gamble to some degree.

[Wino]

the old axiom of "never put all your eggs in one basket" is not something to be usually ignored.

That is an excellent old axiom and works well to spread the risk. On the flip side, another axiom is "put your eggs in one basket, then watch the basket like a hawk." There is something to be said about both statements.

[graymo]

"All things considered, he's OK," says Ira Sorkin, Mr. Madoff's lawyer. "He still suffers deeply for what he did."

Oh well, that's OK then...

[Wino]

"He still suffers deeply for what he did."

Here is an article about Bernie's "falling out of bed" incident. I guess he is suffering deeply.

Last December, officials at the federal prison in Butner, N.C., rebuffed rumors of a prison-yard beatdown involving the facility's most famous inmate, Bernie Madoff—he of the multibillion-dollar Ponzi scheme that crashed to earth so ingloriously in 2008. Yes, the prison’s administrators conceded, Madoff had suffered facial fractures and lacerations, broken ribs and a collapsed lung requiring an extended hospital stay. But the former Wall Street titan had just fallen out of his bunk bed, they insisted.

Today, observers who were skeptical of the odds that one’s lung might collapse after a tumble out of bed were vindicated. The Wall Street Journal confirmed the more plausible version of events today: that Madoff was indeed jumped and beaten up by a fellow inmate, a “beefy†gent who possessed a black belt in judo—and had a personal grievance stemming from a Madoff-contracted debt he believed he was owed.

According to three prison sources the paper spoke to, the man who stole tens of billions of dollars from clients over a span of decades spends his days at the medium-security facility watching action films like "Lethal Weapon" and doling out financial advice to fellow inmates in the prison library. The sources say that Madoff’s closest buddy is a New York pharmacist locked up for the illegal distribution of painkillers—but that he also socializes frequently with Carmine Persico, the head of the Colombo crime family.

The unnamed man—who’s serving out a sentence based on federal drug charges—clearly is not part of the Madoff inner circle at Butner. He might well be able to score some free drinks once he’s released, however, from fellow members of the bilked-by-Bernie fraternity—an extensive list that includes Kevin Bacon, Steven Spielberg and New York Mets owner Fred Wilpon. Even Harry Markopoulos, the whistle-blower who tracked the Madoff scam for years, has told the press he wouldn’t have blanched at murdering Madoff if that was what it took to stop him.

The December incident wasn't the first time Madoff found himself engaged in a prison brawl. He allegedly emerged the victor after an argument with another inmate over the "state of the market" ended in fisticuffs last October. Additionally, the New York Post reported last year that various prison gangs, including the Butner facility’s "homosexual posse," had been aggressively trying to recruit Madoff into their crews, regarding his notoriety in the outside world as a badge of honor.

Oddly, for all the concern about the irrational bent of the nation’s army of pitchfork-wielding populists, physical attacks on Wall Street chieftains are not exactly epidemic. The only other former master of the universe who’s suffered a physical attack was former Lehman Brothers head Dick Fuld—and he was smacked by one of his former employees, not a fleeced investor.

"It's actually been a little surprising that there haven't been more of them out there," said John Carney, about episodes in which financiers might find themselves on the wrong end of a fist. Carney, who covers Wall Street for Business Insider, adds that the cocoon of privilege that envelops most high-rolling investors can also serve as protective camouflage. "They live in a world where they have limited contact to normal human beings. In order to get beat up they have to be in the same room as people who aren't just like them."

— Brett Michael Dykes is a national affairs writer for Yahoo! News.