Bernie Madoff, Infamous Ponzi Schemer Who Bilked NYC Real Estate Community, Dies
Bernard Madoff, New York City financier and orchestrator of one of the largest Ponzi schemes in history that bilked many New York City real estate figures out of millions, died in federal prison of natural causes early on Wednesday. He was 82.
Madoff died at the Federal Medical Center in Butner, N.C., a representative from the Federal Bureau of Prisons confirmed. The office could not share specifics regarding the cause of death, but added that it was natural causes, not COVID-19. The Associated Press first reported news of Madoff’s death.
The Madoff scandal shook New York City real estate to its core. Madoff ran an investment advisory business, exposed in 2008 as a $20 billion Ponzi scheme. Prior to the revelation that Madoff had, over decades, swindled thousands of clients out of billions in investments, Madoff was known as a self-made financial guru that attracted many famous clients. He helped launch Nasdaq, the first-ever electronic stock exchange, and even advised the Securities and Exchange Commission on the system. In the 1980s, his investment securities company occupied three floors of the iconic Lipstick Building.
Among Madoff’s victims were former New York Mets owners, the Wilpons; the Rechler family; commercial real estate giant Burt Resnick; CBRE’s Stephen Siegel and Newmark’s Brian Waterman. Charities, film director Steven Spielberg and actor Kevin Bacon also invested with Madoff.
The financial hit to investors was enormous. When Madoff was arrested, fake account statements told clients of Madoff that they had holdings worth $60 billion. But no securities were bought and sold and, according to Madoff’s chief financial officer, the detailed trading statements were faked. A court-appointed trustee has recovered more than $13 billion of around $17.5 billion investors poured into Madoff’s business, AP reports.
The New York City real estate industry was devastated. At the time, executives said deals were jeopardized or canceled due to the scandal, and residential brokers said some Madoff investors were forced to put apartments on the market. Many commercial real estate investors pledged investments with Madoff as collateral for their projects and feared having to find alternatives to support their projects, The New York Times reported. Others, like Edward Blumenfeld of Blumenfeld Development Group, were concerned that they might have trouble completing projects under construction.
Robert Ivanhoe, a real estate lawyer at Greenberg Traurig, never met Madoff but had many clients who invested with him.
“My only thought on his passing is remembering the many innocent victims whose lives and financial well-being were turned upside down by his long running fraud scheme and insatiable greed, some of them never even knowing that funds they invested in were, in turn, invested in Madoff,” Ivanhoe wrote to Commercial Observer. “Some of those victims experienced financial ruin, some took their own lives and he caused tragic results for the many victims he touched. His passing just brings back those horrific memories.”
Madoff confessed first to his sons and then the Federal Bureau of Investigation, insisting he acted alone, though the FBI doubted that claim. The scandal turned Madoff into a well-known pariah, so hated that he would wear a bulletproof vest to court, AP reported.
Madoff pleaded guilty in March 2009 to securities fraud and other charges, and was sentenced to 150 years in prison after several months of living under house arrest at his $7 million Manhattan penthouse apartment. Madoff was stripped of his personal property, including real estate, investments and financial assets.
The scandal took a personal toll on Madoff’s family. Madoff’s brother, Peter, who was involved in running the business, was sentenced to 10 years in prison in 2012. One of his sons, Mark, killed himself on the second anniversary of his father’s arrest, and Madoff’s other son, Andrew, died of cancer in 2014 at the age of 48. Madoff is survived by his wife, Ruth.