"Madoff Speaks" Author: Bernie Madoff Resented His Investors

at Bloomberg dot com slash podcast. Cornard made Off, the Manhattan investment advisor who promised stellar returns to his A list clients and instead you frauded them of more than nineteen billion dollars in history's largest Ponzi scheme, has died. He was eighty two. We want to get more color on the man behind the scam, Bernie made Off, and we do that. We're so fortunate to have Jim Campbell. Jim is the author of an upcoming book entitled Made

Off Talks. He's also hosted the radio shows Business Talk with Jim Campbell and his crime show Forensic Talk with Jim Campbell. Jim, thanks so much for joining us. I know you have your book coming out on Bernie made Off. Made Off Talks available April. Talk to us about out the access you had to Bernie made Off for this book. I think it's just really interesting. Well, first all, thanks for having me on. Obviously something most have happened today,

and it is big news. Actually, Um, it was very It was really fortuitous in the sense that I was doing an interview from my show on a book on made Off and they let me speak off the record with Andrew made Off, and UM, I told him would be very open. I asked him tough questions. He obviously was doing nothing publicly because he was under all kinds of assault from the Southern District of New York and

recific made Off trustee. He introduced me then to Ruth Madeoff, who again fortuitously had just moved to Greenwich, where I live, and we developed a relationship. She introduced me to Bernie. Bernie and I communicated. I had got over four hundred pages between handwritten letters emails. Um, he's very Nixtonian. He had this need compulsion to kind of explain everything. Fascinating guy. Um, you'd just be amazed about him. He was not driven

by greed, um, ironically driven by control. And let me just tell you then you can ask you whatever you want. The biggest single thing that blows my mind is he built side by side one of the most ethical, innovative, and leading businesses on Wall Street. That was his market maker at the same time, two fours down behind the locked uh door with several unsophisticated folks, he built the

biggest criminal enterprise in Wall Street history. It wasn't like he got in trouble had to double down and then do a Ponzi scheme he thought he would get out of. He built them side by side. So I wonder do you feel sorry for Bernie made off? I know he committed I guess you could say heinous crimes, although they were you know, financial and nature. Um he did bankrupt a lot of people who, you know, their lives were

made considerably worse afterwards. They were suicide, one of whom was his own son, though um Mark killed himself in two thousand and ten and then Andrew died of lymphoma in two thousand fourteen. I mean, do you feel bad for the guy? I think the way to answer that question is was he a pure social path? Um who sentce you was a financial terrorist? And the answer is no, It's not black and white. He ran the firm like

a family. He paid for folks sudden medical expenses their honeymoons traditionally, and so it was not black and white. On the other hand, he has the sociopath aspects of very little empathy. He had resentment for his victims in some sense, he thought they were greedy. They were always asking him for more. He could never say no. So it's kind of a mixed bag. He's obviously can never be forgiven for what he did, and he could never

come to grips essentially with honestly admitting it. But he's not at you know, pure sociopath evil God what I found. I'm sorry. Let me just say Ellie was out, you know, the famed Nazi hunter, Holocaust survivor, Nobel Peace Prize winner, was asked if he could forgive made off and he said no. To forgive first of all, and this is a direct quote, would mean that he would come on his knees and asked for ask for forgiveness. He wouldn't

do that. Um. Is that right? Did he never do that even to someone like Ellie Wizzell Well, let me tell you this, and this is kind of an irony. Um. He wrote a one satins letter to Andrew, and Andrew's partner fiancee Um that said, I'm so sorry, Dad, essentially apologizing for the scheme not even a look. But it was one set. At the same time, I was getting six seven single spaced letters in beautiful, exquisitive handwriting, explaining and rationalizing everything. So yeah, he had a tough time.

He had an ego that could never admit any kind of loss, which is not something to be a tribute and the trait you want to have if you're in the investment business, where losses are are part of the game, similar to President Trump in that way. And so there's a huge denial mechanism. And though he did not ask for forgiveness, he told me Um he felt he felt really bad for his his uh you know, his victims and everything he knew he'd done wrong. He was devastated

by what he did to his sons. He essentially killed both because Andrew died slowly of cancer. But I spent a lot of time with victims, and Um, it's it's very very hard to forgive a guy, um, knowing what he what he the damage that he calls Jim and your communications with made off. You know, did you talk to Hi about the angle? Only angles that fascinates me was you know, it seems like he took advantage of

his friends, um and maybe praying upon their Jewish religion. Hey, you know, you know that's where a lot of his relationships came from, whether it's a synagogue or just you know, uh circle of friends and pomp Beach or Adam Hampton's. And it seemed to really prey upon you know, his friends, that his Jewish friends. Did that come up at all?

Oh yeah, he's um in a sense, it was almost a financial holocaust, and in the Jewish community, UM to betray financially um, you know, fellow brotherren is almost beyond conception, which is one of the reasons he was so successful.

Here's example of the two sides of him. His his he had big four investors who he basically took his lower net worth investors and passed the money onto them and what I call a reverse Robin hood and um one of the uh, one of the four Norm Levy he was very close to and and and worked hand in hand and when he died even sort of took care of him to keep control over him. At the same time, he was the executor of his non real estate. Asked that he was a big real estate investor. He

stole twitter in fifty million to pump into his headge fund. So, um, you know, how do you fathom this guy? It is it's it's an it's an amazing, um, you know thing that I have been sort of blessed with to try to diagnose this and get under the hood. Did he have any friends at the end, Jim, you mentioned that you have that you have a relationship with Ruth, And I know at one point, I think after mark suicide, she said she was never going to talk to Bernie again.

But surely she must have remained in contact if she hiked you up. Yeah. She Um. The first thing is that that she's really was almost cult like controlled by him, and she had a very hard time decoupling from him. She was thirteen years old when they started dating. She believed his rationalizations and minimizations at first. By the time I met her, she was presenting to me at least that, um, you know that he was going to that she was cutting off relations to the degree she could. He emailed her,

he phoned her, They were in communication. Still they were. She was also obviously through me funnel uh stuff to him. But um, it was very hard for her to get through. To be honest, she was also very hurt, as I say in the book, by um some sexual affairs that he had that actually related more to control of his investors than it did to the pure sex. But that's

all in the book. You'll find Also in the book, I will just uh, I'm the first meteor media source I believe to determine if Ruth, Mark and Andrew were complicit in any way. The FBI and the SIF the trust stee believe that they had to have known, and I have I've got a it's in chapter eight, folks, right, that's interesting real quick? How is his time in prison, the ten years? How hard was it? Did he have any friends or any supporters or is he really alone?

My understanding was that actually, you know, he's charismatic, and uh he is. He is a non con con man because he's so low Keith and I think he gained a lot of respect that a lot of the prisoners thought he was kind of cool. We'll pull off what he pulled off, and he's kind of a survivor that way. Um. He's been sick for a while, though pretty badly and isolated. I think the hospital wins all right. Jim, Hey Jim, we really appreciate you taking time here on this really

important day. Jim Campbell, he's the author of the upcoming book it's due uh out in stores and on online on April seven, entitled Made Off Talks, so that should be very interest giving the timing that we have here. Jim, thanks so much for joining us here. Point based public offering today via directed listening. We're still waiting for that to open, but it is certainly has the attention of a global Wall Street. Meltem Demror's cheap strategy officer from

coin Shares Group, joins us here today. Give us your thoughts of what's the feeling inside coin Shares today. Quick delineation. Coin Base is listening today. Coin Shares, which is my firm, listed about a month ago, so look really great day

for the industry. Coin Base is not only going to be a great validation, not just for crypto assets, which are two trillion dollar market now, but for the companies building in the crypto ecosystem slated to be und billion dollar I p O. I think we're going to tap a hundred fifty billion by the end of the week. Coin Base will be bigger than Golden and Stacks, which is amazing. But really the monumental moment here is we're firmly planting the flag in the ground. Crypto is an

asset class. Crypto is an industry, and for investors, this is a place where you can no longer afford to ignore. You have to be allocating to this sector. You can do it be the assets themselves. That's what we do at coin Shares. We have five billion in assets under management in our change trade of products. Or now with coin base, you can buy equity in high growth sintech companies. So we're super excited. So let's talk about the well,

to some extent, the differences right. Coin Base is an exchange, the largest US cryptocurrency exchange. What you offer with your exchange traded product is the ability to and correct me if if I'm wrong to buy bitcoin, but I don't have to. I can buy bitcoin with your E t P, but I don't have to figure out how to hold it. Do I put it in? I don't know what it's called cold storage or whatever. Um you guarantee my security, you know, you know, I know what I'm talking about, Meltham. No,

But the point is you. Um, you basically take the busy work out of it for an old gen Z guy like me, and I don't have to worry about someone stealing it. I I still own it though, Yep, exactly right. So coin Shares we've been around for the last seven years and basically what we do. We're an investment firm that does a lot of different things. Were best known for products, which again you can go onto any old brokerage platform type in a ticker and hold

crypto exposure in your account. Coin based lifts you buy the underlying assets directly, which is different right there. They're more of an exchange and a bank effectively. But again, there's tons of innovation in this space. We're seeing a lot of different companies going public over the coming months and years, and we're really excited. You know, I manage our venture portfolio. We're also interesting in a lot of these companies with our balance sheet capital and we're just

so excited to see huge validation. I just want to say one more thing on the coin based on listing. What's really cool. Here's Colin Based didn't do an I p O. They're going to market through a direct listing, which I think is great, um. But more importantly, this listing is going to be the biggest direct listing and one of the biggest capital markets events we've seen in

the venture space in the last ten years. So I think again, the fact that this is a crypto native comp ane that's able to achieve this type of outcome just validates why it's so important for investors to allocate to this space. And then I think again, just a huge moment for this industry. After seven years of being called crazy and the traditional financial world shutting us, we are now being accepted because we speak in the language that investors understand, which is money. Well, you know, my

my heartache is UM. When I started researching and reporting on bitcoin in two thousand twelve, I bought some, put it in my blockchain wallet and promptly forgot the password. I'm not I'm not feeling the pain as much as some of the bigger whales that did the same. But Um. The benefit I guess of an et P which you offer is that I would be able to what call somebody and say, hey, help me out here exactly. And it's also the other element that's really important is you

can hold exchange trigger products in your retirement account. Right, so tax advantage savings really important. Through me, Are you going through a tunnel? Are you in an elevator right now? You know I'm right hear me? Okay, yeah, okay, you're breaking up a little bit. We got you, okay. So, look, that big opportunity with E T t s is the retirement accounts. Americans hold the majority of their wealth in

their homes and in their retirement accounts. So we want to get crypto into every retirement account so that people can grow their their wealth through this asthet class and through these businesses in their tax advantaged savings, especially as the U. S. Government looks to tax earners and savers alike at a much higher basis than the years going forward given all of the deficit that we're seeing in

this country and in the world more broadly. Meltime, you talked about maybe some of the uptake of some of this cryptocurrencies at there give us a sense for the institutional appetite for all things crypto. There's concerns that maybe we're not seeing the uptake from some of the big institutional investors. What's your experience, Yeah, absolutely, so, look from

an asset allocation perspective. We produced the weekly fund Flows reports that tracks all of the inflows and outflows into crypto products that are publicly traded right now, those products have over sixty billion in assets under management between them. The last two quarters have seen record inflows. And I'll just share one more fact. Gold has typically been the preferred portfolio diversifier for institutions. What we are seeing right now is over the last two quarters, gold products and

gold ETF have seen twenty billion dollars in outflows. Crypto products have seen seven billion dollars in inflows. And so what we have here is a sector rotation. Investors and allocators need diversifiers in the current macro climates. Our research has found a four percent allocation to bitcoins is the optimal portfolio diversitycation to balance risk and reward. JP Morgan says one percent that we think our research is better at four per cents um. But look, investors are looking

to diversify. They're looking for places to generate return. With real inflation at two point five to three percent and fixed in comic close to zero and real rate it close to zero. We think crypto and bitcoin will play an increasingly important role in investor portfolios and allocators are starting to come out of the woodwork. They're starting to allocate in size, and nowhere is that more apparent than the inflows we're being into these products. All right, Melton,

great to get some time with you. I hope we can talk to you a little bit more after this. Melton um Demers has been really a huge driving force in this industry. She's on the she founded the World Economic Forum Blockchain Council, and you've probably seen her if you watch c SPAN testifying in front of Congress on digital currencies. She also teaches at m I T as well as ox Ford and UM. Right now, you know,

we're focused on the coin based direct listing. It's indicated to open at three five and no now indicated to open at three six five dollars in the NASDAC debut. But there's so much more to talk about around crypto, especially as here in Europe they're talking about digital currency and they're focused on privacy. I wonder how much of that she believes. We'll get her back on again soon. This is Bloomberg, John Tucker. They're talking about some of the big banks that have come out today. JP Morgan

Goldman Sachs Wells Fargo. We have one of the top bank analysts on Wall Street Quick Chris Whalen joins, us chairman of Whalen Global Advisors, And Chris, let me get your reaction first to JP Morgan. I mean, everyone is saying it was such a great quarter, and yet the shares are down for the third day in a row. Well, it's because we're counting last year's earnings. Very simply, if you back out the release of loan loss reserves, which they had put aside when COVID first exploded on the scene, Um,

we're now taking them back into income. So if you really look at the numbers, their expenses were up, revenues were flat, and as you mentioned in your intro, loan demand is soft. Um. You know, it's funny in the classical economics texts, when rates rise, you're supposed to see an expansion of margins on lending. We're not seeing that. Uh,

net interest margin is being squeezed. So I think, honestly, uh, it may be record gap earnings because the accountants and the Fed let them take four and a half billion dollars back into income from loan loss reserves. But if you back that out, the numbers don't look so good. And I think that's what the more astute observers on the street are going to trade based on how concerned are you about the commentary from JP Morgan about the corporate loan growth or the lack thereof in terms of demand.

Is that something you view as temporary that event Actually, as this economy reopens, we will, in fact see lenders come back into the market, our barbarers come back into the market. We've had soft loan demand for a while. And you know, the street typically hasn't focused on this. They just focus on the press release, maybe the first paragraph of the press release when it comes to earnings.

But banks are in a very difficult environment now because the FED has created scarcity and just about any asset class you look at, and the competition for big commercial loans is intense. So in order for banks to win that business, they have to be willing to drop their rate, and in some cases the banks just fold their arms and say, no, I'm going to just leave the reserves at the FED. I don't need to work for nothing,

which is what quantitative easing really means. It means financial assets have no value and so I think the FED needs to rethink what they're doing because if we leave current policy in place, I think banks are going to be in trouble by the end of the year. There's a certain level of interest earnings that they have to have to survive, and we are going to test those limits because of people like Janet Yellen and j Powell. They just don't get it. You know, they're they're working

with a playbook that's twenty five years old. Yeah, but Chris, I mean, you know, we're coming out of this pandemic. It's all about getting the economy open. And these banks are printing record profits. Nobody's going to cry for these guys. Well, they're printing record gap profits. But if you back out the low loss reserves, they're not doing that. Well, um, look at again, look at the results if you take that out, because remember that's last year's profits were counting.

Now that's not this year. Market stuff. I mean, you know, the consolidation in the banking industry has resulted in five six of these players just racking up numbers that and I used to work on the street, we'd never even

think of these levels of profitability. Well, no, and and thank God, because it is the transactional side of people like Goldman and JP Morgan that's gonna save them temporarily from quantitative easing, the the ill effects on net interest margin and on the return on earning assets, which is really all that matters with banks. You know, banks a big portfolio. If they're not making money on their assets, you can survive for a while when the FED pushes

the cost of funds down. The cost of funds for the whole industry today is about eleven billion dollars for twenty trillion dollars worth of assets. Think about that, and that's just helping them look okay. So over the next several quarters, the benefit of that cheap funding is gonna eventually EBB and the the earnings on assets are falling

just as fast. So it's kind of a race to the bottom right now on banks, the mid sized banks, I mean, it could be an example the bank I love Western Alliance that just bought a big mortgage company, a Mara home from Apollo. They're gonna do okay because the smaller banks have more pricing power. They're they're chasing smaller loans. But the big banks, you know, they are in a world a hurt right now because the competition

for large assets is global. Every private equity fund, every sovereign fund, they're all chasing the same customers and so JP Thank god they have capital markets. Is any of the big banks positioned well to deal with this situation then, Chris or do you look down? Um? The latter two, the smaller, midsize and smaller banks look the best bank in the top five as US bankrupt consistently, they have actually been taking more losses in the other banks half,

which I see as a sign of strength. They're cleaning house. There's a lot of forbearance on the street. So as an analyst, when my clients asked me about these banks, I tell them off. And I don't know because the FED has countenanced forbearance on commercial credits, especially commercial real estate, that I think we're going to regret. Because their hope is that the economy bounces is yere. You know, people go back to New York City, we start to see

utilization of commercial assets return. I'm not sure that's going to happen. I think the ravage is right. I think New York City is in trouble, and all the lenders who have exposure to commercial real estate and cities like New York, Chicago, Los Angeles. I think they've got a long, long road ahead of them. Hey, Chris, thanks so much for joining us to really appreciate your take on some of these big bank earnings uh that we are dealing with this morning, and also more to come later this week.

Chris Whalen. He is chairman of Whalen Global Advisors, based in New York and getting some guy to here. Coin Voice a coin base indicated to open at three and at forty. We'll have more coming up now. I want to get over to Bloomberg. Business Week reporter William Turton has written a story with Joshua Bruce dun about a kid really twenty three year old coder who kept q and On online when no one else would. That's the headline from your Business Week story. Um who is this kid?

He's not. He doesn't appear to be a white supremacist or um a q and on follower? Um where did you find him? Hi? Thanks for having me. Nick Limb is the CEO and founder of a company called Bonmo Tech, which is based in his hometown of Vancouver, Washington, and they provide various web services. But most importantly they provide a what's called the cd N service, which prevents websites

from being knocked offline by kind of malicious attacks. And so you know, websites like eight coun and the Daily Stormer, which is like white nationalist website, have been kind of dropped by mainstream providers of that service, like cloud Player

for example. So Limb's company von Tech kind of steps in to fill that void, and his clients, um, you know, as far as we can tell, is a very small amount of people who kind of run some of the most extremist websites on the Internet, alright, So it kind of goes to I think a lot of folks when I think about uh technology and social media and the

spread of extremist views. I think obviously of the brand names the facebooks of the world, but there's also, as you point out in this Business Week story, there's a

lot of smaller players involved as well. This is is more than just Facebook, right, and you know, there's this kind of interesting debate going on right right now about the platforming and social media censorship, right, But so what if you take it a little further and think about, you know, does someone have a right to have a website even you know, even if it has kind of the most abhorrent views um and limb is is kind of you know, and what he explains as the maximum

for free speech. Um. And you know, he kind of summed up his his ideology when it comes to this issue to us, you know, very simply by just saying, I don't care as long as it's not illegal in the US. You know, he's happort it. But he believes

in free speech. Then you're saying, well, right, that's what that's what he says that that I think how he justifies you know, kind of exclusively offering his services to you know, extremely far right uh websites, He exclusively offers them to them or is he just the only one that will accept them? Are you saying he actively white

supremacists that's true, Yes, he does. You know, we found an instance where he you know, actively courted Andrew England, who runs the white supremacy of website Daily Stormer, and

offered him free services. Um. But you know he claimed that, you know, he offers his services to everyone, but the only ones that we could find really were sites like a coon in the Daily Stormer who else does this, um, you know, I mean it's it's hard to believe that this twenty three old with this small company is the only one providing I guess technical support for some of these extremist groups. Is is this a collection a lot

of small players out there, William? Well, you know, as we know in the story cloud Flare it's still offer services to sites that kind of have these extreme mists used, right. They they've only really dropped support of certain sites um. Um, you know, under a lot of kind of public scrutiny and pressure, right and this is an extremely nuance and

complicated issue, which cloud Flaire has itself talked about. UM. But you know, there's as far as I know, there's there's no one really like Nick um, you know, considering most people don't actually have problems using using mainstream providers unless there's kind of a massive backlash that comes from it. It's funny I would have thought you'd see in in UM maybe Eastern Europe or Asia, the hosts of these

Q and on UM supportive websites. Now I say that, um, William without thinking about Facebook and Twitter, which Paul mentioned the top I don't obviously UM surf the web and go to these little niche places. But I do see these kind of weird views, I guess if I can. I don't want to make a value judgment of it, but I do see these kind of Q and on views spreading across everyday Facebook pages, right, I mean, you know the Facebook difficulty and moderating content has been well documented,

of course. I mean, I think it's just sort of interesting. Um, you know how even if you try to d platform someone, right, like if if cloud player stops offering its services, state Coon, there's someone like Nick who can kind of build the gaps. So it's really just a question of how hard these sites want to try to keep themselves online. And then you know, you're you're at a point where you're kind of playing this cat and mouse game, right, and so

what effectively what are you doing? Right? You're kind of chasing different sites to different service writers, but maybe you're not actually kind of confronting the real question of the content and how to how to address it, you know, societally. So well, has there been any pushback on Nick Limmon and his company van wall Tech? Has been any regulatory pushback, legal pushback, um? Anything that might people try to stifle

his operation. Yeah, you know, we feature a researcher in the story who kind of had made it a personal mission of his too to disrupt Limb's operations. And so he you know, found one of the providers that helped provide Limbs his services and wrote them and they took them offline. But you know, as I was just saying, Nick quickly found someone else to to keep the services going. So um, you know, there's always I think gonna be someone that that will be able to offer this kind

of thing. I guess. I guess the question is is he um is he helping to keep any illegal content out there? I mean you mentioned, for example, not just white supremacist websites, but there are also you know these kind of four chan eight chan. I guess it's more into eight coon now I can and keep up um. They also that's intense at all. They also branch they also branch into really uh illegal things like child pornography.

Right well a coon, you know fans shown pornography, or at least it says it does, and and Limb is very clear that you know, if if you know something was illegal, he wouldn't support it. Right now, in practice, what does that actually look like it's It's hard to tell, um, But you know, I think these people aren't actually really that interested in having much legal liability. They're they're more interested in seeing how far they can push the First Amendment.

UM and uh, you know, as far as kind of any regulatory illegal pushback, I mean, not much has been written about Limb or his company, UM, and he actually avoided a lot of scrutiny during the kind of peak of Q and on. But you know, I am curious to see what happens next. I don't anticipate any legal regulatory perspect because Limb, you know, as far as I can tell, isn't doing anything illegal. Interesting. William, thanks much for bringing this this story. William Turton, cybersecurity reporter for

Bloomberg News. His story on a small part of the Internet as but certainly a big part for some of these extremist websites. You can find his story in this week's edition of Bloomberg Business. Sweet Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three put on fall Sweeney. I'm on Twitter at pt Sweeney

before the podcast. You can always catch us worldwide at Bloomberg Radio