The Lifestyle
RUTH MADOFF WAS FURIOUS.
She had accepted the shame attached to her husband’s $65 billion crime. She knew he had cheated thousands of people, including many of her close friends and family. She could handle being cut off from her social circles and even banned from her New York hair salon. She understood that the Palm Beach mansion, the oceanfront house in Montauk, and the villa and yacht on the French Riviera were gone. She was a virtual prisoner in her Manhattan penthouse. She was always afraid of running into one of her husband’s former clients. She would wait for the doorman to tell her that the photographers had gone, so she could sneak out for an afternoon movie.
But Ruth could live with all that. What made her so angry one morning in late March, 2009 was an item in the New York Daily News claiming that ten years earlier Bernie had had an affair with a younger woman, someone in the media. Men are creeps, she fumed to people close to her after reading the article “Was Ponzi Bernie Madoff man a philanderer, too?” read the headline on the Daily News’ Rush & Molloy gossip column. The writers said two sources confirmed Madoff’s affair with “an executive assistant at a media company” who was “attractive and Jewish,” according to the account. The column said Bernie was generous with her and “used to fly her around” until Ruth found out and “kept him on a short leash after that.” Despite what the columnists’ sources had told them, Ruth had not known about the alleged affair until the column appeared.
The story of the alleged affair spread rapidly, and the next night it provided fodder for David Letterman, who presented the Top Ten Signs Your Wife Is Having an Affair with Bernie Madoff on his late night CBS program.
Number one: “When someone on the news mentions getting screwed by Madoff, your wife says, ‘Tell me about it.’”
Sitting in the luxury Manhattan penthouse made possible by her husband’s crimes, Ruth seethed for days. Bernie had pleaded guilty just two weeks earlier. The judge promptly revoked his bail, ending his house arrest and sending him to jail to await his sentencing.
Ruth had vowed her love to her husband of forty-nine years and had been warming to the role of the lonely, devoted wife until she picked up that Daily News. Now she was experiencing the overpowering sense of betrayal and anger that Madoff’s victims felt three months earlier when they learned he had cheated on them with their life savings.
At the time—three months after Bernie’s arrest—Ruth had not expressed any public regrets about her husband’s monumental crime or any sympathy for his victims. To the outside world, she seemed immune to the suffering of the families—including her own sister Joan’s, whose finances had been devastated—or the charities that were bankrupted by Madoff’s financial chicanery.
But the idea that Bernie would betray her? Cheat on her? After all she had done for him? After all they had been through together?
According to people familiar with her reaction, she vowed to get the truth from Bernie once she was allowed prison visits. And, in fact, a few weeks later, when she visited him at the federal Metropolitan Correctional Center in Lower Manhattan, he denied the affair. And she believed him. She was sorry she had even brought it up. Her Bernie would not lie to her. After all, he wasn’t a creep. He was still that tan, handsome lifeguard who had swept her off her feet at a beach in Queens fifty years earlier.
Life in the ensuing decades had been very good for Ruth and Bernie. Once Bernie’s scheme was in place, there had never been any shortage of money. In some cases, tens of millions of dollars would suddenly appear in Ruth’s accounts with no apparent explanation, according to investigators.
In addition to swindling his investors, investigators say there is evidence he stole from some of them outright by looting the estates of clients who had named him the executor.
On their most recent federal income tax return, for 2007, the Madoffs reported $13,262,706 in gross income. His salary from the company was $9,422,238. They collected tax-free interest of $2,566,428 from some $45 million in municipal bonds. He knew better than to put that money in the hands of the seventeenth floor.
Their IRS 1040 return was prepared by David Friehling, the same small-town accountant who is suspected of covering up Madoff’s fraud at Bernard L. Madoff Investment Securities. It is full of typographical errors.
Madoff may have cut corners in hiring an accountant, but he spared no expense in catering to his and Ruth’s every whim or desire.
They traveled the world together in two private luxury jets co-owned by Madoff with family and friends. Bernie and Ruth adopted a style and demeanor that belied their outer-borough upbringing. They sought the “old money” look, even though their money was freshly stolen.
His clothes were expensive and elegant. Dark blues and grays with a black knit tie. He looked like a French diplomat. On a shopping spree weeks before his downfall, Madoff spent several thousand dollars at Trillion, a men’s store in Palm Beach, where he chose a $1,200 blue Polo shirt and a $2,000 pair of light gray cashmere slacks.
“That’s Bernie’s shade,” said co-owner David Neff.
For shoes, Madoff was a loyal customer of Belgian Shoes, located just down the street from his office. Since 1979, Madoff had bought dozens of handmade suede loafers for around $350 a pair. He told people it was the only shoe he would wear.
Madoff was obsessive about his appearance. Often, when he bought a pair of the shoes, or any tie or shirt, he would buy ten of each item. There would be one each for the meticulous walk-in closets at his four homes in Manhattan, Montauk, Palm Beach, and the French Riviera. The other six sets of clothes were for the six steamer trunks he bought and shipped to his six favorite hotels around the world, including The Lanesborough in London, the Plaza Athénée in Paris, and the Hôtel du Cap-Eden-Roc on the Riviera, so that when Madoff traveled to his favorite places, he took no clothes; they were waiting for him.
“Someone who plans ahead so well that he pre-positions his clothes around the world, don’t you think he has some hidden bank accounts around the world, too?” asked one investigator on the case.
In the last ten years, Bernie and Ruth’s life had been a wonderful merry-go-round, with stops in the Hamptons; Palm Beach; the Riviera; Cabo San Lucas, Mexico; and skiing in St. Moritz, Vail, and Aspen. Bernie was the “non-skiing” captain of the ski team for the Cincinnati stock exchange, which he and his brother helped transform into the National Stock Exchange.
“We had these meetings around the world where all of the stock exchanges of the world would get together for one week and end up with a big gala and ski competition,” said Nando Pignatelli, a former broker from Monte Carlo. Bernie “was seen with very good-looking girls, but they and their husbands were part of the team. He had Ruth there as his wife. Peter with his wife. They were absolutely very regular.”
When they weren’t vacationing in exclusive locations around the world, they maintained their luxury lifestyle at home in New York City. Their penthouse apartment at 133 E. 64th Street, on Manhattan’s Upper East Side, was an understated showcase. Valued at $7.5 million, it is a two-story expanse on the eleventh and twelfth floors. They moved into the city from their suburban home in Roslyn, Long Island, after their sons, Mark and Andy, had finished school. In a building full of millionaires, Madoff was on the top floor, with a commanding view of the city. One of the couple’s close friends, Susan Blumenfeld, served as the decorator. On her Web site, Blumenfeld boasts of her “artistic prowess” and ability to “customize any space to reflect each client’s character with an unexpected flair that is always elegant and beautiful.” She also was the decorator for Madoff’s offices and his yacht.
For the New York apartment, Blumenfeld chose a neutral color palette, with antique Oriental rugs and classic furnishings. As in the office, there were no loud colors—nothing flashy for the Madoffs.
There was a Steinway grand piano in the living room on the top floor, along with floor-to-ceiling windows and a fireplace. Small statues of bulls were placed on each side of the entrance to the room. Nearby was a formal dining room with its own fireplace, a crystal chandelier, and a $64,000 set of silverware. The large eat-in kitchen adjoined the room where Madoff spent most of his time after the arrest, reading the paper and watching old movies on a large flat-screen television. Visitors said the apartment was spotless. According to investigators, the Madoffs’ housekeeper, Praxides Dirilo, was paid out of the company accounts.
The bedrooms were on the eleventh floor, accessed by a large spiral staircase. Bernie and Ruth each had a personal walk-in dressing closet for their expensive wardrobes. Bernie arranged his suits, hand-tailored in London, precisely one inch apart. Each shirt had its own pull-out shelf, and his twenty pairs of suede loafers were arrayed as if on retail display. Down the hall, the master bathroom was big enough for an exercise bike and a large flatscreen television. Bernie and Ruth also had their own luxurious dens. His was all mahogany and decorated with a nautical theme and a leather sofa. There was a metal statue of a bull on the floor. Her den featured an equestrian motif, with Chinese lacquer and floral fabric for the sofa. While he was under house arrest, ABC News cameras from across the street saw both Madoffs relaxing in her den, watching television, surfing the Internet on an Apple computer, and then fluffing the thick pillows on the sofa before turning out the lights and going to bed.
The oceanfront home in Montauk, on New York’s Long Island, was their summer getaway place, purchased in the early 1980s. It is a sprawling estate with its own beach, on Old Montauk Highway. The Madoffs held a yearly summer party for the office in Montauk, but after one particularly raucous weekend, the event was shifted from the family home to nearby motels.
The office summer party began as a fishing trip in the 1980s, and it grew into a three-day beach extravaganza. Employees and their families were all put up at area beach motels. At the last party, in mid-July 2008, there was a beach bonfire dinner on Friday night. Saturday was spent on the sand, with clowns, games, and face painting for the children. Bernie and Ruth sat in beach chairs under a set of umbrellas, as if they were the king and the queen watching their loyal subjects from their thrones. On Saturday night, the festivities moved to the nearby Montauk Yacht Club for an elegant dinner under a huge tent, with a DJ playing music for dancing.
It was the social highlight of the year for the office, and it allowed Madoff to be seen as the great benefactor. Former employees remembered that Madoff loved to watch everyone dance as they stopped, started, and jumped up and down on the commands of someone with a loud whistle.
His messenger, Little Rick, remembers Bernie smoking joints during some of the beach parties, seemingly able to relax and forget for a moment the huge scam he was juggling. Many of those same people he so enjoyed watching on the dance floor, or playing with their children at the beach, invested their savings with Madoff. When they lost everything, they wondered how he could have done it to them when he had always appeared to be such a kind and thoughtful man.
“You would have liked him,” said one former Madoff trader whose savings were wiped out in the scam.
“We thought we were working for this wonderful man. We thought we were doing the right thing for our families. And we just thought that we were having a nice life. And we weren’t,” said Eleanor Squillari. “I never could picture him as wanting to hurt innocent people, but clearly he did, and clearly he knew he was doing it,” she said with anger as she recalled all the good times at the Montauk summer parties.
In the winter, the Madoffs spent their weekends, holidays, and long stretches in Palm Beach. It’s an easy commute from New York when a private jet is standing by. The Madoffs first bought a condominium in the area that some longtime residents in Palm Beach called the “Gaza Strip” because of the perception that most of the newcomers in the high-rise condos were Jewish, intruding on this WASP stronghold.
In 1994, as business was booming and the threat of an SEC investigation had passed, Madoff paid $8 million for a waterfront home on the very fashionable Lake Way. He was one of the first Jewish homeowners in that part of town.
The house at 410 N. Lake Way seems to attract the notorious. It was previously owned by Herbert “Peter” and Roxanne Pulitzer, whose sensational divorce trial included testimony about sexual escapades in the house involving three-way partnerships and a long list of other titillating details. One witness testified that Roxanne Pulitzer had séances on her bed with a trumpet nearby, and she was soon described by the New York tabloids as “the Strumpet with the Trumpet.” Bernie and Ruth couldn’t top that for sensationalism, but their infamy may prove to be more enduring.
The Madoffs joined the Palm Beach Country Club, whose membership was mostly Jewish. All members were major contributors to charities—it was one of the requirements for membership. On their 2007 federal tax return, the Madoffs reported more than $8 million in charitable contributions to a variety of organizations, although much of it was given to foundations established in the name of Bernard L. Madoff and his son Mark Madoff. In 2007, The Madoff Family Foundation had more than $19 million in assets and distributed only $95,000, less than 1 percent.
The Madoffs met their country club’s definition of being charitable, although in their case they were giving away other people’s money. Ruth Madoff often used the Corporate Platinum American Express card to make charitable contributions in smaller amounts.
Members of the Palm Beach Country Club remember Madoff acting like royalty at the clubhouse. To know him, and be accepted by him as an investor, was to be in the elite of the elite. Multimillionaires in the club said they were hesitant to approach him directly for fear of causing offense. Someone had to recommend you.
“It’s almost like you’ve got to grovel. ‘Come to me, I’m the king,’” said former FBI agent Brad Garrett. “That’s extremely important to people with antisocial personality problems. ‘You’re going to have to do what I say and maybe I’ll help you and maybe I won’t.’”
The Madoffs were members of several other golf country clubs, including the Atlantic Golf Club in Bridgehampton, New York. Investigators discovered that Bernie used clients’ money to pay $947,703 in country club dues for himself, his brother, Peter, and their wives between 1996 and 2008.
Bernie was considered an above-average golfer, with a nine handicap, according to people who played with him regularly. Ruth was also above average and often played with Bernie, defying the belief of many golfers that love and golf don’t mix.
They enjoyed each other’s company. Some of Ruth’s most treasured memories are of weekends spent alone with Bernie in their New York apartment. This was not a couple who sought separate vacations or a little breathing room from each other.
“They were incredibly close,” said Eleanor. “I think they genuinely loved and liked each other. Which is huge, when you’re together for so long. They did everything together. He wanted to be with her. The movies, and dinners, even a quiet dinner at home.”
Still, according to former employees, Ruth was well aware that Bernie had a wandering eye.
She surprised him once at an industry cocktail party, where Bernie was “getting a little frisky” with another woman, recalls Little Rick. “Bernie’s there and Peter’s there and they’ve both got blondes next to them, and who walks into the place—in dungarees and a T-shirt no less—but Ruth Madoff.
“She takes one look and she was out. There was no scene. She was a very sophisticated, very classy lady. Needless to say, after that day, everybody went to the industry dinner, all the wives, everybody.”
Little Rick says Ruth kept a very close eye on Bernie after that. As he served as a chauffeur one day, he heard Bernie ask Ruth, “So, honey, when you coming back?”
“She goes, ‘You think I’m gonna tell you when I’m coming back?’
“I wanted to turn around, tell him, ‘She knows your ass real good,’” Little Rick said.
Madoff also had a loyal team of attractive female masseuses. His “little black book,” a $415 goatskin version from the French leather goods store Hermès, contained nine women, under M, who provided massages, in New York, Montauk, Florida, and France.
“I did tell Bernie if he loses that book that somebody’s gonna think he’s a pervert,” said Eleanor, who kept a separate copy of the address book and provided it to the FBI.
In the book, the Madoff number for “Lena” traces to a sexually explicit Web site, where “Lena” is also called “Lilly.” On the site, customers say they paid $150 for a “nude” massage. “The massage was very good and she used her tits and hair to add to the sensual feel. I loved it,” wrote one satisfied client.
Other female masseuses have Web sites that state they are “non-sexual.” Bernie’s former messenger, Little Rick, said Madoff told him he often liked to watch “one woman massage another.”
The stories of Madoff with other escort service women, hotel masseuses, and certain attractive female employees were well known around the office. According to former employees, this was especially true in the 1980s. Ruth learned to live with it.
She could find her consolation in her status as Mrs. Madoff, the wife of one of Wall Street’s most successful investment strategists. Their presence was sought after by hostesses in Manhattan, the Hamptons, and Palm Beach. Her Corporate Platinum Amex card allowed her to buy whatever she wanted, whenever she wanted. In January 2008, company documents show that Ruth spent $3,792 on a one-day Paris stroll from Giorgio Armani to Jil Sander to Marni.
And she made sure to send word back to the old neighborhood about just how wealthy she and Bernie were getting.
Bernie’s childhood friend Jay Portnoy says his mother received regular updates from Ruth’s mother, Sara Alpern, and Bernie’s mother, Sylvia. “I was often told, ‘Mrs. Alpern says Bernie’s doing very well in the stock market,’ ‘Mrs. Madoff says Bernie’s now doing extremely well,’ ‘Mrs. Alpern says Bernie’s now a millionaire,’ and then a multimillionaire.”
By 2006, at the age of sixty-eight, Madoff had enough money and free time to enjoy a fourth home, this time on the French Riviera. The Chase Bank corporate account had several billion dollars in it, enough to handle the continued 12- to 20-percent returns and the occasional client withdrawal. Under Frank and Annette’s supervision, the seventeenth floor was operating like a well-oiled machine. Madoff could take time away from the office without fear of the scheme collapsing. He and Ruth loved France—especially the Riviera.
Bernie and Ruth had traveled there often, staying at the Hôtel du Cap-Eden-Roc in Cap d’Antibes, between Cannes and Nice. It is one of the most elegant hotels in the world, built on a cliff overlooking the Mediterranean and surrounded by a forest of pines. The yachts line up along the waterfront so that their owners can be ferried to the hotel’s outdoor terrace for lunch next to the pool. It was Bernie Madoff’s kind of place.
The Madoff villa was nearby, in an area of Cap d’Antibes known as Château des Pins.
Ruth and Bernie spent a lot of time and money collecting antiques and art for their French villa: a $35,000 painting bought at The Armory Show in New York, furniture from hidden Parisian shops, a leather chair from London. The villa was modest by the standards of many of the Riviera’s grand estates, but the Madoffs loved it.
“Nothing flashy at all,” said Nando Pignatelli, the former stockbroker who often visited at the Madoffs’ place. “Don’t forget that I live in Monte Carlo, and I know what these rich people are and want to look like when they want to show off. He was never a show-off.”
Madoff’s most prized possession was the eighty-eight-foot yacht he bought for about $7.5 million in 2007, named The Bull. He docked it at Juan-les-Pins in Cap d’Antibes, near the Riviera villa. His New York decorator, Susan Blumenfeld, decorated it for the Madoffs, and Bernie commissioned an oil painting of the vessel. Now he could be delivered by sea to the Hôtel du Cap’s terrace like the other wealthy residents of the area.
He now had a yacht on the Riviera, part ownership of two private jets, four multimillion-dollar homes, access to a bank account with billions of dollars in it, and no way out of the monumental crime scheme that had made it all possible.
After his arrest, Bernie was asked how he had planned to end his Ponzi scheme, what was his exit strategy?
“I just somehow hoped the world would end, that would have been a way out,” he told a visitor.
“But Bernie,” the visitor said, “that would mean that Ruth and the boys and the grandkids would all be dead.”
“Right,” said Bernie.
Ruth seemed oblivious to any problem, even though they otherwise seemed so close.
“As far as I know, there was nothing that they kept from each other since they were teenagers,” said Eleanor.
Ruth had helped Bernie run the business when he started it. Her father steered him some of his first clients. Ruth’s role had diminished over the years, but she still had her own office one floor below Bernie’s. Former employees have told investigators that she was there at least once or twice a week.
At one point, she went back to school to study nutrition and received a master’s degree from New York University. She is also listed as one of the two executive editors of a cookbook called Great Chefs of America Cook Kosher, though her precise role in the book’s creation is in dispute. Although Ruth and her co-executive editor appear in a photograph wearing aprons in a kitchen, the editor of the book, Karen MacNeil, told ABC News that she wrote and assembled the book and its recipes herself and never once met or talked with Ruth.
Mostly, when Bernie went to the office, Ruth seemed to be a rich wife who had lunch, played golf, played bridge at the club, worked out at the Equinox gym, and enjoyed her wine and a smoke. She did not seem to have a care in the world other than making sure all the help was paid.
“People like Madoff pick people in their lives who stay with them. Who are basically codependent,” said former FBI agent Garrett. The type of person who thinks, “‘I don’t really want to know what you’re up to, but I do want to benefit with the yachts and clothes and houses and antiques.’”
In the weeks before her husband’s arrest, Ruth emptied her accounts of $15.5 million and helped Bernie prepare for the collapse. If she didn’t know it then, she would soon realize that she was married to a crook, and yet she remained close and loyal. Still in love, she said.
“When your life becomes this sort of mega-materialism and there’s really no reality in your life,” said Garrett, “you can basically rationalize away all those things around, outside this world of wealth and materialism that you’re entitled to.”
When reality hit, Ruth would be devastated.