[RADIOLAB INTRO]

JAD ABUMRAD: So maybe you just want to start at the beginning. So how did you bump into this? Had you been following financial stories?

STEVE FISHMAN: I did some financial stories, but I think my beat was more people in the headlines at the worst moments of their lives. And then I would go in and become their friends, and we would talk intimately about what downfall means when you've been at the mountain top.

JAD: Hey, I'm Jad Abumrad.

ROBERT KRULWICH: I'm Robert Krulwich.

JAD: This is Radiolab. And today ...

[NEWS CLIP: The arrest of Wall Street legend Bernard Madoff.]

[NEWS CLIP: Bernie Madoff.]

[NEWS CLIP: Bernie Madoff.]

JAD: A behind the scenes look at the greatest financial fraud in history.

[NEWS CLIP: A million-dollar pyramid scheme.]

[NEWS CLIP: What the hell is going on here?]

[NEWS CLIP: Who is blackmailing who?

[NEWS CLIP: Wait, come on, Bernie. I know you got that money, man. Where that money at?]

JAD: It's a series called Ponzi Supernova from Audible.com. And just to set up how we got to it, Ellen Horne, the great Ellen Horne, who was one of the founding members of Radiolab, a couple years ago, she left us. It was very sad for us, but she went off to Audible, teamed up with a guy named Steve Fishman, who you just heard, and together they produced this series which has tape in it that has never before been heard. And it's pretty extraordinary.

ROBERT: And kind of—you know, given what's happened recently with financial reforms up for reconsideration, what you're about to hear, you will find a little bit troubling and extremely timely.

JAD: Yeah. And so what we did a couple days ago, we got Steve and Ellen into the studio.

ELLEN HORNE: Oh, dear.

JAD: To play us some stuff and to ...

ROBERT: Talk about it.

JAD: Yeah.

STEVE FISHMAN: Sure.

JAD: You spend the first episode really—oh, sorry. You spend the first episode really chasing the guy.

STEVE FISHMAN: Yeah.

JAD: Like, trying to get access to Bernie Madoff in prison.

STEVE FISHMAN: Yeah. You know, I did all kinds of things. I mean, this was, like, years'-long pursuit. I would send Bernie novels in the mail. I would try and insult him. I copied out Sartre's play No Exit, and I sent that to him, you know, just to try and get a rise. I put money in his commissary account and then, you know, sent him a "You're welcome" note, never receiving a response.

JAD: Do you know why, at this point? What was driving this?

STEVE FISHMAN: I mean, listen, Bernie has done this. I mean, everybody knows. And we keep reading about the details, and we keep triangulating Bernie from friends who very obviously didn't know him, investors who obviously didn't know him. I want to hear this guy tell me. I want to say, "Bernie, why did you do this? You were already rich. Come on! What's going on here?" I mean, Bernie had the greatest seat in the house to what was going on behind the scenes.

JAD: So Steve has explained to us for years, he just kept pestering the guy.

ROBERT: Very stubborn man.

JAD: Yeah. He ended up talking to, like, a whole series of other prisoners, asking them to get the word to Bernie. And eventually, just to cut to the chase, one day ...

STEVE FISHMAN: My home phone rings. So I pick it up. It's a Sunday evening, the Jets game is on, and I got my two young kids running around. And it's, "You have a collect call from an inmate at a federal prison." And then you hear Bernie's voice saying, "Bernard Madoff," in this kind of—slightly kind of disgusted tone of voice. And I'm ...

ROBERT: This is like Captain Ahab, but now you have kids running around the room, a Jets came on. Here's the phone call. Oh, my God! Are you ready? Oh!

STEVE FISHMAN: And I'm not ready. I don't have a pen and paper, I don't have a tape recorder, and my kids are in the background. So my first reaction to Bernie on the phone is, "Hey, kids, shut up. It's Bernie Madoff!" [laughs] So then calls come only in 15-minute bursts. And then for whatever reason ...

ROBERT: Meaning at exactly 15 minutes.

STEVE FISHMAN: At exactly 15 minutes it just ends. And then the inmate has to wait 15 minutes to call you back.

ROBERT: Wow.

STEVE FISHMAN: So he hangs up. I know I have 15 minutes. I'm running around. I must have a tape recorder somewhere. Find one in the closet. I, you know, test it.

[AUTOMATED VOICE: An inmate at a federal prison.]

JAD: At this point, we're just gonna drop into the series.

[ARCHIVE CLIP, Steve Fishman: Bernie?]

[ARCHIVE CLIP, Bernie Madoff: Yeah. Hi, Steve.]

[ARCHIVE CLIP, Steve Fishman: Hi.]

[ARCHIVE CLIP, Bernie Madoff: You got—you got cut off in the middle of saying something. You said you were just—you were. "I was so—" and then you got cut off.]

[ARCHIVE CLIP, Steve Fishman: Well, I—yeah, I was just saying it was great to talk to you because, you know, talking to you in person is so different than reading about you. All the kind of caricature out there, and the whole sense of you as being, you know, just this one-dimensional person.]

[ARCHIVE CLIP, Bernie Madoff: And it was nice talking to you too, Steve, after all these years. So ...]

[ARCHIVE CLIP, Steve Fishman: [laughs] Yeah, that's right.]

STEVE FISHMAN: Bernie Madoff is the greatest financial crook in history, but his voice is familiar to me. Madoff could be the uncle I run into at bar mitzvahs. We have common roots, middle-class New York Jews, and also an interest in the Jets.

[ARCHIVE CLIP, Bernie Madoff: Screwing up the game for you.]

[ARCHIVE CLIP, Steve Fishman: I got it recorded.]

[ARCHIVE CLIP, Bernie Madoff: Okay.]

[ARCHIVE CLIP, Steve Fishman: Yeah, I like that. I can breeze through commercials if I want to. What do you do? Are you near the TV room now?]

[ARCHIVE CLIP, Bernie Madoff: Yeah. Yeah, the phones are right near the TV room.]

STEVE FISHMAN: I try to imagine the former chairman of the NASDAQ at a payphone in a cellblock, Inmates lined up behind him with prison-made tattoos, prison-honed muscles.

[ARCHIVE CLIP, Steve Fishman: Oh, and you can call at night, too?]

[ARCHIVE CLIP, Bernie Madoff: Yeah, I can call 'til 10:30 at night.]

STEVE FISHMAN: Prison is not what Bernie expected.

[ARCHIVE CLIP, Bernie Madoff: It's not the way it's been depicted. Your room is—there's no bars on the windows. Wooden doors. They're not locked at night. I have a nice, pretty big picture window. You can't open it. But ...]

[ARCHIVE CLIP, Steve Fishman: Yeah. I mean, I guess aside from being, you know, separated from everybody and well, the ...]

[ARCHIVE CLIP, Bernie Madoff: Oh, it's—you mean my family?]

[ARCHIVE CLIP, Steve Fishman: You know, you're probably not talking to Ruth right now.]

[ARCHIVE CLIP, Bernie Madoff: No. It's just the whole thing is—you know, it's just—I know you'll never go ...]

[click]

[ARCHIVE CLIP, Steve Fishman: Oh my God!]

STEVE FISHMAN: Time's up. It's frustrating. A call starts, we build momentum. Bernie begins to open up. And then the guillotine falls. Trust is tough to build on a timer, and I need to be the person he will trust with the whole story—at least as he sees it. Bernie lets me know he has a story to tell. He's been misunderstood. "I'm a good person," he tells me. He starts with this: his family didn't have a clue. Bernie insists he shielded his family, nobly kept them in the dark until the unseasonably warm afternoon of December 10, 2008.

[ARCHIVE CLIP, Bernie Madoff: At that stage, I was sort of in a panic about the whole—the whole thing.]

STEVE FISHMAN: He was at his office, Bernard L. Madoff Securities, a family business.

[ARCHIVE CLIP, Bernie Madoff: What happened was Andy and Mark came into my brother during the afternoon and said, "What's wrong with dad? He looks exhausted. He looks terrible. He just looks like he's falling apart." And then my brother came in. He said, "Well, you know, you have to tell the boys. They know something's wrong. They don't know what it is." And I said, "I will." I said, "I can't tell them in the office because I'm just gonna fall apart, so—and I have to tell Ruth. She has no idea." So we got into my car and we drove a few blocks. My driver drove me a few blocks to the apartment. Fortunately Ruth was home.]

[ARCHIVE CLIP, Steve Fishman: Nice.]

[ARCHIVE CLIP, Bernie Madoff: We had my Christmas party that night.]

STEVE FISHMAN: They went into Bernie's study.

[ARCHIVE CLIP, Bernie Madoff: That's when I broke down and I told them. Started crying, and I explained to them what the deal was. I owe all this money out, and I'm not gonna be able to recover it. And I was crying.]

[ARCHIVE CLIP, Steve Fishman: Right.]

[ARCHIVE CLIP, Bernie Madoff: And Andy, I remember, took me in his arms. You know, he felt sorry for me at that stage. I don't think it totally sunk into everybody. Mark was standing there and shocked. And I said, "Look, I don't know what else to tell you." I said, "But I don't know what you're supposed to do now that I've told you this. So ...]

[ARCHIVE CLIP, Steve Fishman: And nobody gets angry at that point.]

[ARCHIVE CLIP, Bernie Madoff: Everybody was stunned. They were shocked. I mean, they were scared, they were shocked. You know, I mean, look, you can just picture one day you think your father's running this multi-billion dollar business and everything is fine and he's happy and they're happy, and then all of a sudden the world comes crashing down. They saw me in tears. The last time I cried like that was when I found that my son had cancer.]

STEVE FISHMAN: Andrew, Bernie's youngest son, had been diagnosed with lymphoma five years earlier. He fought it and recovered fully. He considered changing jobs, but Bernie talked him into returning to work beside his dad, his brother, his uncle, his first cousin.

[ARCHIVE CLIP, Bernie Madoff: The family all got along well together, and it was wonderful having them there. I mean, we were a very close family. I was very proud of my sons. They were proud of me, you know, of what I accomplished. They liked being a Madoff. There was a lot of recognition in that. I was respected in the industry before this happened, and they—they loved that. And I love having them in the business because they were successful at it. I kept them totally out of the loop. I mean, I didn't want them to be part. I couldn't let them be part of the loop, and now all of a sudden they realize that there was this other side that they didn't really know.]

STEVE FISHMAN: As for what happened next ...

[ARCHIVE CLIP, Bernie Madoff: The afternoon I told them all, they immediately left. They went to a lawyer. The lawyer said, "You gotta turn your father in." They went and did that and then I never saw them again.]

STEVE FISHMAN: And didn't hear from them again until two years into Bernie's 150-year sentence. His oldest son Mark sent a message in the most horrible way.

[ARCHIVE CLIP, Steve Fishman: The chaplain came to get you. And what, does he bring you to the chapel?]

[ARCHIVE CLIP, Bernie Madoff: Right.]

[ARCHIVE CLIP, Steve Fishman: And Ruth's on the phone and she tells you?]

[ARCHIVE CLIP, Bernie Madoff: Yeah. I cried for well over two weeks after he died.]

STEVE FISHMAN: Mark Madoff killed himself at age 46, hung himself with a dog leash in his Soho loft while his toddler slept in the room next door. The date, December 11, 2010, two years to the day after his father's arrest. To Bernie, Mark's message to him was clear: you ruined my life.

[ARCHIVE CLIP, Bernie Madoff: I tried to cry in private because I didn't want to do it here. And if they saw me—if they saw me, they probably would have put me in a suicide watch, which is what they do. They were worried about me. They woke me up every hour on the hour to make sure that I was okay, the guards here. I was a basket case for weeks.]

STEVE FISHMAN: Bernie told me he still hoped he could reach Andrew and explain. But Andrew's cancer returned. He blamed the relapse on his father's crimes, the stress and shame of it all. Andrew Madoff died in 2014.

[ARCHIVE CLIP, Bernie Madoff: I have tears in my eyes, and I'm talking to you about certain things. And not a day goes by that I don't suffer. I may sound okay on the phone. Trust me, I'm not okay. I never will be.]

STEVE FISHMAN: Bernie, though, is a survivor. Once he confessed to the largest Ponzi scheme in history, for him, the worst was over.

[ARCHIVE CLIP, Steve Fishman: It must have been something of a relief to finally be able to get this off your shoulders.]

[ARCHIVE CLIP, Bernie Madoff: Oh, it was. I mean, I wish that I was caught earlier. I was under tremendous pressure. It was an absolute—it was a nightmare only for me.]

[ARCHIVE CLIP, Steve Fishman: Yeah.]

[ARCHIVE CLIP, Bernie Madoff: It was only a nightmare for me.]

[ARCHIVE CLIP, Steve Fishman: Yeah. I mean, you were looking down the barrel of this for years. I guess you kind of knew it would end up here, you know, where you are now, sooner or later.]

[ARCHIVE CLIP, Bernie Madoff: When I say 'nightmare,' that's a nightmare. Imagine not being able to tell anybody that I destroyed the family. They said, "Why did you need to do this?" And I said, "I don't know." Anyway, that's what I try and figure out here once a week.]

[ARCHIVE CLIP, Steve Fishman: Yeah.]

[ARCHIVE CLIP, Bernie Madoff: The psychologist.]

[ARCHIVE CLIP, Steve Fishman: Yeah.]

[ARCHIVE CLIP, Bernie Madoff: And they—fortunately, they have wonderful psychologists here, and they're very helpful to me.]

[ARCHIVE CLIP, Steve Fishman: Well, that's great. That's great.]

[ARCHIVE CLIP, Bernie Madoff: Believe me ...]

[ARCHIVE CLIP, Steve Fishman: That's great.]

[ARCHIVE CLIP, Bernie Madoff: I have tearful sessions with her every week.]

STEVE FISHMAN: A New Yorker and his shrink, seeking reassurance, searching for answers. Where does a monster come from?

[ARCHIVE CLIP, Bernie Madoff: I asked him am I a sociopath? After I was seeing this shrink. He said, "You're absolutely not a sociopath." They said, "You have morals, you have remorse."]

STEVE FISHMAN: I came to think of my conversations with Bernie as kind of session, too.

JAD: I'm just curious, what are you thinking at this point as you're talking to him?

STEVE FISHMAN: I mean, we're running through his story, and we've developed a kind of rapport. I mean, you know, there's a different generation, but Jewish roots, New York area. This is a guy who's familiar to me. And I and we develop a rapport, and Bernie kind of tells me the story of his father and of how he got into this.

[ARCHIVE CLIP, Bernie Madoff: My father built a sporting goods business. He owned a company called Dodger Sporting Goods, and he invented Joe Palooka punching bag stand.]

[ARCHIVE CLIP, Steve Fishman: Oh, right.]

[ARCHIVE CLIP, Bernie Madoff: You know, a stand on a metal rod. And he had a big successful business. And then during the Korean War, there was a steel shortage. He couldn't get steel and his business failed. So, you know, I lived through that. You watch that happen, and you see your father, who you idolize, you know, build a big business and then lose everything. You're frightened about—you know, about something like that happening.]

STEVE FISHMAN: Bernie was determined to attain success, lasting success—the kind that had eluded his father, whatever it took.

[ARCHIVE CLIP, Bernie Madoff: I started the company in 1960.]

STEVE FISHMAN: 22 years old, he convinces a handful of investors to trust him. Friends' parents, former customers of his high school lawn sprinkler business, clients of his father in law's accounting firm.

[ARCHIVE CLIP, Bernie Madoff: The first thing I did was I participated in a couple of new issues.]

STEVE FISHMAN: New issues were hot in the 1960s, though without the mad scramble and hype of today's IPOs. Back then there was no CNBC, no computers. With new issues, he thought he'd hit on a money making strategy.

[ARCHIVE CLIP, Bernie Madoff: And then the market cracked in '62 with the Cuban missile crisis.]

[ARCHIVE CLIP, Steve Fishman: Right.]

[ARCHIVE CLIP, Bernie Madoff: The whole new issue market went into the tank.]

STEVE FISHMAN: Bernie lost almost all of his clients' money. As he tells it, he was embarrassed, he was in tears. Ruth took him to her father. Bernie begged for a bailout. His father-in-law saved him. Bernie needed a better strategy.

[ARCHIVE CLIP, Bernie Madoff: We looked for someplace where we could have an edge.]

STEVE FISHMAN: The odds were against him, as he saw it. Bernie wasn't one of the Wall Street elite.

[ARCHIVE CLIP, Steve Fishman: And did they make that clear that, you know, you're—you're not in the club? And ...]

[ARCHIVE CLIP, Bernie Madoff: Oh, yeah, I mean, it was obvious to everybody. I mean, everybody knew it. You know, we were a small firm, we weren't a member of the New York Stock Exchange. You know, it was very obvious.]

JAD: Steve says that idea, like, of Bernie as that as a lower-class kid from Queens who wanted to prove himself to the big boys and be accepted, Steve says that's one of the keys to really understanding how a guy like Bernie Madoff could have gotten into this gigantic fraud. Because when Bernie's business started to really take off—possibly increasingly through fraud—all of a sudden he had all of these guys from the big banks calling him up and wanting to take him out to lunch.

STEVE FISHMAN: By the mid-'90s, word had spread. People clamored to put their money in Madoff's IA business.

[ARCHIVE CLIP, Bernie Madoff: So I opened up the individual accounts of people and I started taking in these funds.]

STEVE FISHMAN: Hedge funds, bank funds and feeder funds created to funnel money to Madoff, who pumped out those incredibly consistent returns.

[ARCHIVE CLIP, Bernie Madoff: So all of a sudden, if you have all these major banks ...]

[ARCHIVE CLIP, Steve Fishman: It's flattering. It's flattering, too, right?]

[ARCHIVE CLIP, Bernie Madoff: Yeah, of course it is. It feeds your ego. I mean, you know, you say to yourself, "All right, all of a sudden, these banks which wouldn't give you the time of day, some of them all of a sudden, they're willing to give you a billion dollars. I had all of these major banks coming down and entertaining me. It's—it is a head trip.]

STEVE FISHMAN: Everyone wanted to be with Bernie—country club golfers, hedge funds, prestigious banks.

[ARCHIVE CLIP, Bernie Madoff: They started—they said, "We're gonna start a fund, you know, but we need you to commit to the money." So I said, "Okay, you know, I think I can do it." Because I thought that even if I started to short some of this stock to them, it would just be a matter of weeks or months and, you know, I'd be able to recover from it.]

STEVE FISHMAN: According to Bernie, this was the turning point. The market went against him. The boy genius failed. And the deluge of money? That was his undoing. He couldn't move billions of dollars in and out of the market.

[ARCHIVE CLIP, Bernie Madoff: My mistake was I just should have left it at that. Instead, these funds just—you know, just kept on pouring money into me, and it was very hard to turn down.]

STEVE FISHMAN: Irresistible for the young man once shut out of the club.

[ARCHIVE CLIP, Steve Fishman: I mean, I guess the other thing there is, you know, you had a history of, you know, breaking up the country club at the New York Stock Exchange with the market makers. And, you know, now in some sense, I guess you're finally getting the recognition from those kind of same people that they need you.]

[ARCHIVE CLIP, Bernie Madoff: Yeah, that's right. And then it just—it just—the whole thing sort of spun out of control.]

JAD: But let me just kind of get something out of the way. So a Ponzi scheme, which we sort of need to know. Ponzi scheme is I give you money to invest.

ROBERT: Yeah.

JAD: You pretend you invest that money, but you don't.

ROBERT: Right.

JAD: Instead what you do is you go out and you get new investors, take their money, give it to me. And then you go out and get even newer investors, take their money, give it to the ones before them, and on and on and on. So, like, all you're doing is just repositioning money, like taking it from the new guys, giving it to the slightly less new guys, making it look like you're trading when you're not. And it only works as long as you have new people coming in. You need a constant stream of new people coming in with new money. But that all sort of fell apart in 2008.

ROBERT: In 2008, when we had a huge stock market crash. Bernie woke up after decades of getting a lot of money in. All of a sudden one day people said, "I want my money back." "Mine too. Me too, me too." And he had not done anything except expect more money to come through the front door. On that day, there was no money coming in the front door.

[ARCHIVE CLIP, Bernie Madoff: It just—the whole thing sort of spun out of control.]

STEVE FISHMAN: And so Bernie's version: the fraud started because impressive people threw money at him. A good person who made a mistake. And we spent hours talking about this. And it seems to me at some point that there's always gonna be that next phone call, but there's that gap, you know, 15 minutes I have to wait until the phone rings. And one time the phone doesn't ring. Bernie doesn't call back. And I get from the prison a letter basically explaining that I have been declared a security risk.

ROBERT: What does a security risk mean?

STEVE FISHMAN: I have no idea. And, you know, it's some kind of catch all. I mean, I tried to appeal that to the Bureau of Prisons. It's unappealable. So basically the warden says, "You know, we don't want this. This is a hassle. You know, he's a security risk. He can't talk to him."

ROBERT: And just to synopsize, just—so at this point, having spent a hunk of time, you went into this thinking, "Okay, I'm gonna sit in his shoes and I'm gonna feel him." And where are you right now at this point?

STEVE FISHMAN: So now I've spoken to him for three or more hours. And, you know, I've taken this journey with him, I've heard his story and, you know, I have felt some empathy for Bernie from his point of view. And so now I start to listen to the tapes, and I start to really kind of dig in. And it occurs to me that Bernie's telling me two stories. Bernie Madoff, on one hand is this wizard conducting this incredible financial criminal wizardry. A mastermind. And on the other hand, he's this kind of pawn.

ROBERT: "Pawn." Not a word you normally associate with Bernie Madoff.

JAD: No, and actually that's more on that after the break. Because what ends up happening—and this is one of the cool revelations of this series is the way in which Bernie actually sees himself as a victim. And it's here where the story sort of starts to expand beyond him, and you start to sort of see ...

ROBERT: A much bigger field of play.

JAD: Yeah, that's coming up after the break.

[LISTENER: This is Alicia Bridges calling from Saskatoon in Saskatchewan. Radiolab is supported in part by the Alfred P. Sloan Foundation, enhancing public understanding of science and technology in the modern world. More information about Sloan at www.sloan.org.]

JAD: Hey, I'm Jad Abumrad.

ROBERT: I'm Robert Krulwich.

JAD: This is Radiolab. Today we're playing a series of excerpts from a brand new series from Audible called Ponzi Supernova. Comes from reporter Steve Fishman and Ellen Horne, our former executive producer. And it's a series about Bernie Madoff, the largest financial fraud in history. It's sort of a behind-the-scenes look. And in this series, there's lots of really kind of crazy, frankly, descriptions of how Bernie Madoff and his team pulled it off, and how on many occasions they almost got caught.

STEVE FISHMAN: Former US attorney Matthew Schwartz told me about one of the closest of the close calls, one starring Frank DiPascali, Madoff's top lieutenant.

MATTHEW SCHWARTZ: DiPascali testifies that he's, you know, sitting in a conference room with the auditors. They ask for this—this report called a SIAC, S-I-A-C report.

STEVE FISHMAN: So picture it: a conference room full of auditors. One asks for this routine report, something a legitimate trading firm would have on the shelf. Of course, Madoff isn't a legitimate trading firm, so they don't have it. Think quick, Frank, and be cool. In front of the auditors, Frank phones the computer programmers and says ...

MATTHEW SCHWARTZ: "Hey, can you bring up the SIAC reports?" And the guy says basically, "The SIAC report? You told us we didn't need the SIAC report. Where the hell am I gonna get a SIAC report?" And he says, "Great, I'll see you in 10 minutes."

STEVE FISHMAN: [laughs]

MATTHEW SCHWARTZ: You know? And then he does, as he described it, a little soft shoe to stall for time.

STEVE FISHMAN: Meanwhile, the team has minutes to prepare a false report, and then make it appear as if it's been idling on a shelf.

MATTHEW SCHWARTZ: They're frantically putting together and printing out this report, which is, you know, it's half a foot thick of this big paper, dot matrix paper. And then it's supposed to be a report that's been lying around for a month and instead it's hot off the presses. So first they stick it in a refrigerator that's down in the investment advisory business to cool it off. And then they literally play football with it. They're tossing it around the room to one another to make it look weathered. And then they run it up to DiPascali.

[ARCHIVE CLIP: Mr. DiPascali, here's the SIAC report.]

STEVE FISHMAN: Who coolly hands it to the auditors. Their close calls over and over again. It's fabulous theater!

JAD: Steve actually described Bernie Madoff's operation, you know, that created, like, this massive $65-billion fraud as, like, super rickety, basically held together by tape and safety pins and old dot matrix printers. And their series goes into a lot of detail about sort of the mechanics and how it worked. What caught our attention was the thing that we sort of mentioned before the break, this idea that Bernie saw himself not as this, like, all-powerful criminal mastermind, but as kind of a pawn.

ROBERT: Yeah. There was an original group of investors that Bernie Madoff found, and this group is called the Big Four.

STEVE FISHMAN: That's exactly right. The Big Four, they came to be known. Even Madoff calls them the Big Four.

[ARCHIVE CLIP, Bernie Madoff: I had four prime, big clients: Jeffrey Picower, Norman Levy, Carl Shapiro and Stanley Chais. Commonly referred to as the Big Four.]

MATTHEW SCHWARTZ: It was very clear that those accounts in particular: Shapiro, Levy, Picower, and Chais.

JAD: Former Assistant US attorney Matt Schwartz again.

MATTHEW SCHWARTZ: Were handled very differently from other accounts, and were handled in a way that, you know, it mattered less if there was a mistake.

STEVE FISHMAN: For these accounts, the workmanship was quite different—more demanding, less exacting.

MATTHEW SCHWARTZ: Some employees were more meticulous than others, and some clients you could afford to be less meticulous with.

STEVE FISHMAN: Annette Bongiorno had been there a long time. She was employee number one in the Ponzi business. Garfinkel told me she handled the accounts of the Big Four.

JAD: Steve Garfinkel was one of the FBI agents who investigated Bernie Madoff's operation.

MATTHEW SCHWARTZ: Annette's clients, the way she fugazied their account statements, there were some instances when the customers got their account statements from Annette and complained that, "Oh, my—you know, you promised me, you know, 18 percent and I only got 16 percent." And they sent the statement back to Annette. So then she would do a new statement when miraculously you got the—your new statement with a new higher return.

STEVE FISHMAN: Madoff himself says the accounts of the Big Four were 'fugazied.'

[ARCHIVE CLIP, Bernie Madoff: They were doing all sorts of 'shmey-drey' trades—it's a Jewish term that we use—where they were, you know, taking loss trades. And the stuff that they did was unbelievable, and they were doing it through me.]

STEVE FISHMAN: They demanded Bernie do kinkier maneuvers.

MATTHEW SCHWARTZ: Stanley Chase, for example, there was explicit testimony that he would not tolerate a single losing trade in his accounts. And he had a particular trading strategy where sometimes you could have a losing leg of a trade, but the trade as a whole was a winner because it was a three-legged trade. He wouldn't even tolerate that. For some reason, every single trade, every single leg of every single trade had to be a winner. Well, that doesn't happen in real life, and no one can demand that of their money manager.

STEVE FISHMAN: Each of the Big Four paid back millions. In Picower's case, billions of dollars. Every one of them claimed Madoff had duped them. They weren't prosecuted, and it's impossible for Schwartz to say for certain who knew what. What he can say is there was activity in the accounts of the Big Four that ...

MATTHEW SCHWARTZ: I think would raise questions in the eyes of anyone. Now you might believe that your genius money manager can get you 700 percent return in a good year, but no one has the ability to rewrite history and turn stocks into bonds.

STEVE FISHMAN: And so these men—mostly older, powerful mentors to Madoff—opened for me a new door into the Madoff Ponzi operation. They gave Bernie his break, and then demanded that he provide them things he couldn't honestly achieve.

MATTHEW SCHWARTZ: These people are—these people, and by that I mean the Big Four, whether it's them personally or their lieutenants or whoever it is, they are asking for things that are not possible. Bernie is accomplishing those things. So now ask yourself: who has the power in that relationship? Is it Bernie because he knows he's doing illegal things for these parties? Or is it the party who's now making Bernie do illegal things? It's both of them.

ROBERT: Well, when Bernie said to you, "Gosh, like, I discovered that people are really greedy." Remember, that was in the beginning. Is this what he means, that these people were using him?

STEVE FISHMAN: This is what Bernie means. And Bernie has actually a particular enmity for those Big Four. One of them, Jeffrey Picower, took out $7 billion. [laughs] $7 billion from this game.

ELLEN: Right. Beyond what he invested.

JAD: That's Ellen Horne, who produced the series. Now the story of Jeffrey Picower is one of the more dramatic moments in this series.

[ARCHIVE CLIP, 911 operator: What's going on?]

[ARCHIVE CLIP, Barbara Picower: He must have collapsed. He's at the bottom. I can't get him out. I can't get him to move. And I don't know how long he's been ...]

STEVE FISHMAN: Ten months after Bernie Madoff's arrest, Barbara Picower, wife of Madoff's largest investor Jeffrey Picower dialed 911.

[ARCHIVE CLIP, 911 operator: He's at the bottom of the pool?]

[ARCHIVE CLIP, Barbara Picower: At the bottom of the pool. Not moving.]

STEVE FISHMAN: This call is hard to listen to. It's upsetting.

[ARCHIVE CLIP, 911 operator: Okay, stay on the line. I'm gonna send the medics to you. Don't hang up.]

[ARCHIVE CLIP, Barbara Picower: Okay. I'm gonna put you on speaker so I can help take him out.]

[ARCHIVE CLIP, Bernie Madoff: The fact that Jeffrey Picower had a heart attack and drowned in his pool, you can congratulate me on that.]

STEVE FISHMAN:According to Madoff, before Picower went for his final swim, Bernie phoned him.

[ARCHIVE CLIP, Bernie Madoff: I called up Jeffrey Picower and, you know, I said, "You gotta give the money back." I said, "You guys owe me money and I want the money back." Picower, you know, said, "Well, you know, I don't have it all." I said, "Jeffrey, I know that you have the money there. You're worth $9 billion, and I want $7 billion back."]

STEVE FISHMAN: Consider what Madoff's tone regarding the death of someone he knew for decades, what this says about Bernie Madoff, who he is. Whenever someone hears that I interviewed Madoff, they always want to know: does Bernie feel remorse? I've interviewed serial killers, child rapists, people considered monsters. I suspended judgment. I wanted to hear their stories, to understand them. This doesn't mean I wasn't horrified by what I heard, but I tried to see the world through their eyes—an exercise in empathy. At times, I feel empathy for Bernie. But here's what struck me about Bernie: he didn't feel empathy. He claimed to feel remorse. He mouthed the words, but there was always a but.

[ARCHIVE CLIP, Bernie Madoff: Look, none of my clients, even if they lost every penny they put in there to plead poverty doesn't mean that I'm excusing what I did. It doesn't mean I don't feel sorry for them. You know, Steve, you had to have a certain net worth to be a client. They were told time and time again that, you know, they should not put more than 50 percent of their marketable investments with me. On all of their confirmation, on all of their statements, they saw there were things that they signed that basically they knew that this kind of trading is speculative. And believe me, if you don't think they had doubts. They had doubts.]

STEVE FISHMAN: On the phone with me, every single time Bernie mentions victims, he can barely get through the apology before interrupting himself. "They were warned. They were greedy." Always this strange "Sorry, not sorry."

[ARCHIVE CLIP, Steve Fishman: Yeah.]

[ARCHIVE CLIP, Bernie Madoff: I said, "Brokerage farms can fail. I could go crazy and do something stupid." I said, "It's—you know, if you want a guarantee, you know, put your money in government bonds."]

STEVE FISHMAN: It's impossible to tell the story of the fall of the House of Madoff without understanding that there were real victims, real suffering. Back in early 2009, victims were telling stories of their ruined lives on TV, on the radio, on every local talk show.

[ARCHIVE CLIP: It was the worst thing that ever happened to us.]

[ARCHIVE CLIP: This can't be real.]

[ARCHIVE CLIP: We have lost everything. I have lost everything, and you've lost everything.]

[ARCHIVE CLIP: Everything that we worked for is down the drain.]

[ARCHIVE CLIP: I manage on food stamps. Sometimes at the end of the month, I scavenge in dumpsters.]

[ARCHIVE CLIP, Bernie Madoff: Now of course, you listen to them, they're all—they're living out of dumpsters, and they're—they don't have any money and so on and so forth. And I'm sure it's a traumatic experience for some but, you know, I made a lot of money for a lot of people.]

STEVE FISHMAN: Did you catch the remorse, or was it too fleeting to register in your brain? My producers and I were in touch with dozens of victims. To the victims, Bernie's indifference was enraging all over again. But it wasn't the slightest bit surprising. What is surprising is what happened to victims since Madoff dragged their $65 billion down a dark hole.

STEVE FISHMAN: I mean, there is now—this is eight, nine years later, there is an industry that is created around the Madoff collapse. There are hundreds of lawyers working on recovering money. And that's a very complicated story, and one we try and tell, because you know what? A lot of people who lost money didn't have any inclination, couldn't have had any inkling that this was going on.

ROBERT: So the justice group comes in—private lawyers, courts, judges, the Justice Department—and they try to make amends. Have they?

STEVE FISHMAN: Justice is a very complicated issue in the universe created by Bernie Madoff. You have a trustee appointed to recover funds for victims. Well, some of those funds went to people who took those funds in good faith. They'd given Bernie millions of dollars. They took out a million plus one. And so they thought they were doing the right thing. They thought it was their money. But we've gotta give money back to the people who lost more money than they put in. You're gonna have to give some of your money to them. So it's a very complicated moral universe.

ROBERT: Well, there's the individuals, and then in the last category, there are the banks and the investment institutions that sold Bernie to ordinary people all over the world.

STEVE FISHMAN: Yeah, there are these financial institutions. Hedge funds, raised billions of dollars, took them to Latin America, to Europe, all across the United States, marketing Bernie Madoff as a safe bet. You know, he was weaponized by the financial system. And so we wondered why weren't those hedge funds accountable for not doing their job?

ROBERT: Yeah, and this is the still happening, still unraveling, still needs to be reported part of the story.

ELLEN: Absolutely.

JAD: That question about why the people who quote, "weaponized" Bernie Madoff haven't been punished yet, probably will never be punished, that is something that Ellen Horne and Steve Fishman tackle in the final episode in their series. And we definitely recommend you check it out at Audible.com/ponzisupernova. We'll link you there as well from Radiolab.org.

ROBERT: And thank you to Stephen Fishman, and to Ellen Horne for sharing this work of theirs with us.

JAD: Also, a shout out to producer Kelly Prime, who helped Ellen and Steve work on the series.

ROBERT: Yeah. So thank you, Audible. Thank you for listening.

JAD: I'm Jad Abumrad.

ROBERT: I'm Robert Krulwich.

JAD: We'll see you—we'll see you next time.

ROBERT: Yeah.

[LISTENER: Hi, this is Logan from Hamilton, Montana. Radiolab is produced by Jad Abumrad. Dylan Keefe is our director of sound design. Soren Wheeler is senior editor. Jamie York is our senior producer. Our staff includes: Simon Adler, Brenna Farrell, David Gebel, Matt Kielty, Robert Krulwich, Annie McEwen, Latif Nasser, Malissa O'Donnell, Arianne Wack and Molly Webster. With help from Tracie Hunte, Valentina Bonini, Nigar Fatali, Phoebe Wang and Katie Ferguson. Our fact checker is Michelle Harris.]

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