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Bernie Madoff Screwed Everyone He Met. And Plenty of People He Never Met.

The king of fraud is dead. But we're still dealing with the fallout from his crimes.
April 15, 2021
Bernie Madoff Screwed Everyone He Met. And Plenty of People He Never Met.
(Hannah Yoest / Photos: GettyImages)

Bernie Madoff—pronounced “made off,” as in “made-off with all the money”—died on Wednesday at age 82. Responsible for the largest investment fraud in American history, it is worth taking a moment to once again shame him—but also to note how he changed the industry forever.

Madoff’s Ponzi scheme was what’s referred to as “affinity fraud.” Affinity fraud is a type of investment fraud in which a con artist targets members of an identifiable group based on things such as race, age, religion, etc. The fraudster either is, or pretends to be, a member of the group. Many trusting Jewish people, believing Mr. Madoff to be a pillar of their community, entrusted their life savings to him and were wiped out—which both to me and to the Department of Justice prosecutors made his crimes especially heinous.

While Madoff used affinity fraud with the Jewish community, a feeder fund involved social fraud in the Greenwich WASP money scene. (Back then Madoff-style “funds of funds” were a thing.)

Which brings us to Walter Noel, Jr., of Fairfield Greenwich Group.

Walter is from the south—he and I went to the same prep school (several decades apart) and his cousin was my second grade teacher. In our parts, the Noel family is pronounced like “knoll.” But, when Walter got to Greenwich, he became Walter No-el, like the holiday. So much more sophisticated.

The racket Noel ran was mainly a feeder for Bernie Madoff’s guaranteed 20 percent returns per year. So, when you think about how much of a scumbag Madoff was, and how awful his bilking of the Jewish community was, I hope you’ll also consider sprinkling a little scorn on one very financially and socially fraudulent Walter (pronounced “knoll”) Noel, Jr.

And you can even toss a little hate on his kids, whose husbands participated in the scheme and were forced to liquidate lavish homes.

Full disclosure, I was not dumb enough to fall for Walter’s pitch, but I know a lot of people who did, many of whom were so embarrassed they didn’t seek compensation. In WASP world, its better not to look like a fool than it is to get your money back. Their 11th Commandment might as well be “lawsuits about money are for the lower classes.”

Unless we’re talking about tres comas, at which point the WASP veneer comes off right quick.

It’s likely that out there, somewhere, there’s another Bernie Madoff operating right now.

You see, we might never known of Madoff if it weren’t for the fund redemptions that came from the 2008 financial crash. He had survived the dotcom bust, but when the Great Recession hit, there were more existing unwitting victims trying to get out than new unwitting victims trying to get in.

Right now the stock market keeps hitting new all-time highs and becoming more untethered from reality. This cannot go on forever. At some point there will be a reason to redeem investments in alternative investment funds (hedge funds, venture capital, private equity) and it would shock me if, when that happens, we don’t see something that looks a whole lot like what Madoff did. Maybe not as big. But if I had to guess, it will be more multitudinous.


There were other, ancillary victims of Madoff who never even crossed his path: He did enormous damage to up-and-coming hedge fund and private equity fund managers, and created a cottage industry of excruciating back office compliance that was so onerous that only the very biggest managers can now meet those requirements.

Madoff foreclosed lucrative careers in finance for who knows how many people—especially for women and minorities. Louis Bacon Moore, the juggernaut manager who started with $25,000 from his aunt, for example, could never get traction in a post-Madoff world because the breakeven cost to run a hedge fund—no matter what the performance—is around $250 million of AUM (assets under management). And the only people who can meet that burden out of the gate are breakaway portfolio mangers from big funds.

Ken Griffin of Citadel fame (or infamy take your pick) began trading out of his dorm room in college. His career could never happen now because he’d have never be able to meet the entry costs. (Use the world’s tiniest violin Griffin. When he was feeling charitable, who did he donate to? Harvard.)

In my career I’ve seeded a number of youngsters who are extremely talented and I generally believe that there are not enough women and minorities in alternative finance. So I’ve seen talented, hard-working people fail to reach their goals simply because they can’t meet the financial back office burden that was created as a result of Madoff’s crimes.

That kid who was a stock picking wizard in college and who saved up for years to be able to trade? The young woman with the brokerage statements to prove that she’s a sustainable generator of superior returns and is as honest as can be?

Bernie Madoff stole the life’s savings of a lot of people he knew. And he stole the futures for a bunch of people he never even met.

R. Marshall Brandt

R. Marshall Brandt is the managing partner of Annapurna Capital Management, LLC.