As the economy worsened in 2008, Bernie Madoff was in desperate straits.
Calls from panicked clients had started coming in to his virtually impenetrable 17th-floor private office in the Lipstick Building on Manhattan's Third Avenue—the office later identified by authorities as Ponzi Central, the epicenter of history's most massive fraud—where his billions of dollars in personal investment accounts were handled in strictest secrecy.
With the stock market crashing, with credit tighter than anyone could remember, with unemployment hitting record highs, with the housing market in free fall, with big banks and investment houses failing or pleading for government bailouts (and getting them), and with automaker giants like General Motors and Chrysler teetering on the verge of bankruptcy, Bernie was facing his own private hell, his own private demons.
Big and small investors in his very exclusive club—a privileged circle of financial institutions, charities, billionaires, celebrities, and some few favored Joe Six-Packs and Wal-Mart Moms—who were receiving steady and huge returns on their investments in good times and in bad, had begun requesting, and then demanding, that their money be returned.
In the past, when they needed money from their accounts, they'd get a check within days. Suddenly, they were getting the stall. Now Bernie was facing redemption demands to the tune of a whopping $7 billion. Bernie realized that if he couldn't cover those requests, ...