Markopolos, Harry - No One Would Listen by Markopolos Harry

Author:Markopolos, Harry
Language: eng
Format: epub
Published: 2010-01-28T16:00:00+00:00

Markopolos, Harry - No One Would Listen

Gaytri Kachroo became my lawyer. She began negotiating with...

Because I had told Gaytri absolutely nothing about Madoff, she probably thought I was overreacting. But as she listened to me yelling about the SEC’s incompetence, about their stupidity, about their refusal to do their job, as she listened to me letting all my anger and frustration come out, she finally realized that I’d had previous encounters with that agency. And she began wondering about that.

Chapter 7

More Red Flags Than the Soviet Union

In August 2007 Frank Casey sent me an e-mail about a new financial product he’d found on the Internet site NakedShorts: “Investment dealers are excited to announce the newest structured finance product—Constant Obligation Leveraged Originated Structured Oscillating Money Bridged Asset Guarantees, or Colostomy Bags. Designed to accommodate the most sophisticated investment strategies, Colostomy Bags contain the equity tranches of Structured High Interest Taxable derivatives, or Shit, and are leveraged an infinite amount of times through the innovative use of derivatives.”

I probably smiled sadly as I read it, knowing that it was no less real than Madoff, and that if it actually existed and somebody could make money from it, they would sell it. I wrote back, “That’s an awesome-sounding product! Who do I call to get an allocation? I want to take down a small piece first, say $100 million, then pitch them to the French HFOF’s as a higher return, slightly higher volume product than Madoff.”

When Neil was sitting across the desk from me at Rampart and things got a little hairy, he would remind me that his mother, who never invested in anything more risky than a certificate of deposit, had tried to talk him out of going into the financial industry. “My Dad was in favor of it, telling me Wall Street people are smart. They make a lot of money. Get in the trenches and do a good job. But my Mom thought investment people were scam artists, and wanted me to become something respectable: ‘Be a doctor or a lawyer.”’

Then he would add, “And we aren’t even Jewish!” We’d laugh and manage to somehow get through the current crisis. But as the years went by, it occurred to me that maybe she knew what she was talking about. After spending so many years trying to convince government officials, reporters, and fund managers that Madoff was a fraud and being rejected or ignored by every one of them, it’s human nature to at least wonder if maybe everybody else was right and I was wrong. But the truth is that I never doubted myself. There is a single irrefutable fact that I relied on: Numbers can’t lie. That’s the basis of my career. First examine the numbers, then investigate how those numbers were generated.

The question I’ve struggled with, which all of us on the team have struggled with, is why did so many people permit this fraud to continue for so long? The industry knew, there’s no question about that.

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