GENEVA - "To be beautiful, transgression has to be excessive," French philosopher Jean-Bertrand Pontalis once wrote.
This would then probably apply to Bernard Madoff’s fraud, a massive Ponzi scheme that defrauded thousands of investors of an estimated $50 billon.
But before he became the biggest scam artist of the century, Madoff had lawfully built a considerable fortune, which helped defuse any potential investor distrust. When the fraud began in the 1990s, Madoff was not a desperate outsider: His wealth was well established and so was his reputation. In the world of finance, he was already an influential man.
During the second part of his career, running his asset management business, Madoff remained vague on his modus operandi (this very haziness actually added to his fame, as his clients thought he wanted to protect his magic formula). He promised his clients big but not unrealistic returns, and above all, he promised total security – zero risk. His stroke of genius consisted in relying on the investors’ greed, while at the same time making them believe in a world where people earn money in their sleep: Whether the markets went up or down, you were still supposed to get your 10%. It was a utopia, a day with no night, a never-ending summer, a volatility-free market.
But three elements threatened Madoff’s system: crisis, controls, and time.
In the middle of the 2008 subprime mortgage crisis, many investors asked to withdraw their funds, which meant Madoff faced $7 billion in requested returns. But the funds had disappeared, and Madoff was forced to tell the truth.
Meanwhile, controls performed by the Securities and Exchange Commission (SEC) had the opposite effect: Conducted by lawyers and not by traders, the eight investigations Madoff was submitted to did not uncover the massive fraud. As baffling as it sounds, their findings reassured the financier’s investors and strengthened his credibility. Instead of uncovering the fraud, they made it worse.
The last threat, time, is the most interesting. Madoff’s aforementioned system required more and more money to be lent faster and faster so as to pay the investors back -- but this obviously couldn’t last forever. In other words, Madoff knew from the beginning that he would end up in jail, which gives his whole scheme a suicidal tone. Madoff was in the position of an immensely rich man engaged in a scam that was, sooner or later, doomed to fail. As Freud would say, Madoff had gone beyond the pleasure principle and into the death drive.
On December 11, 2008, his two sons Mark and Andrew – neither of whom involved in the fraud -- were the ones who turned him in.
Mark could have chosen to hate his father, like Andrew did, or to stab his own eyes out, like Oedipus. He wound up hanging himself -- with his dog’s leash.
As for Bernie, a letter that was later made public revealed that he was happy in the clink.
He declared that being arrested came as a relief. Living a lie was a constant source of anxiety for him. So the concrete prison replaced the mental prison that was Madoff’s secret. "It was a nightmare for me," he told investigators. He confessed he had been under "unbearable" pressure for 16 years, and wished it had all ended sooner. He now lives without the burden of fear, without the burden of hope, at peace.
Besides, being locked away freed him from another source of anxiety: choice. When you’re in prison, bets are closed, somebody else gets to decide for you. Madoff described how heavenly it was for him to live a life of passive contemplation, vita contemplativa: "I lived the past 20 years of my life in fear. Now I have no fear because I'm no longer in control," he confessed during an interview with ABC’s Barbara Walters.
He also enjoys the penitentiary’s security: "It's much safer here than on the streets of New York." He compared the federal prison where he was sent to in Butner, North Carolina, to "a college campus, with pretty lawns and trees."
Still a celebrity
Inmate #61727-054 wasn’t bullied nor did he suffer from anonymity. Instead, he was welcomed to the penitentiary as a celebrity (who refuses to sign the autographs he is hounded for), and benefits from the respect and consideration of both convicts and guards. "I am doing O.K. [...] Everyone treats me with respect." He said he had "loads of friends". K.C. White, a former bank robber and the prison's artist-in-residence, even sketched his portrait.
These comments outraged Mark’s widow. She would have rather seen her father-in-law rot away, forever tormented by regrets. She’s not the only one Madoff’s declarations have upset: The former stockbroker once compared government aid, like pension systems, to a giant scam, doomed to fail. "The whole State is a Ponzi scheme," he even declared.
But back to Madoff’s career. In 1992, 16 years before the truth emerged, there was still time to make things right and get out of the trap that he himself had set. "I spend a lot of time thinking about it […]. I try to piece it together; why didn’t I say, ‘I cannot do it?’ Why didn’t I return the money […] and admit, ‘I can’t do it.’ Why?”
Madoff asked to meet with a psychologist once a week. "Everybody on the outside says I am a sociopath," Madoff is reported to have told her one day. "Am I?"
To which she replied: "Of course not. You have morals. You have remorse." We only have the journalist’s word for it. Cunning as a fox and always ready to play the victim, Madoff likes to put on a show.
Fleeced by Madoff, author, activist and Holocaust survivor Elie Wiesel recalled an extraordinary evening he spent with the fraudster...talking about ethics. Later, Wiesel would publicly curse Madoff, calling him "the crookest of crooks." Wiesel, a Nobel Peace Prize laureate, conjured what he thought would be the most brutal punishment: "I would like him to be in a solitary cell with a screen. And on that screen, for at least five years of his life, every day and every night there should be pictures of his victims, one after the other after the other, always saying ‘Look, look what you have done to this poor lady, look what you have done to this child, look what you have done.’"
But far from rotting in the special hell Wiesel had devised for him, Madoff seems happy to be in prison. How can that be, how can one enjoy such an existence? Is there such thing as claustrophilia? Can psychoanalysis explain it? Otto Rank, the Austrian author of The Trauma of Birth, explained that beyond its mere expiatory side, being shut off from the outside world can sometimes lead to wellbeing. A monk for instance, alone in his cell, can experience a passive state similar to the blissful time in his mother’s womb, far from the torments of time and human desires.
Besides, countless authors have praised the benefits of a life behind bars. The imaginary motif of a happily cloistered life is a recurring element in novels or poems (Stendhal, Baudelaire, Genet, and others).
As of today, Madoff works for 14 cents an hour. He does maintenance in the refectory. He’s looking for another job: He asked to be responsible for managing the budget of his fellow inmates. His request has so far been denied.
Read more from Le Temps in French
*Vartzbed is a psychologist and author of "Comment Woody Allen peut changer votre vie" (How Woody Allen Can Change Your Life)