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Bernie Madoff: How he pulled it off

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On April 14, 2021, Bernard Madoff, who burned thousands of investors through an epic Ponzi scheme, died in prison while serving a 150-year prison sentence. Correspondent Jim Axelrod talks with journalist Jim Campbell, author of "Madoff Talks," who maintained a years-long correspondence with the disgraced investor and his family, to learn exactly how Madoff pulled off the largest financial fraud in Wall Street history.

Video Transcript

JANE PAULEY: When it comes to the late Ponzi schemer Bernie Madoff, you could truly write a book. Jim Axelrod has been talking to the author who did.

JIM AXELROD: For the 12 and 1/2 years between his arrest and his death, Bernie Madoff barely said a word to reporters.

JAMES CAMPBELL: This is the handwritten letters that Bernie sent me.

JIM AXELROD: Or so we thought. It turns out he was engaged in extensive correspondence with a journalist named Jim Campbell-- 400 pages worth.

JAMES CAMPBELL: Handwritten letters. The vast bulk of 400 pages is emails. I have a chunk that are single-spaced, they're long, they're full of compulsion to explain. Very Nixonian in the need to rationalize and justify his behavior.

JIM AXELROD: Campbell is out with a book, "Madoff Talks," which takes us inside the mind of the man who perpetrated the biggest fraud in American financial history. Did he ever express remorse?

JAMES CAMPBELL: Yes, and it would happen this way. "My lawyers tell me I have to express remorse, Jim." I said, here's a victim that you decimated. How do you feel about that? He said, I really have tremendous amount of remorse. Please tell her that I say that.

JIM AXELROD: Why didn't he reach out to her himself and say, I'm sorry?

JAMES CAMPBELL: He couldn't do that, really.

JIM AXELROD: His grotesque ego permitted only one sentence of apology to his son Andrew but allowed him to write letter after letter to a stranger to try to manage his legacy.

JAMES CAMPBELL: You realize that he's writing a guy that he's never met a six, seven-page single-spaced letters, and he sent a letter to Andy and his fiance partner, one sentence-- "I'm so sorry, dad." Not even love. "I'm so sorry, dad."

JIM AXELROD: That's chilling.

JAMES CAMPBELL: It illuminates a narcissist that is compelled to rationalize what had happened. He sometimes would go, Jim, nobody knows why Madoff did this. And I'd say, Bernie, you're Madoff.

JIM AXELROD: Prison officials refused Campbell's request for a face-to-face visit with Madoff, but he took Madoff's wife Ruth to lunch many times starting in 2011. Was Ruth Madoff complicit?

JAMES CAMPBELL: My assessment is she was not complicit and she did not know about it. I asked her, what did you say after Bernie told you guys? What is a Ponzi scheme?

JIM AXELROD: And you think that's on the level? You think Ruth Madoff really didn't know what a Ponzi scheme was?

JAMES CAMPBELL: I don't believe that she really understood what was going on, no.

JIM AXELROD: It removes an element of sinister that Bernie has attached to him and just makes Ruth tragic.

JAMES CAMPBELL: It does. And also, it's again emanating from Madoff's ego. He could never have admitted to his wife and family that he was running this thing as a criminal enterprise.

JIM AXELROD: Bernie Madoff outlived both his sons. Mark died by suicide on the second anniversary of Madoff's arrest. Andrew died of cancer in 2014.

JAMES CAMPBELL: You know, Andrew would say to me, he killed Mark quickly, he's killing me slowly.

JIM AXELROD: Andrew and his brother had worked for their father in a legitimate billion market making business Madoff kept separate from the Ponzi scheme. After Madoff confessed to his sons, they turned him in. Andrew never spoke a word to him again. Did he have any capacity for introspection?

JAMES CAMPBELL: No, not much. I don't think he had introspection because he's keeping this thing running in his brain every day, complete criminal enterprise, at the same time he's keeping the legitimate business going. How could a guy do that if he looked inside himself for two minutes?

JIM AXELROD: It's the work of a psychopath.

JAMES CAMPBELL: It's the work of a financial psychopath, yes. This is a statement of Bernie's firm and went to his investors each month.

JIM AXELROD: Campbell showed us one of the principal tools of the fraud. Morgan Stanley, PepsiCo, American Express, Pfizer, Bank of America, Procter & Gamble. This particular client thought that Madoff was investing his or her money in these companies.

JAMES CAMPBELL: Yes.

JIM AXELROD: Was he?

JAMES CAMPBELL: No. It's a completely fake. He had complete phony records run off of an old archaic IBM AS/400. And every trade was there faked, but that was just for the regulators and for show.

JIM AXELROD: Campbell says plenty of blame extends well beyond Madoff. How could the regulators not uncover that?

JAMES CAMPBELL: It's inexcusable. It's gross negligence. It's incompetence.

JIM AXELROD: But at the heart of his story is a criminal mastermind who kept spinning to the end.

JAMES CAMPBELL: He thought that I would set the record straight, and you'll see that. The first letter says that, you know, "you can help clear up all the misperceptions that are out there."

JIM AXELROD: If that was his calculus, then Bernie Madoff's final investment in Jim Campbell ended up like all the others-- worthless.

JAMES CAMPBELL: I say it's not too far of a stretch to say he was a monster. He was a product, as he told me, of the corrupt nature of Wall Street.

JIM AXELROD: So it was somebody else's fault.

JAMES CAMPBELL: Yes. The blame was always shifted to somebody else.