Staff Writer
Columbus CEO

c.2013 New York Times News Service

It was the first global Ponzi scheme — a slow-motion crime wave that began in the Manhattan offices of a stockbroker named Bernard L. Madoff, spread to wealthy enclaves in Palm Beach, Fla., and Southern California, and reached as far as the Persian Gulf. It carried a breathtaking price: $64.8 billion in paper wealth and at least $17.5 billion in cash losses. Those affected ranged from carpenter-union pensioners to French aristocrats.

Early on Dec. 11, 2008, Madoff was arrested at his Manhattan penthouse. Within hours, the news reached his investors, leaving them stunned. In doctors’ offices, beauty salons, executive suites and living rooms, they learned that all the money they thought was in their accounts — invested through a trusted Wall Street statesman — had vanished.

Madoff’s fate was quickly settled. He pleaded guilty and was sentenced to a 150-year prison term, which he is serving in Butner, N.C. But five years later, many of his victims are still waiting to learn if they will recover even a small fraction of the wealth they lost. And some anxious investors, who withdrew much more than they put into their Madoff accounts, are facing lawsuits that seek to reclaim profits that, unknown to them, were paid with stolen money.

Irving Picard, the court-appointed trustee liquidating the Madoff estate in federal bankruptcy court, is suing to “claw back” those paper profits so he can redistribute them to victims who lost actual principal by investing directly with Madoff. So far, Picard has recovered $9.5 billion and has distributed $4.8 billion of that. He hopes to raise more for eligible victims through thousands of lawsuits that are inching their way through the courts.

These eligible victims can expect to collect at least 54 cents for every dollar they gave Madoff. But they represent only 15 percent of 16,000 Madoff-related claims. (Each claim could represent hundreds or even thousands of investors.)

Most of the investors — including those who lost cash through an intermediary — will receive much less, if anything, and some may even be required to pay money to the trustee. Provided that they incurred a cash loss, they may be eligible for a separate $2.35 billion fund set up by the Justice Department, financed through civil settlements and the sale of assets seized in Madoff-related criminal cases. But that process has just begun.

Some victims, meanwhile, are edging into the light, recovering some savings, however slowly, and rebuilding satisfying, if simpler, lives. In recent interviews, a sample of Madoff investors cited some common lessons that emerged from their differing struggles: Diversify your savings. Focus on what really matters. And don’t give up or give in to rage or frustration.


Burt and Joanne Meerow have told the story often enough that they can now laugh, a little, about the absurdity of the situation: They were in a doctor’s office, Joanne’s jeans around her knees, as she waited for a cortisone shot in her hip.

Burt, who had come with her to the appointment, took a call on his cellphone, listened for a moment and suddenly began crying out in panic, “I have no money, I have no money.”

Bernie Madoff had been arrested. About 80 percent of their wealth, invested just a few years earlier through a money-management unit at a major insurance company, was gone.

Joanne Meerow drove her distraught husband to their home in Park Ridge, N.J., went into the bathroom and threw up.

Today, the Meerows — he is 75; she is 66 — have settled into a new life in West Dover, Vt.

“When your life gets altered overnight, you realize you don’t have to keep doing everything you’ve been doing,” Burt Meerow said. “You don’t need to belong to a country club or drive an expensive car or buy expensive jewelry. You certainly don’t have to own three separate dwelling places. It was all pretty obvious.”

Burt Meerow, the sole breadwinner, retired in 2004 after selling his consumer testing business, placing the proceeds with a Madoff-linked fund he had heard about at his country club. The couple had planned a comfortable retirement, with skiing in Vermont, golf in Florida and frequent visits to their children and grandchildren in New York City.

After Madoff’s arrest, they promptly sold their New Jersey home for a good price. They unloaded a Florida golf-club condominium at a loss but no longer had to pay the costly monthly fees. They sold their share of a ski home in Vermont and bought a smaller home nearby, in a community where they have friendships extending back many decades.


But Joanne Meerow — who concedes that “Burt is a ‘glass-half-full’ kind of guy, and I’m a ‘glass-half-empty’ kind of girl” — says she feels “stuck” by their reduced finances. Their new home is too far from New York to allow easy visits with her daughter and two grandchildren, and regular stays in Manhattan hotels are out of the question. She cannot help her son with his fledgling artistic career as much as she’d hoped.


The Meerows have no idea whether, or when, they will recover any of the principal they lost. As indirect investors, they are not eligible for the cash being distributed by the trustee. The Justice Department has said indirect investors will be the primary beneficiaries of its fund, but that claims process began just last month.

Still, the Meerows say they feel lucky. Their losses did not affect the health or safety of loved ones, and they are not facing a claw-back claim. They volunteer as hosts at their local ski resort and enjoy free skiing, discounted lift tickets for their family and half-price golf at the local course.

A recent visit to their old country club for a wedding underscored that its society — “all about things and jewelry and all that silly stuff” — was no longer congenial, Joanne Meerow said. “That’s not who we are anymore.”

“Besides,” she added, “if I had never walked into that club, I never would have heard the name ‘Bernie Madoff.’”


David Iselin was a successful entrepreneur who sold a business, invested the proceeds with Bernard Madoff and then retired. Like more than 2,700 other Madoff investors, Iselin drew more out of his Madoff accounts than he had put in.

“I had built up the account to around $500,000 by about the late 1990s, and I always kept it at around that level,” said Iselin, 66, who lives in White Plains, N.Y. “Most of it was the proceeds of selling my printing business about a dozen years ago. That’s what my wife and I had always planned to retire on.”

A legacy from his in-laws left the Iselins with two other Madoff accounts, one of them an IRA that required his wife to make minimum annual withdrawals.

Fortunately, they had other assets and didn’t lose everything to the Madoff fraud, but the crime still “changed our life totally,” Iselin said. Picard, the trustee, has sued the Iselins, and many others, to recover the money they withdrew over the years.

“I’m sure you’ve heard it a million times, but to treat me and lots of other people like me as if we are criminals — that is probably the most difficult thing I’ve ever had to deal with financially,” he said. “I thought a claw-back suit was something they filed against those who knew what was going on. I never dreamed they’d be interested in me.”


The morning after Madoff’s arrest, Iselin received a call telling him “that Madoff was a scam,” he said. “The rest of that day is a blur. It was a blur for months, really.”

But he says he vividly recalls the first thought that knifed into his mind, “that we would have to sell the house in the Berkshires — a home I love, a home we built together, the place we planned to retire.”

That did not happen; in fact, the vacation home has become the Iselins’ salvation, he said. They rent it out as much of the year as possible to generate income. “It is how we have survived,” he added.


Iselin says he is unsure of the status of the trustee’s lawsuit, which is seeking to recover just less than $1 million from him.

“But it’s there, always looming over my head — like there’s a test coming in school and I’m not ready.”


When Madoff was arrested, the small America-Israel Cultural Foundation in Manhattan was hit from all sides, recalled David Homan, 34, its executive director.

Its entire $13.7 million endowment, invested with Madoff for years, vanished overnight. A few regular donors were also Madoff victims, and their support vanished; others curtailed their gifts to steer more money to other struggling charities they supported. Then Picard filed a claw-back lawsuit to recover money the charity had withdrawn from its account over the years — mostly cash spent long ago on the foundation’s work supporting and showcasing young Israeli artists.

The Madoff calamity cast doubt on whether the foundation would survive to see its 70th anniversary, which was to be marked by a star-filled fundraising gala at Carnegie Hall in January 2010.

Homan, a classical composer who was appointed in 2006, went into crisis mode: He cut his 11-member staff almost in half. He sought out hundreds of potential donors. He appealed to the stars recruited for the gala, including actress Tovah Feldshuh and violinist Pinchas Zukerman, to keep the date on their calendars despite the uncertainty. He wrote urgent letters to 20 top-tier art schools and conservatories, asking them to continue to enroll the 1,100 students, mostly children, who had relied on foundation grants — now evaporated — for their tuition.

“Every school came through. Every artist agreed,” Homan recalled. “The amount of good will shown to us by artists and by the arts-academy world cannot be measured.”


The foundation has broadened its donor base and is carefully rebuilding.

“We haven’t fully recovered, not by a long shot,” Homan said.

But the endowment has grown to $2.7 million from zero, and, with several promised gifts already in the pipeline, he is hopeful that it will hit $4 million by year-end.


The 2010 gala was held at Carnegie Hall, as planned, and was a turning point. At the event, the Ted Arison Family Foundation publicly pledged $2.5 million.

“Thanks to that vote of confidence, the supporters who were uncertain stayed with us,” Homan said.

The claw-back lawsuit remains a constant worry, and he says the foundation can’t really move forward until it is resolved. The amount being sought by the trustee is still under negotiation, he said.

“Our legal team is confident,” he added. “But it’s something that has to be discussed at every board meeting. It is very clear that we live year by year.”


Geneen Roth, an author and behavioral counselor in Nicasio, Calif., had a money manager who turned out to be an embezzler. So in 2000, a trusted friend invited her and her husband to put their savings into his private fund — a fund invested with a market wizard named Bernie Madoff.

“I think our friend just took pity on us because of what had happened,” she said.

And despite what happened next, they remain friends.

Roth, an author of best-selling books on eating disorders, was stunned. She turned to the woman who had been her spiritual teacher for many years, who, Roth said, replied with New Age serenity that “nothing of any value” had been lost.

“I was furious,” Roth said. “I told her: ‘I have lost all my money! This is not the time to be spiritual!’”

Nonetheless, Roth, who is now 62, continued writing. Her book “Women, Food and God,” which came out in March 2010, hit the top of the New York Times best-seller list.

“With the first dollars from that, we paid off the mortgage,” she said.

Then she turned her Madoff experience into another book, called “Lost and Found: Unexpected Revelations About Food and Money” (Viking, 2011). In that book, she described how her insecurities about money echoed her unhealthy feelings about food.

“You can feel stuffed and full after bingeing on food,” she said. “But there seems to be no amount of money at which people feel full.”

She added, “Anorexics who think they are fat are no different from those who have money for all their basic needs but still worry that they don’t have enough.”

As Roth sees it, she is largely to blame for her financial calamity because she steadfastly refused to take personal responsibility for her financial affairs. She acknowledged that her conclusion might upset many Madoff investors, who might see her as “blaming the victims” rather than Madoff.


“I don’t feel that my part in this was not being able to see through him,” she explained. “But I do feel my part in this was my own lack of consciousness about money.”

She lost that blithe disregard the day of Madoff’s arrest, she said, adding that she feels richer for it.


“The Madoff loss changed me in ways I am so grateful for,” Roth concluded. “Would I like to get that money back? Yes. But do I feel that what I’ve gotten since losing it has given me more wealth, in a way, than anything I had before? Yes.”