Weighing Madoff’s Claims of Complicity

Bernard L. Madoff, in his first interview for publication since his arrest in 2008 for running the largest Ponzi scheme in history, makes claims that echo those of the trustee, Irving H. Picard, in various lawsuits: some of the bankers and fund investors “had to know” about the fraud.

But should we believe the orchestrator of a decades-long deceit when he points the finger at others, while making sure to exonerate those closest to him?

In her article in The New York Times about a prison interview and other exchanges with Mr. Madoff, Diana B. Henriques makes it clear that he was rather selective in who shared the blame for a fraud that cost investors billions of dollars. He talks about providing information to Mr. Picard’s team that “I knew would be instrumental in recovering assets from those people complicit in the mess I put myself into.”

Yet he also asserts that he “refused to help provide them with criminal evidence.” And he defends Fred Wilpon and Saul Katz, owners of the New York Mets who also invested with Mr. Madoff for years, claiming: “They knew nothing. They knew nothing.”

But if he withheld “criminal evidence” from prosecutors, then his claim that he alone was responsible would not appear to be true. And this interview does nothing to dispel the notion that he is still covering up about the role of others.

An interesting question is whether Mr. Madoff is trying to burnish his image, and perhaps even restore a bit of credibility. Mr. Madoff was viewed at one time as a leading Wall Street sage, and it is undoubtedly difficult for him to have lost the luster of his position as an expert on the securities markets. By boasting of his assistance to Mr. Picard’s team, perhaps he can speak authoritatively about the one thing on which he is truly expert: his own scheme.

Of course, Mr. Madoff’s statements to Mr. Picard will be subject to discovery in any related cases. And it is questionable how helpful Mr. Madoff’s assertions will be.

Defendants will question how the trustee could rely on a man who deceived investors for decades and operated an investment business that was a complete fabrication. The fact that Mr. Madoff implicated some as being complicit but tried to exonerate others, like Mr. Wilpon and Mr. Katz, does not make his claims of complicity particularly trustworthy.

The defendants in Mr. Picard’s suits may seek to depose Mr. Madoff to learn what he told the trustee. This could put Mr. Picard in the uncomfortable position of defending Mr. Madoff’s veracity as a source of information, if in fact he was. It is usually the case that the perpetrator knows the most about a scam, but there is always the question about the trustworthiness of that person.

Here is an even more radical thought: Might one of the defendants being pursued by Mr. Picard call Mr. Madoff as a witness in the case? Far-fetched as that might seem, a bank or investor claiming to have been misled by Mr. Madoff might consider calling the man responsible for the fraud to testify. Is there really a better way to show the true extent of the fraud?

I doubt we will see Mr. Madoff on a witness stand any time soon. But it is not inconceivable that his statement about helping Mr. Picard’s staff will become a focal point for defendants seeking to show that the trustee overreached. Most likely, Mr. Madoff’s interview with Ms. Henriques will not be the last we hear from him.