Who Is Bernie Madoff? Many Investors Didn't Ask

As the haze lifts from Bernie Madoff's financial massacre, his victims are now asking the fundamental question: if we had known Madoff was behind our investment, would we have made it?

Madoff investors appear to break down into two distinct camps: the "I-know-Bernies" and "Who's-Bernies?"

For those investors like me who never heard of Madoff, privacy and propriety were the camouflage that kept his name from so many hundreds, maybe thousands, of private and public investors. Secrecy enabled him to create his global Ponzi-on-steroids scheme undercover, and helps explain why it worked so brilliantly for so long. The fact the Securities and Exchange Commission gave Madoff multiple free passes to sidestep closer inspection is even more troubling for any investor looking to put a hard-earned buck into this system. (How I Got Screwed by Bernie Madoff.)

It seems to me that many of Madoff's fund-raising generals—many close friends who were unlicensed to trade securities—down the line must have been given strict commands to avoid using the Madoff name. These generals ran many of Madoff's complex network of domestic and international feeder funds, which in turn created their own sub-funds. It was into these sub-funds many private investors, foundations, schools and other endowments poured their life savings. From the super wealthy, like Mort Zuckerman, to schmoes like me, the victim-cry is: Who the hell is Bernie Madoff? Had we known Madoff was behind all the "trades" maybe we would have made a better investment decision. Maybe. Other victims, however, with direct access to Madoff, such as those going through licensed brokerage firms like Minneapolis' Engler & Budd, knew the name Madoff and invested big because of his strong reputation and track record.

Generally, investors got into this private, no-prospectus game through a trusted family friend. In our case, the trusted friend was an affable, debonair fellow named Stanley Chais, who ran the Brighton and Popham investment groups for decades. We were in two sub-groups of Brighton, and they were small, 10 to 15 people — possibly so they would fly under regulator radar, victims now tell me. Brighton, it turns out, fed the money into Madoff. I'd sit next to Stanley at year-end holiday parties and, knowing my family's money was in his hands, I'd ask: "How're things going with the arbitrage?" The answer was always, "Life is good." Things have changed.

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