Madoff fraud still stings ex-clients 5 years later
NEW YORK — The last time Morton Chalek visited Bernard Madoff's office, the then-trusted investment adviser gave him the customary warm welcome.
“Hey, Mort, come on over,” Chalek recalled Madoff saying before giving him more good news about his portfolio.
The World War II veteran saw no risk investing with the affable Madoff. But two months after that last meeting, on Dec. 11, 2008, the headlines told him he'd been had.
With the fifth anniversary of the exposure of Madoff's Ponzi scheme approaching, Chalek lives with a disdain for Madoff that gnaws at him daily. He's among a legion of former investors struggling to move on after seeing their life savings go up in flames.
The man Chalek sarcastically refers to as “good old Bernie” revealed to the FBI that his firm was a Ponzi scheme of epic proportions. Account statements for thousands of clients showing $60 billion in assets — Chalek's account stood at $2.3 million — were fiction.
Of the $17.5 billion in principal that was real, most of it was gone. Authorities say it was paid out as fake profits or raided by Madoff's family and cronies.
A court-appointed trustee has so far recovered more than $9.5 billion to redistribute to burned clients through an ongoing claims process. Victims who invested through third-party “feeder funds” recently became eligible to make claims for an additional $2.35 billion collected through forfeitures, including funds from Madoff's wife, Ruth.
The victims have watched Madoff get a 150-year prison term in Butner, N.C., his brother and business partner, Peter, sent away for 10 years and five former employees go on trial on charges they were in on the scheme. The trial, which began in October, will resume on Monday.
Despite the recovery effort and criminal prosecutions, five-year-old wounds haven't healed. A judge received several anguished letters from former investors before the sentencing of Peter Madoff in December 2012, including an unusual appeal by a Madoff in-law.
Robert Roman, the husband of Ruth Madoff's sister, wrote that they, too, were victims of the fraud. But he sought mercy for the younger sibling of the vilified con man.
Chalek wrote the court to “vent his spleen over the Madoff fiasco.” In his letter, he described standing in line to enlist in the military after Pearl Harbor and flying 23 combat missions as a U.S. airman in Europe.
Once home from the war, Chalek pursued the American dream: He started a grocery on Long Island and got hired by an advertising agency in Manhattan that he ended up buying. He sold the business late in life at a price that he thought would take care of him in retirement and keep his family financially secure when he was gone.
In the early 2000s, Chalek met Madoff, who was a golfing buddy of a friend of his father's. Given Madoff's on-paper returns, the chance to invest was too good to pass up.
“It was always beautiful,” he said. “He was always the easiest guy to do business with. ... It went on like this for years.”
Since the fraud was exposed, Chalek says he hasn't been repaid one penny. The trustee has deemed him a “net winner” — meaning he and his family took out more from their Madoff account than was put in — a determination he's disputing in bankruptcy court.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Shareholders approve Heinz, Kraft merger
- Halliburton to close Indiana County office
- W.Pa. economy gains momentum as employers increase hiring
- U.S. Steel, Alcoa lead June decline
- Obama overtime proposal slammed
- Snappers treat revitalizes Lawrenceville’s Edward Marc Brands chocolatier
- United Airlines announces investment in biofuel supplier Fulcrum BioEnergy
- Data transfer in mergers tall task for chief information officer for Peoples Gas
- Stocks inch up but S&P ends quarter at loss
- Drillers to submit electronic records on fracking chemicals to Pa. DEP
- Greek default drama plays out