Wiesel Lost "Everything" to Madoff
by Portfolio Staff Feb 26 2009
Holocaust survivor tells Condé Nast Portfolio: "We thought he was God,
we trusted everything in his hands."
Nobody knows depravity like Elie Wiesel knows depravity.
And does he ever see it in Bernie Madoff.
Wiesel, whose charitable foundation was wiped out by Madoff, has until
now mostly kept quiet about the alleged $50 billion Ponzi scheme. But
today, the Holocaust survivor and Nobel Peace Prize recipient spoke
passionately about his betrayal by Madoff, whom he referred to variously
as "a crook, a thief, a scoundrel," as well as a "swindler" and "evil."
Wiesel acknowledged that in addition to having lost his foundation's
assets, he lost his personal wealth to Madoff. "All of a sudden,
everything we have done in 40 years—literally, my books, my
lectures, my university salary, everything was gone," he said during a
panel discussion hosted by Condé Nast Portfolio.
His foundation, the Elie Wiesel Foundation for Humanity, lost
substantially all of its $15.2 million in assets to Madoff; including
his personal investments, total losses may be as high as $37 million.
"We gave him everything, we thought he was God, we trusted everything in
his hands," Wiesel said.
About 160 people, including Dan Rather, Georgette Mosbacher, and the
Daily Beast's Tina Brown, packed the 21 Club for the breakfast meeting
moderated by Joanne Lipman, Condé Nast Portfolio editor in chief.
Wiesel was joined on the panel by former SEC chairman Harvey Pitt and
well- known short seller Jim Chanos, both of whom had suggestions on how
to prevent future fraud—and both of whom believe major financial
institutions may be next to face criminal charges for misleading
Pitt also decried understaffing and "a lack of real sophistication" at
Wiesel said he met Madoff only twice, introduced through a friend who
had known Madoff for 50 years and also invested with him. Wittingly or
not, the intermediary played up Madoff's aura of exclusivity by telling
Wiesel, "It's true, you are not rich enough." But he agreed to make an
Wiesel ultimately shared two dinners with Madoff and was impressed.
Madoff "presented himself as a philanthropist,"
Wiesel said. The men spoke, ironically, mostly about ethics and
Madoff gave the impression that he was making an exception by allowing
Wiesel to invest with him. "It was a myth that he created around
him...the myth of exclusivity," Wiesel said. "He gave the impression
that maybe a hundred people belonged to his club. Now we know thousands
of them were cheated by him."
Wiesel first gave Madoff personal funds to invest, he said. "And because
we thought we did so well, we said, come on, we have so many
projects.... Everybody we know in the field of finances, they told us,
come on, you can do much more, more projects because of Mr. Madoff the
Asked if he could forgive Madoff, Wiesel paused for a very long moment.
"Could I ever forgive him?" he asked, almost to himself. Finally, he
said firmly "No," to a burst of applause.
Wiesel did, however, come up with an imaginative punishment: "I would
like him to be in a solitary cell with a screen, and on that
screen...every day and every night there should be pictures of his
victims, one after the other after the other, always saying, 'Look, look
what you have done.'
.... He should not be able to avoid those faces, for years to come."
He added, "This is only a minimum punishment."
Also during the panel discussion:
Wiesel rejected the idea that Madoff preyed on Jews, and that the scheme
was some sort of affinity fraud. "It's not the Jewishness in him, it's
the inhumanity in this man....
The man is, was not only a liar, a swindler, but he was not a crook; he
was somehow always more than that. More. Once you enter evil, it's not
static, it's dynamic."
Charities that were scammed by Madoff should be bailed out by the
government, Wiesel believes. "Just as we bail out banks and car
agencies, bail out charitable institutions...I think it would be a great
gesture that the Obama administration should show that we really think
of those who are helpless."
Wiesel sees parallels between Madoff and his Holocaust experience.
Although he emphasized that "Madoff is not the greatest story of our
lifetime," he added that in recent years, "Madoff is one of the greatest
scoundrels, thieves, liars, criminals.
How did it happen? I have seen in my lifetime the problem is when the
imagination of the criminal precedes that of the innocent. And Madoff
We have no idea that a person is capable of that, but then I should have
learned, of course, that a human being is capable of anything."
Donations to the Wiesel foundation have come in unsolicited: "Literally
hundreds of people that we have never known sent us money though the
Just as in 9/11, you remember 9/11 of course was the greatest tragedy,
but it also brought out the best in the American people."
Pitt, the former SEC chairman, estimates that despite Madoff's claim
that he lost $50 billion, the actual number is probably between $10
billion and $17.5 billion. The larger number "was supposed to indicate
how much money had passed through his portfolio.... However big it is,
it's larger than it should be, and it's an incredible amount of money."
To prevent future frauds Pitt advocates a new audit system, overseen by
the SEC. "What is needed is a system in which everyone who takes money
from the public should be inspected every year, or, for smaller firms
perhaps every other year, by a completely independent, wholly outside
expert entity." The audit would determine whether there were "actual
assets" behind financial statements.
Pitt also believes "people who invest money should be required to deal
through a non-affiliated entity" to prevent self-dealing.
Chanos, the fund manager, believes that "if Bernie Madoff had been
public, he probably would have never gotten as far" because of scrutiny
by journalists, short-sellers, or internal whistleblowers.
Both Pitt and Chanos said they believed there is criminality among some
of the major financial institutions hit by the financial crisis.
"There was criminality going on in the executive suites of these
firms...because they were materially misrepresenting the financial shape
of these firms as they were raising tens of billions of dollars from new
investors," Chanos said.
"The level of accounting chicanery that is going on in these major
institutions is stunning." Pitt agreed there was criminality, though he
added that "I can't say whether it was the executive suite or not."
Pitt said the SEC isn't properly staffed to ferret out fraud. "You can't
take young people, two, three, four years out of college, pay them
$50,000, $60,000, $70,000, and expect them to have the sophistication to
assess a $20 billion hedge fund," he said. Later, he said there is "a
lack of real sophistication" at the SEC.
"I can say this as a lapsed lawyer...the SEC is overlawyered in the
sense that it's heavily dependent on lawyers. There aren't enough
economists, there aren't enough MBAs, there aren't enough market
specialists in the agency providing the kind of additional
sophistication" that the SEC needs.