on April 27, 2011
I haven't read many books about finance or financial crimes, so I was a bit concerned that parts of this book might be over my head. This was not the case with The Wizard of Lies. Instead, what I got was a suspenseful, thrilling story that I couldn't put down. I got it all from this book: a comprehensive overview of when and how this crime started, the smallest details about how it ended, and everything in between AND after. We also learn how it's affected--and continues to affect--individuals and organizations.
Finally, what I found very interesting is how the author looks at what Madoff's crime--and how he fooled so many--can teach us about ourselves. This was something that made me reflect and think about the stories I tell myself. Highly recommended to those who are looking for a compelling, informative and thoughtful non-fiction book.
on May 1, 2011
A fascinating and very readable book that walks the reader step-by-step through Bernie Madoff's Wall Street career, detailing the growth of both his legit brokerage business and his massive Ponzi scheme.
More than anything, the book illustrates how the Madoff phenomenon could never have gotten so big or lasted so long without the complicity of his major "clients." Particularly "feeder funds" such as Fairfield Greenwich and funds run by (or connected to) people such as J. Ezra Merkin and Sonja Kohn. While positioning themselves as hedge fund managers, these operators were nothing more than salespeople funneling money to Madoff. Madoff's genius was allowing them to generate phenomenal fees for themselves off the business they were doing with him, using their greed and ego to keep questions at a minimum. You really see how preposterous it is for these funds to claim they had no idea anything fishy was going on.
One of the most ironic takeaways for me was Madoff's role in bringing greater transparency to the market for OTC securities (through participation in the creation of NASDAQ) and his work in bringing down commission costs for retail investors through his initially controversial "pay for order flow" model. Yet at the same time he was sitting on his own dark secret.
Excellent and engaging. What kept it from being a five star book for me was how much is still left unknown -- when exactly did the scheme begin? How much did the feeder funds know? Maybe there will be a follow up book.
on April 26, 2011
Diana Henriques, a senior financial writer for the New York Times, has performed an act of wizardry. Not only has she covered the "Madoff affair" from its initial days as a gifted reporter, but she has written an insightful book which gives context and understanding to this most spectacular, longest running and largest Ponzi scheme in history. She understands the financial system and the securities markets inside and out. This book she has written is a must read. The Madoff story is not over. There are major and significant law suits to be decided, but from now on all of the reporting will have the benefit of Ms. Henriques insights and understandings of the events and the real people who worked with Madoff, invested with Madoff and, yes, were related to Madoff.
on July 3, 2011
When the Madoff catastrophe first broke, I had no difficulty accepting that such a venal man existed. But, what perplexed me were two questions: (1) How could such massive fraud take place within the financial industry, the most heavily government regulated part of our economy; and (2) How could so many large professional investors, and their batteries of lawyers, accountants, and due diligence investigators, be so thoroughly deceived for so long a period of time? The contemporary reporting I read in the NYT and WSJ, gave hints of the answers to these two important questions, but I was waiting for time to go by so that more evidence would become available, and this evidence could be studied by academics, scholars and writers. "The Wizard Of Lies: Bernie Madoff And The Death Of Trust," By Diana B. Henriques, is the book for which I've been waiting.
Henriques, a reporter for the NYT, not only knows how to research and digest a large amount of data, but also how to tell a story. "The Wizard of Lies" is not only "...the definitive book on what Madoff did and how he did it" (Business Week), it is a riveting tale of both Madoff and his victims. It reads like a work of imaginative fiction. Unfortunately, being true, it is a tragedy. It is one of the few books I've read recently that I couldn't put down, even though the sad ending is already known on the first page.
on May 2, 2011
I used to know Diana Henriques, both professionally and personally, and am well acquainted with her outstanding writing and reportorial skills, as well as with her relentlessness as an investigative journalist. These talents, among others, are evident beyond refutation or even argument in her excellent "The Wizard of Lies".
I think what I like most about this book is Diana's decency and sense of fair play. She refuses to engage in idle and destructive speculation regarding the supposed involvement and guilt of Mrs. Madoff or of the two sons (and others). So easy to do, so expected; what an understandable temptation to which to succumb. But Diana is made of sterner -- and better -- stuff. She reports and, to coin a phrase, we decide. Indeed, if anything, she's perhaps a bit too detached. No, I didn't want her to engage in calumny, however coy and oblique. But I had both hoped and expected that she would delve a bit deeper. Her reporting is outstanding, to be sure, but I'm no closer (anyway, not much closer) to understanding Bernie Madoff than I had been. Why did he do it? I'm not impressed by vague and cookie-cutter explanations, such as "He was greedy." Who isn't who doesn't have "Saint" in front of his name? No, what I'm interested in, specifically and exactly, is...why? And I still don't have an answer to the question that's fascinated me from the beginning: Why didn't he run? If it had been me, I would have pulled a Lord Lucan in two shakes of a lamb's tail.
Any other problems? Not really. There's an occasional editing glitch. For example, Diana explains the concept of front-running more than once. And where are the photos? Wasn't it Anita Bryant who astutely observed that a day without orange juice is like a day without sunshine? Well, a nonfiction book without pictures is, well, like a day without, you know, sunshine. Or something.
Still, I heartily recommend "The Wizard of Lies", which is terrific. By the way, try to find a copy of Diana's "The White Sharks of Wall Street". It's a riveting study of Leopold Silberstein and the other original corporate raiders.
on December 18, 2011
Diana Henriques spins a great tale and is a brilliant observer of humanity. She describes a prison interview where Madoff seems "unfailingly candid, earnest, and trustworthy. But then he always does--even when he is lying.' Henriques understands con men and our inability to protect ourselves from them. They are not ""other" than us, or "different" from us. [They are] just like us--only more so."
Her book is entertaining, well organized, well-structured and easy to follow. She takes a complicated set of parties, issues, and legal principals and tells the still unfinished story of Madoff and his victims in a way that makes a reader want to keep turning the pages. She has a gift for improving a great turn of phrase. She describes an investor as a man with "a discerning eye but not a perceptive one. "He is someone who identifies the best restaurants by looking at who goes there rather than by making his own assessment of the menu." That description could well apply to all of us and our delusionally self-assured assessments of our own investment practices. In a sick way, I like being reminded that we will get fooled again because our optimistic beliefs are reinforced by "daily experience, selectively observed."
I think, however, that Henriques misses the point when she claims "no villain put a human face on the collapse [the economic meltdown of 2008] the way Madoff did." Offering up Madoff as the sacrificial lamb for an economic meltdown caused by a very smart people focusing on their personal rewards and working as allowed by the system, ignores Madoff's position as a criminal outlier. In fact, and I am not apologizing for Madoff, Madoff's advocacy of computer trading systems and narrow spreads may have saved the investing public more money than Madoff stole through his crimes. The money stolen illegally by a crook like Madoff pales in comparison to the money stolen legally by Wall Street Insiders working in a morally ambivielent world. What is the moral difference between payment for order flow, and outright theft? I don't know. If Henriques means to say that Madoff's behavior is typical of those in finance, then I would agree that he is the human face of the economic collapse. I am pretty sure, however, that she does not mean to indict the system, and if she does not, Madoff is not the human face of systemic collapse, but only an entertaining sideshow joined by an accident of time.
Despite my differences on the importance of Madoff, I liked the book. It is an entertaining, well written page turner; and that is a big complement on a book about finance. Buy it.
on December 30, 2011
Because I hunt investment fraudsters for a living and give speeches on how to spot them, Diana Henriques had me at "Bernie." I intended to read The Wizard of Lies the way you read trade journals, to remain professionally competent. In relegating it to my Must Read for Work list, I was selling it, and her, so short that I feel like I owe her an apology. I take a break from our usual coverage of breaking investment scams to recommend this book because otherwise I'd owe all of you an apology.
You've heard of Bernie Madoff, of course. His name carries with it so much infamy that as I type that word I hear it in FDR's voice. Henriques introduces us to the entire Madoff clan; the wife, the sons and their families, the brother, the in-laws. Many people still wonder whether they knew of the scam before December 2008 when Bernie confessed to his family, and his sons blew the whistle on the biggest Ponzi scheme in U.S. history. Henriques lays out the available evidence with an evenhandedness appropriate to her profession. But those facts left me convinced that Bernie's family are unmourned victims of the patriarch's fall. One of them committed suicide. Another changed her name.
Henriques introduces us to Irving Picard and David Sheehan, the attorneys responsible for retrieving assets and proposing a plan for distribution to defrauded investors. Even to most attorneys that kind of work seems like an obscure corner of the profession, and it would have been easy for Henriques to make a misstep here and there in those passages. I've served in that role in three SEC fraud cases so far, and I found her description of the duties and challenges of the role to be spot on. Henriques deftly leads us through the decisions that preserved assets for certain classes of investors, but doomed others to recover nothing.
In a story that involves so many different players, it's natural for readers to enjoy certain aspects of the story more than others, to look forward to passages that address their favorites and to earn the next such passage by suffering through what they find less intriguing. At least that's my experience as a reader. But not with this book. I found the entire story compelling and so well written that I believe I'd sit down with a 200-page variable annuity prospectus if the cover read "by Diane B. Henriques."
As hard as it is to single out one part of this book for special mention, the epilogue stands out for me. In it, Henriques hits the bullseye in explaining why Ponzi schemes begin and thrive. Her explanation is a word to the wise. It doesn't take a heart of utter darkness to become a Ponzi scamster, and the feedback a scamster receives before the ultimate collapse makes it hard to stop before continuing is no longer possible. There is wisdom in this epilogue. I expect to mention it often in my travels.
I don't have a star or thumb scale for rating books. So, let me say it this way: this book will help you on your path to becoming the kind of vigilant investor who can survive the tsunami of investment fraud that has begun to break over the investing public, and you'll enjoy the education.
on August 16, 2013
The Wizard of Lies - Bernie Madoff by Diana Henriques
This is my first novel/biography concerning Wall Street or the financial field. In fact, my eyes usually glaze over at the mere mention of the subject. The vocabulary ("front-loading", "clawback", "hedge funds") seems arcane and daunting. Diana Henriques has written about this and a very flawed man, Bernie Madoff, in a very readable way. Like a Shakespearian tragedy, we watch Madoff self destruct, but he also takes his family and thousands of people who trusted him to their doom also. This is a personal story that goes way beyond the headlines and well worth your time.
on June 5, 2011
This book is very, very good. It does a great job covering the Madoff fraud from all the angles-- it goes a bit into the Madoff family's history, tackles the problems at the SEC and Madoff's feeder funds, and even talks to Madoff himself. It's a terrific narrative, and the author does a great job tying together all the pieces and placing them into context. There's one other book on the Madoff fraud that is also worth a read-- Erin Arvedlund's "Wizard of Lies". The difference between this book and that is that Henriques gets access to Madoff himself, which presents a compelling new dimension. To be fair, Arvedlund (a Barron's reporter) was on Madoff's trail before the Ponzi scheme blew up, so the odds of him talking to her were slim to none, but Henriques's access makes this a great read.
I guess my only grip is that the author either didn't try to or failed to shed light on some of the factual issues that are still on the table. It seems like Madoff's fraud COULD have started any time between the 60's (when the first evidence of his ability to commit fraud comes out) and 1992 (when he acknowledges it began). I would have liked either some deeper digging into that issue, or at least more evidence from the records to establish it. But in the grand scheme of things, it's a minor blemish on a very, very good book.
on June 26, 2011
This is a very important book for our generation. I wanted to understand how Madoff could have gotten away with a scam bigger than anyone could have ever imagined and the book does exactly that. I am surprised that someone wrote that there is nothing new here, but it is extremely well written and all the the background and follow up details are in one place. The author's attention to details is captivating. Even for those of us without financial backgrounds it is informative, interesting and provocative. Even though I had to go slowly through the details of the financial market, it was absolutely worth my time. I feel much more informed and eager to discuss with others the greed, deception and ridiculous trust when there should have been skepticism. Wizard of Lies provides a lens on this unfortunate time in our recent history when government officials, financial experts, business and nonprofit leaders, and honest citizens should have stopped Madoff's sickness years ago. As important as it is to understand how it happened and how it continued perhaps for 20+ years, it is even more important to use this book to prevent such an atrocity (or even deception on a much, much smaller scale) from happening again.