Inside the Mind of Madoff: An Interview with Diana B. Henriques, Author of the Bestseller “The Wizard of Lies: Bernie Madoff and the Death of Trust”

By D. Bruce Johnston, President & CEO, Advisolocity on Friday, August 12th, 2011

On August 18th at 2PM EST I co-sponsored a webinar with ByAllAccounts entitled “The Madoff Lessons: What Every Financial Advisor Must Learn From History's Biggest Ponzi Scheme” featuring the New York Times Bestselling author Diana B. Henriques (to watch the on-demand replay CLICK HERE). While working on the webinar, I had a chance to sit down with Diana to ask her about her experience covering the Madoff story from start to finish, writing her bestselling book, and being the first journalist to have in-person access to Madoff in prison.

Q. How did you get interested in the Madoff story?

A. I had known Bernie Madoff slightly as a source on stories in the mid-1990s about how computers and globalization were affecting the structure of the stock trading business - one of the topics on which he advised regulators in his informal role as a senior "statesman" on Wall Street. He spoke frequently at conferences and SEC roundtables on the topic and I interviewed him now and then. Even before that, I knew his firm was a leader in "after-hours" trading in NYSE stocks, and I turned frequently to his trading desk for data on how late-breaking news was affecting specific stocks or the overall market. Then, at about 4:15 pm on Thursday, Dec. 11, 2008, I saw the headline hit my email inbox -- Madoff had been arrested for securities fraud.

Frankly, I was astonished. He had been such a thorn in the side of traditional Wall Street trading institutions for so long, it seemed unlikely that they would have left any stone unturned in trying to discredit him. Surely this was some minor, technical fracas? In a quick call to a regulatory source, I asked the scale of the alleged fraud. "Huge," was the nervous and abrupt response. So I was instantly intrigued that someone so much in the spotlight and so provocative in his views had been accused of fraud -- it was reminiscent of the old Depression-era scandal involving Richard Whitney, the masterful "Prince of Wall Street" who gallantly led the NYSE through the 1929 crash only to be caught, years later, embezzling from the exchange's widows and orphans fund. By nightfall, we knew that Madoff had been turned in by his two sons, and I was thoroughly and permanently hooked. This wasn't just a Wall Street fraud, this was a family drama of nearly Shakespearean dimensions. That was the clincher for me.

Q. What were the best and the worst moments in the process of writing “The Wizard of Lies”?

A. The best? Ah, those are so hard to remember because researching and writing a book is such a relentlessly grueling process that the little triumphs are quickly eclipsed by the next huge problem. But I think it would have to be the night I was standing outside Union Station in Washington, straining to hear my cell phone over the taxi traffic and learning that HBO wanted to option the book for a possible film -- confirmation that I had achieved my goal of writing a book that would break out of the confines of "business & investing book" and appeal to a much a broader audience.

The worst moment? Surely that was the Saturday morning, Dec. 11, 2010, when I was awakened by a call from our weekend editor at The New York Times telling me that there was a wire-service report that Mark Madoff had been found dead in his apartment. The sheer frantic urgency of reporting and writing our story for the web and the next day's paper pushed all personal emotions into the background but when I'd finally made my deadlines and sat back, a wave of sorrow crashed over me. My initial sense that there was an element of Shakespearean tragedy in the Madoff scandal had been, sadly, far too accurate.

Q. What did Madoff think of the book?

A. The first word I got from him was in mid-February, when an article in The New York Times about my interview with him in prison mentioned the name of the upcoming book. Madoff said he thought it was "sensationalistic." When the book came out, the publisher sent him a copy and he said he'd read it. He said he appreciated the fairness with which I'd treated his family and said the "vivid details" had made it hard for him to read, given his memories. But he firmly disputed my analysis suggesting the fraud started well before 1992. He insisted that was when his Ponzi scheme began and he tried, once again, to persuade me to believe him. We've exchanged some cordial emails since then, and a colleague (who was working on another story that required a telephone interview with Madoff) told me that he spoke admiringly of me and the book. So who knows what he truly thought? 

Check out the webinar highlights below! Or to watch the full on-demand replay CLICK HERE!

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