All language subtitles for FBI True Season - 5 episode 8

- The money laundering
case of a lifetime

just walked in the door.

- It's 60 billion, with a B.

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- My head just
immediately went spinning.

- There must be
thousands of victims.

- He doesn't care,
the lives that he destroyed.

He's a monster.

- And it goes back decades.

All hell is going
to break loose.

# #

Everybody affiliated
with the Madoff family

was certainly on a target list.

- It looked like
an absolute genius,

but meanwhile, all he
was doing was kicking

back and taking their money.

# #

- Bernie was a
criminal mastermind.

- In today's
regulatory environment,

it's virtually impossible
to violate rules.

- This is what he wanted to do.

He enjoyed this.

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He is the worst
criminal that I've

ever encountered in my career.

- Sir.
- Don't touch me.

- In the FBI, we make
a lot of headlines.

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Drug busts,

mob stings,

terrorist takedowns.

- Get down! Get down!

- We understand why people
want to tell stories about us.

- Mark it.

- Freeze!
- FBI.

- FBI!
- Action!

- But they don't know
the half of it.

What really goes down,

we save that for each other

when we're talking
agent-to-agent.

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This is "FBI True."

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- Pat, take me back
to December 10, 2008.

- Kristy Kottis is a
24-year veteran of the FBI.

She worked gangs, crimes
against children, as well

as human and drug trafficking.

- The evening of December 10th,
it was probably 8:00 to 9:00.

It's really unusual
to get a call

at that hour of the evening
on a securities fraud matter.

- Pat Carroll managed the
FBI's Complex Financial

Crimes Program.

He served with the
Bureau for 24 years,

before retiring as Assistant
Special Agent in Charge.

- I got a call
from Bill Johnson,

who was the head
of the Southern

District Securities and
Commodities Fraud Task Force.

And Bill said to me,
Pat, we have a big one.

We're looking at
a $60 billion Ponzi scheme.

I was a little bit
distracted, and I

corrected him to 60 million.

He said, Pat, look, it's
60 billion, with a B.

And I said, Bill,
you got my attention.

His name was Bernard Madoff.

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- Who is Bernard Madoff?

- Bernard Madoff is
a 70-year-old man.

He's been in the
industry since 1960.

He started a
business called BLM--

Bernard L. Madoff
Investment Securities.

There's a legitimate component
of the business, which

is a market making business.

Very respected man.

Did very well
in this business.

He was one of several
folks who brought

automation to the
over-the-counter market.

In addition to that, he had
this investment advisory.

It was a straight,
old school Ponzi scheme.

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- Doug, give me an idea, what's
the financial environment

during December '08?

- It was a global financial
meltdown in effect.

- Doug Leff joined the
FBI's New York Field Office

as a special agent in 1996.

He spent much of his
career investigating

organized crime,
money laundering,

and terrorist financing.

- During that particular
point in time,

one of the greatest unfortunate
credit crises in the history

of the country since
the Great Depression

was taking place
because of issues

with mortgages that had
underlying real estate

that was overinflated.

- This is going to be one
of the watershed days

in financial markets history.

- It was a manic Monday
in the financial markets.

- It was the worst
day on Wall Street.

- Because we're now down 43%.

- What's a Ponzi scheme, Doug?

- A Ponzi scheme is where the
con artist, the fraudster,

puts out that he or
she has some kind

of tremendous investment
vehicle or strategy,

all the while their intent
being to line their pockets

with investor money, and each
time they get another series

of investors to put in, paying
back the original investors

so that they can keep
the scheme going,

perpetrating it without
anyone catching on.

- I would like to
start with the premise

that most of the practitioners
in our industry

come into their firms in
the morning saying they want

to comply with the rules,
they want to do

what's best for their client.

- It is an enormous allegation,
a $60 billion fraud.

There must be
thousands of victims.

And it goes back decades.

If we don't get
this cooperation,

is Bernie Madoff going
to become a fugitive?

Where is that money
if he takes off?

We've got a very
difficult situation.

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- All of a sudden,
he had a completely

unpredictable amount of people
demanding their money back.

- Most investment
advisors, hedge funds,

they were having what's
called a run on the bank,

just like in the 1930s.

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People were coming
in and asking

to cash out their positions.

That's exactly what
happened to Madoff.

That's what he
relayed to his sons.

And he couldn't meet
the expectations

because it was a Ponzi scheme.

So, in other words, there
wasn't $60 billion there.

He was literally left
with $300 million.

- The two sons called.

- The sons call that night.

They're essentially
turning their father in.

- They wanted to report the
fact that their father had

disclosed to them
that the investment

advisory, the hedge fund,
was actually a $60 billion

Ponzi scheme.

# #

- I mean, this is,
like, unbelievable.

So what was Madoff's
investment strategy, Pat?

- They let us know, there
was never any investment

strategy at all.

Money came in, money went
out, so the new investors

paid off the old investors.

- So the victims
get the statement,

and it showed what
happened, but in reality, he

was doing what
someone could only

do if they had a time machine.

- For example,
in July, Madoff might

see that stock in
XYZ Corporation

had gone up 20% since January.

He would then pretend
that he'd

bought XYZ stock in January,

and that he'd sold it in July,

making it appear as if he'd

made a brilliant investment.

This is much like betting on
a horse race after it's over.

- So he looked like
an absolute genius,

but meanwhile, all he
was doing was kicking

back and taking their money.

- At the same time,
Madoff projected an image

of honesty and integrity,
which the investment

community believed.

- In today's
regulatory environment,

it's virtually impossible
to violate rules.

It's impossible for a violation
to go undetected,

certainly not for a
considerable period of time.

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- Doug, what kind of
victims are you seeing,

and what are you
feeling as you're

looking at what you're seeing?

- They ranged from
very wealthy people,

who just had plenty
of money and could

throw some in with Madoff.

But then the sad
stories that we saw

were people who didn't
necessarily know they

were investing with Madoff.

There were people's
pensions, entire funds

who decided to put the money
with Madoff, because they

heard how well he was doing.

- When you say like
investment funds,

like pensions
for like teachers,

you know, civil servants,
like some of-- you know,

regular Joes.

- Those were examples,
right, of people who wound up

losing everything that they
thought would be waiting

for them for their retirement,
and to be able to pass on

to their children.

- We've been in
a state of disbelief.

- The $8 million charity she
was running was wiped out.

Philanthropic organizations

have lost a staggering

$2.5 billion so far.

- He doesn't care
how he ruined us.

He doesn't care
the lives that he destroyed.

He doesn't care
the people who killed

themselves because of this.

He's a monster.

- So now you have to stay up,
I assume, all night.

You're starting to make a plan.

What's that plan look like?

- We needed Bernie
to admit what he did,

and we also needed to
have his brother, Peter,

who is the chief compliance
officer and a lawyer

at the firm, consent to
search that location.

We don't have any reason
to charge Bernie,

just the statements
of the son.

We have no probable cause to
search that location either.

- So at this point,
the sons have called.

They allege they knew
nothing, so they don't

have any specific evidence.

So now it's incumbent
upon the FBI to get consent,

or to interview and see
what happens from that.

- The first thing
we have to do is

we have to send out
a team that's going

to talk to Bernard Madoff.

So the first person who came
to mind was Ted Cacioppi.

Ted really took to
interview and interrogation,

what we call advanced
and sophisticated techniques.

So I called Ted.

One of the things that I told
him that I was very clear

was if he doesn't cooperate,
we can't hold him.

- Also, you probably have some
concern that this news is going

to affect,
potentially, the market,

because he was
such a big player.

- Yeah, absolutely.

Tomorrow, all hell is
going to break loose.

- So we have Ted
being deployed that

morning to Madoff's penthouse
on East 64th Street.

# #

Ted calls me, and he said,
it was like Bernie

was waiting for us.

He looked like an old,
distinguished businessman.

He was in his bathrobe.

He was obviously getting,
you know, ready for breakfast.

It was a very
beautiful penthouse

on the East Side of Manhattan.

It was him and his wife there.

First thing Teddy said
to him was, Bernie,

is there any
innocent explanation

for what happened here?

And he said,
no, it's a Ponzi scheme.

That's not what I
taught him to do.

We teach to ask very
open-ended questions,

not close-ended questions
that end in a yes/no answer.

And I said to him--
I said, Ted.

He goes, I know, Pat.

He said, but I just felt he
was at the end of his rope,

and we had to get to this.

And he said, I looked
at him, and that's what

I decided I was going to say.

- Madoff was taken
into custody,

but this was
only the beginning

of the investigation.

- Now that we have
the top person confessing,

the case really turned to the
money laundering and asset

forfeiture, because after
cutting off criminal's means

of escape, the next goal
that's still on their mind,

even if they're behind bars,
is to see what they can do

about getting their money out
of our reach and their assets

out of our recognition.

So we needed to jump on that.

- Two minutes
later, I get a call

from Bernard's brother, Peter,
who consented to the search

of the Madoff businesses.

# #

- What was that
environment like?

You know, how many
floors did they occupy,

and what did it look like?

- There was the
legitimate business on 19,

and it was pristine.

# #

It was exactly what you would
expect from the chairman

of the NASD, who ran
this very successful

market making business.

All the same color.

The desks were neat.

Everything was tidy.

It was obvious that it was
cleaned on a regular basis.

His sons worked
at the legitimate business,

but when the team got to
the investment advisory,

this looks like a boiler room.

Now, a boiler room is a place
that usually, it's mobbed up.

These are dirty, grimy
places, cigarettes

in ashtrays all over the
place, coffee everywhere.

There's no cleaning people that
come in there because there's

evidence everywhere.

There's boxes everywhere.

There's antiquated
computer systems from,

like, the '80s and '90s.

I mean, I hadn't seen computer
printouts like this since

I was a broker in the '80s.

The computer system
was the AS/400,

which was state-of-the-art,
I think, in 1988.

Using an antiquated computer
system, which could not

be connected to the
internet, helped

Madoff conceal his fraud.

- It was like
a crime time capsule.

- It literally was.

It was fascinating.

- When you walked into
the 17th floor office,

it literally was like the
office that time forgot.

I mean, one thing
we shared among us

was that usually we always
thought the government was

the only one who knew
how to create such

an unpleasant-looking work
environment for their people,

but this place was
just horrendous.

We walked around there.

There are printers.

The dot matrix kind was
what was in use there,

where you have to rip
off the perforation

as the page prints out.

And that's all they
had on this floor.

# #

- We're in
the investment advisory.

There's hundreds of
banker's boxes here.

In addition to that, there
was 6,000 boxes in a facility

in Long Island City.

# #

- When they opened the
doors, and it's just

as far as you can see, boxes.

- Yeah.

This is a box that can hold
a great deal of paperwork

and evidence in this case.

- We knew going forward,
there were literally millions

of pages that we'd have to
have eyes put on them in order

to follow where-- like,
follow the money, as we say,

which was our primary mission.

- And so, you know now.

You have the responsibility,
along with Pat's squad,

to go through millions
of pages of evidence.

Where do you begin,
and how do you organize that?

- So we did the walk
through of the office.

Doug was with us.

And you know, the spirit
of the folks there were,

like, can't move this stuff.

- But everyone uniformly
agreed on the best place

to look at them was
where they were.

- Oh, so wait a minute,
that's very unusual.

Instead of taking all the
documents back to the batcave,

we are going to stay there.

- It's the first time that a
case-specific resident agency

was set up in a field office.

We're going to have
our phone system.

We're going to have
our security system.

It was quite a production,
but it took a couple of weeks

to get that up and running.

- Even though Madoff said,
you know, I was doing a Ponzi

scheme, he didn't cooperate.

He didn't help you guys
with your investigation.

- He said he did it by himself,
a $60 billion Ponzi scheme

with millions of documents.

He helped in no way,
shape, or form.

That made it difficult.

It also made
the asset recovery difficult.

- Shortly after he confessed
and supposedly was cooperating,

we found out a package--
giant package--

with a large amount of jewelry
in it came in the mail.

It was clearly sent by Madoff,
or someone at his behest,

to try to have that jewelry
hidden so that his family could

enjoy it.

Unfortunately, the lawyers'
wisdom had the best of it,

and they came
and told us about it

so that we could take
that and make that part

of the asset forfeiture.

- And as I look at
different players in this,

I'm thinking about, you know,
the sons called initially

and said, hey, our father told
us that he was running a Ponzi

scheme, and they came forward.

But they were also getting very
well compensated while they

worked at the company.

# #

- Well, the record
is clear about that.

That's true.

It's always important to say
they were never charged by us.

So everybody in America
has a presumed innocent

until convicted of a crime
by plea or a jury,

so they're presumed innocent.

To state generally, though,
the people don't realize this

often, for money
laundering to be guilty,

you don't have to
know specifically

what that money came from.

You just have to know
that it must have come

from some felony activity.

So stemming from
Bernard Madoff or loans

to family members, seven-figure
loans with no terms,

no indication you ever
have to pay it back.

So anyone on a jury would
have to ask themselves

that particular question,
did this person

know that must have come
from a felony type of activity?

- How do you deal with that?

- Everybody affiliated
with the Madoff family

was certainly on a target list.

But to Doug's point,
the sons and the wife

were never charged.

- Got it.
- It's a tough one for us.

- OK, Doug, tell me
about asset forfeiture.

- Sure, asset forfeiture is
where we basically follow

the path of greed
of the perpetrator.

Find everything they
did to enrich themselves

and other people, who
they wanted to enrich,

and use the laws, federal
laws, to get that property

back so that it can be sold.

So as we follow the trail,
he had houses in Long Island,

in Florida.

In France, he had boats.

He had, I think,
partial ownership

interest in an airplane, plus
the money itself flowing.

- Madoff's Manhattan
apartment is

on the market
for $9.9 million, his Florida

home for $7.9 million.

And last month, his
house in the Hamptons

sold for nearly $9.5 million.

- Countries, the ones that
would come to your mind

about where you
want to put money,

because you're assured by the
banks they will never tell

anyone, some of those
countries, the law enforcement

did call us.

And that was because our
agents in those countries

had conversations
with the police there.

And the victims
in cases like this

can recover, usually,
just some or ideally,

all of their losses.

The United States
Marshals Service

has responsibility
for the federal asset

forfeiture programs.

Now, the efforts have continued
up to now, which is incredible.

In any case, even way smaller
cases, they're up to just about

$0.89 on the dollar
recovered from this fraud.

So waves of reimbursements
have continued

to go to victims as recently
as during the past year,

and are still continuing.

- Did you get any
money back at all?

- Yeah, well, so far, we have
gotten the-- there

was something called SIPIC,
so we got that money back.

- You got to experience
hearing these victims,

and you even interviewed
some of them firsthand.

Take me to the hearing
where the victim impact

statements were being made.

- Yeah.

It was a riveting
and powerful day.

It was at his sentencing
in June of 2009,

before Judge Denny Chin,
but the judge allowed

for victim impact statements.

I was sitting right
behind Madoff,

and it was absolute silence.

It was like a funeral.

There was no gasps.

There was no sound.

It was very difficult.

- Retired, I'm 65 years old,
and I am now on food stamps.

I've applied for food stamps.

And if I'm unable
to pay my rent soon,

I'll be living in my car.

- We lost over $4 million.

- Friedman and his wife
were already retired,

left with nothing
but Social Security.

- I'm an old violent crime guy.

I've dealt with
a lot of tragedy

as it relates to physical
violence, homicide,

things of that nature.

This was the closest
thing that I saw to that.

These were folks in
there, in some cases,

very late 60s to mid-70s, who
had thought that their lives

were fine from
a financial standpoint,

that they were going to live
out their lives in a good way,

and that they were going
to be financially safe,

and they lost everything.

- I was in the
process of retiring.

In fact, it would
have been around now,

I was going to retire.

There's no retirement for me.

- This Wall Street
executive, who

once had the world
on a string,

but lost billions to Madoff,

jumped to his death
in an apparent suicide.

- A lot of these people
represented to us, they

were living hand to mouth.

That they were on
people's couches.

They had moved in
with family members.

- Yeah.
- It was really devastating.

- Chairman took a job at
a local grocery store after

losing
his entire life savings,

more than $700,000,

to disgraced Wall Street
financier Bernie Madoff.

Police discovered
Rene-Thierry Magon

de La Villehuchet dead

in his Manhattan
office early Tuesday.

The 65-year-old
French executive

lost more than $1 billion
of his clients' money

to Bernard Madoff.

Police say he
committed suicide.

They say both
wrists were slashed.

- Pat, did Madoff have
anything to say after all this?

- He did issue a statement
at the end of the victim

impact statement.

It was two sentences,
basically, I'm sorry.

And it was clear,
to me, as somebody

who's interviewed
thousands of bad actors,

he didn't care at all.

- Your investors.

- Sir.
- Don't touch me.

- He had no desire to be there.

He could care less about
what the people were saying.

And he just wanted this over.

- Did your wife have anything
to do with this, sir?

- And, you know, when you look
at a serial killer, right, it

wasn't a physical
or sexual assault,

but it was financial
destruction.

This is what he wanted to do.

He enjoyed this.

- How satisfying was it,
though, to see him get

put in handcuffs and
walked out of the room?

- It was very satisfying.

The victim impact,
really, there

was a cascading
effect that way,

that we got to
help these people.

- When he was led away, was
there any comments or anything

from the crowd, the gallery?

- No.
It was a very somber moment.

It was clear that
he had just left

complete devastation behind.

He left in disgrace.

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- Doug, how does this
case rank in your career?

- There was no case
that compared to this.

In the level of time
that a crime went on,

the amount-- dollar amount, the
locations of all the assets,

and the team effort
between ourselves,

our squads,
and the other agencies,

it was just incomparable.

- Bernard Madoff is probably,
the worst criminal that I've

ever encountered

in my career.

He is right up there with
the worst of the worst.

He just chose not to
physically kill people.

He did it emotionally.

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