Thursday, January 15, 2009

Bernie Madoff screws leukemia patient

That would be me. I have been debating whether to write about this. I try to stick to chronic lymphocytic leukemia in my posts and up to now my financial situation has not been especially germane. But I have just lost my savings, and it is important to remember that not every aspect of the disease is medical.

Cancer changes lives in many ways. It refocuses energies -- mental, emotional, spiritual, financial. It transforms everything, from the mystical to the mundane. That mundane world includes money. Cancer can change your career, deplete your bank account, eat you out of house and home even as it eats away at your body.

Bernie Madoff, like a metastasizing financial tumor, has not helped matters of late.

Madoff is the former NASDAQ chairman whose Bernard L. Madoff Investment Securities LLC stole some $50 billion in history’s largest Ponzi scheme. I lost $65,000. That may not sound like much to Madoff, or perhaps even to you, but it meant a lot to me.

Ironically, when it comes to leukemia and lymphoma, I have something in common with the Madoff family. Madoff’s nephew Roger died of acute myelogenous leukemia in 2006 at the age of 32, shortly after he wrote a book called Leukemia for Chickens. His son Andrew was diagnosed with mantle cell lymphoma in 2003, which prompted Bernie to donate millions of dollars to the Lymphoma Research Foundation. My official diagnosis is CLL/SLL: chronic lymphocytic leukemia/small lymphatic lymphoma. In my more poetic moments I like to think that perhaps Bernie donated my money to efforts to beat our common beast.

Probably not.

* * *

Madoff and my family go way, way back. His wife, Ruth, went to high sc
hool with my stepmother, Cynthia, who is quoted in today's New York Times. (Cynthia is like a real mom, and is a good friend, and I love her dearly -- even when she beats me at Scrabble.) Cynthia's parents owned a small, rustic summer resort in New York's Catskill Mountains called Sunny Oaks; during the winter they lived in the same Brooklyn neighborhood as Ruth’s parents, Sol and Sarah Alpern, with whom they became friends.

The Alperns were regular guests at our hotel for two decades, arriving after Memorial Day each year and staying until Labor Day. When I was in college I waited on their table. Later, my Dad and Cynthia inherited the hotel, including the Alperns, and eventually Marilyn and I helped manage the family business and we became hosts to the Alperns. (Sunny Oaks finally closed in 1999, a relic of a Borscht Belt era that had long since passed. The Alperns had passed away by then, too.)

Sol and Sarah were easy guests. They never complained, and although they took one of the best rooms in the h
ouse, they weren’t fancy people. This wasn’t a four-star place. It was basically a collection of rickety old wooden bungalows that we dubbed “cottages,” and it was, as they say in Yiddish, haimish: homelike, friendly, folksy. The guests were treated like an extended family. And we took good care of the Alperns, even when Sarah got old and started to pee on cushions in the lounge. We’d mutter something like “Sarah Alpern is going senile” and just turn the cushions over. (This sort of thing explains why Fawlty Towers is my all-time favorite TV program, but I digress.)

It was Bernie Madoff who eventually gave us all the golden shower. But for the longest time, he was a distant acquaintance who professed nothing but gratitude for the way we took care of his in-laws. Sol, by the way, was an accountant. He knew people on Wall Street, certainly through Madoff and his circle, and he was instrumental in spreading the word at the hotel when good business opportunities came along.

Which, to make a long story short, is how we all
ended up with accounts in Madoff. My history with it goes back almost 20 years. Nobody ever questioned its legitimacy. (It probably was legitimate in the beginning; Madoff was a pioneer in electronic trading back when MS-DOS was the world's most popular operating system.) Statements from Madoff came promptly and looked proper, providing endless lists of transactions. When Marilyn added it all up at tax time, it seemed entirely believable. We often got an annual return of about 10 percent or so, which actually declined in recent years.

Our theory about that decline was that ours was
something of a nuisance account. We kept removing principal and were small financial potatoes, not worth any special effort on the part of the traders (or what we thought were the traders). Indeed, we were allowed to start our account with $50,000. This was in the early days -- a favor -- before Bernie decided you needed two million bucks to get in.

Way back when, our little hotel turned out to be fertile ground for investors for Bernie. Almost everyone in the family had a Madoff account. Accounts radiated out through the guest population, through our distant relatives and the distant relatives of guests. All told, I can think of a dozen people I know who are, collectively, out at least $5 million, and I am sure those people know another dozen people.

I was financially irresponsible, unlike a number of folks
who let their money sit in Madoff and grow and grow. It turns out that irresponsibility has its rewards because at least I got to spend most of my money. I know people -- not rich to begin with -- who are essentially broke.

We’re not talking about the P
alm Beach set that has grabbed much of the media’s attention. This is the Brooklyn-Far Rockaway-where-Madoff-grew-up set, the middle-class-people-who-worked-hard-and-saved set. I know people who lost in the hundreds of thousands, whose money represented their life’s work as well as inheritances from their parents. Some have careers or good equity in their homes or are old enough to be receiving social security or a pension. Others have less.

One cousin wrote that when her checking accou
nt is depleted in February, “I have nothing.”

* * *

I almost closed my Madoff account earlier this year. (Talk about a “D’oh” Homer Simpson kick- yourself moment.) The return was so small -- around 4 percent -- that I was tempted to find another place to put it. But the idea that the money wasn’t safe never crossed my mind. Nobody expects to be a victim of the world’s larges
t Ponzi scheme, especially after so many years, and especially by a man who was both a family friend and a respected Wall Streeter who had actually been hired as a consultant by the Securities and Exchange Commission at one point.

And inertia is a powerful force. “Madoff” was synonymous with “bank” in our circle. It was like “Kleenex” for "tissue" or “Xerox” for "photocopy
." “I’ll put the money in Madoff.” “I’ll take it out of Madoff.” Gifts, trips, cars, down payments on houses, all came from “Madoff.”

Especially in recent
years, when leukemia took a toll on my ability to work and required expensive visits to doctors, “taking another $10,000 out of Madoff” became a yearly event. In the end, I had $65,000 invested -- most of it in my father's account, which was earning a higher return. That money was there as a cushion, to be used in case I needed a transplant or other invasive therapy, in case Marilyn couldn’t work because she needed to spend several months taking care of me. (I was also secure in the knowledge that my folks -- who ultimately lost all their liquid assets to Madoff -- could lend us a financial hand if we really had our backs to the wall.)

And Madoff maintained h
is distant but cordial relationship with our family. As described in the Times article, Cynthia saw Bernie and Ruth at her 50th high school reunion in November 2007. Madoff gave her a big hug. This fall, when the market was showing signs of serious decline, Madoff assured a friend of ours that there was no cause to worry, that in September he had put everything into treasury bills.

Then, on December 11, I got a call unusually late i
n the evening. Cynthia was on the line and I asked her how she was.

“Not too good,” she said morosely. From her tone, I took it that someone had died, or been injured, or was diagnosed with a serious illness. I know all too well how such things can come out of left field.

What she told me was even more unexpected, that Madoff had been arrested and that we all had apparently “lost everything.”

In the ensuing weeks, we have been busy keeping up on the legal issues involved. It appears that eventually -- largely thanks to SIPC, the Securities Investor Protection Corporation -- some of us will see some of the money back. But it could take years, and most of us will never come close to recovering completely from the loss.

* * *

The Madoff mess has taken a toll on its victims i
n different ways. There is the obvious shock, the feeling of betrayal, the loss of security, the anger and the depression. I have been through all that, but I also have a potentially fatal leukemia and that means I have a somewhat different perspective.

Over the past few years I have lost many friends to disease. Seven months ago I lost an especially dear one, my buddy in the battle. I feel my own body struggling as the CLL progresses. I know that I may well be living my life in dog years, four years for every one. I have had to deal with the prospect of the loss of everything, and so I have become an expert on loss. I have a big picture way of looking at i

Madoff hurts, it is a horrible inconvenience, but it will not transform my life the way it will for many others. This is because leukemia has already taught me what E. M. Forster once wrote, namely that "We must be willing to let go of the life we have planned so as to have the life that is waiting for us."

I have already had my life changed, redefined, redirected by events out of my control. For many Madoff stakeholders, this is a new and frig
htening experience. For me, it’s “been there, done that.”

I did not choose to be fighting a deadly, chronic disease in my late 40s and early 50s. It upset my assumptions, put an end to dreams. But it is the life I have, and the struggle has taught me some interesting lessons. There are lessons that money and status and ambition can never teach you, things that come in quiet moments when you face the reality of life and death.

The lessons are these:

It’s not what you do for a living, it’s who you are as a human being.

It’s not what you have, it’s who you have.

I have my soul-mate, a woman who will happily live with me in an old trailer on the edge of the desert so long as we can still be toget
her. We discussed this long before Madoff collapsed, knowing that chronic disease + medical bills + self employment = a recipe for poverty.

From Marilyn (and family and friends) I have endless love in my life, and I would not trade that life -- cancer included -- for all of Madoff’s billions. And so, even in the starkest moments of financial despair, I still regard myself as the richest man in the world.

That is the perspective I keep coming back to, though sometimes it takes awhile after I hear new stories of the pain Madoff has inflicted
on others, or I see his smirking face on TV as he walks back from the courthouse to his penthouse.

The media likes to say that Bernie Madoff, financial psychopath, “destroyed lives.” He certainly disrupted lives, created misery in lives, brought great heartache. I take none of that away from anyone.

But my message to the world is that he destroyed money, not lives.

Believe me, there is a

Five years after our hotel closed, this was Sol and Sarah Alpern's room, right before demolition. There's something symbolic about the wreckage, in restrospect. It sums op our family's Alpern/Madoff experience.


Yours truly was interviewed for this Jan. 29 Bloomberg news report, which is mostly accurate, though Madoff was never a guest at our hotel. He and Ruth visited the Alperns a few times just for the day.


Carl said...

This is a real bummer. I'm so sorry to hear you've had this experience, on top of everything else.

Anonymous said...

There are lies and then there are damned lies. When someone close to him who is already worried asks if things are ok and is told a damned lie "everythings fine's all been invested in treasuries" this is morally inexcusable.

Some of the doctors that you've fired have done far less!!

Because of the economic pain throughout the economy his lying and cheating may somehow seem less venal, but because it involved friends and charities,I believe that it was every bit as viscious as the most heinous of crimes.

I don't believe in Hell, so I don't especially wish him to rot there, just to Rot!

Anonymous said...

How lucky you were to get most of your money out before the scheme broke.

Sorry that your father and other relatives were not as fortunate, and that you have lost your safety net to lend you money in the future.

The "American Dream" has been eroding for many over the years.

Stay strong and keep the faith ... you are not alone in these trying times.

Doug said...

Yes, the media has been emphasizing losses suffered by the Palm Beach set...not much on losses suffered by the common American.

BTW, are those swollen lymph nodes under Bernie's chin?

Anonymous said...

I've never invested with Madoff (never heard of him before this, frankly), but I've lost much more in the general market decline.

If anyone tells you this 'crisis' wasn't manufactured or certainly allowed to happen, they are crazy, ill-informed, or a liar.

For example, some years ago (a dozen?) housing prices were taken out of the consumer price index calculations. In their place were put 'rent equivalents', which was supposedly the amount of rent you could get for a house. Since rents don't appreciate anywhere near as fast as housing prices can (and did), the CPI barely budged when prices for houses were doubling and tripling and quadrupling and more.

This allows everyone to feel good while the Federal Reserve Board keep interest rates low. (If you are old enough, and most of us are, you'll remember interest rates for mortgages north of 12 percent.)

That, combined with the push to put unqualified people into houses they couldn't afford, directly led to this situation.

Some will make out very well in this financial climate, like they did in the Great Depression (made 'great' by government actions, btw).

This is another way the richest families make even more money over time, and aggregate even more wealth.

The middle class has to be very smart indeed to keep above water. The conservative investor will be fine, if he keeps his wits about him.

I'd say this might be a time to selectively purchase stock, but who knows what the amateur Obama will do to the market. Early signs aren't encouraging.

dervishmama said...

Thank you David for getting it all down in such a balanced and articulate way. I am so proud of you and so glad to have you for my older brother.
Much love,

Anonymous said...

Since I already gave you my sentiments on Madoff and what happened to you and your family, I will leave it at this.....another beautiful piece of writing, David. This one needs to be published....maybe you can make that money back.

Jenny Lou

Anonymous said...


I also recently read that Madoff had the largest friends and family team for Light the Night-- The LLS will loose millions because of his scheme. He has not only depleted savings but the resources of many needed charities.

I think you have such a wonderful view on life and your priorities are right on! It is not what you have but who you have--that is especially true.

As far as your personal financial situation--you have wonderful talent-- your writing is incredible and valuable in many ways. I think that is your golden ticket.

Laura K

Pat said...

Thank you David for your clear writing and for putting a human face, a family face on this horrid story of greed and crime. I salute you for the telling it and helping us all to understand how ordinary people have been hurt by this man's evil ways.

Michelle said...

Hi David and wow!! What a story! What a piece of writing!!

Thanks for being so honest and forthright!! Sorry you had to go through this too!!!

Be well!!

Anonymous said...

I believe in capital punishment for certain types of crimes, including crimes where victims were hurt badly but not killed. I believe the Madoff and his ilk should be executed.


Cyndi said...

You are a poetic writer, your words are magical and the feelings you convey are so easy to grasp. Thank you for your gift, and I and many other people are more than grateful for your many talents.

Wayne said...

Thanks David for this insight. You personify perspective in your reactions to this betrayal and what it means not only to you but all of us.

We live in a world of increasing emphasis on consumption fed by greed. Madoff as bad as he is, is a symptom of pervasive greed,lack of responsibility and of accountability.

Your words and thoughts are beacons of light in a darkening world.

empmatt said...

Thanks for your beautiful attitude about life. I'm a Madoff investor too and I was quite inspired by what you wrote.
Madoff can steal our money, but he can't steal our lives.
My heart goes out to you, and I am taking strength from your own beautiful heart.

Wendy S. Harpham, MD said...

Thank you for sharing both the personal story and your response to challenge. Wishing you the best.
With hope,


I know I am beating a dead horse but after years in Japan I know that no one there ends up penniless from illness because the health care system simply doesn't allow it.

Interesting I read of your Madoff connection today because yesterday I was just discussing the Vanity Fair article on him with my wife. Small world.

La Cootina said...

I'm a fellow cancer patient, David. I happened upon your blog through GrowABrain. I guess we are among the "fortunate" Big Picture Viewers who know it's only money. And yet, in this situation, having your financial safety net yanked out from under you is one hell of a sucker punch.

I hope you don't mind if I link to this. (Let me know if you do.) It's a thoughtful, moving piece of writing.

As I said in my Joys of Cancer essays, "Cancer is the club no one wants to join, but membership has its privileges." I wish you and Marilyn the very best.

Nancy, aka The Coot

Anonymous said...

Good for you man! Don't let Bernie and his bad decisions bring you down. You only live once.