How I Got Screwed by Bernie Madoff

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Ruby Washington / New York Times

Bernard Madoff, founder of Bernard L. Madoff Investment Securities, on his trading floor in New York in 1999

The call came at 6 p.m. on Thursday, Dec. 11. I had been waiting for it for five years. When the call finally arrived, it was my wife Sarah who answered. What the person said on the other end of the phone was both simple and devastating: we were financially wiped out.

Of course, I knew this instantly from the look on my wife's face. Her words to the caller, the person handling our financial matters, grew insistent: "You're joking? This is a joke, right?"

We didn't know it yet, but we had been playing in the Bernard Madoff Investment Securities LLC Fantasy Financial League. It began when we sold our home at the peak of the market, collected what was left from an old divorce, found other monies and then, with a combination of pleasure and trepidation, handed over our life savings to someone named Stanley Chais, the Los Angeles network organizer for a man named Bernard Madoff.

Of course, we never heard the name Madoff — which has a peculiarly Dickensian ring now — and had no idea how he achieved such fantastic returns over the past 40 years. All we knew was that my wife's entire family had been in the fund for decades and lived well on the returns, which ranged from 15% to 22%. It was all very secretive and tough to get into, which, looking back, was a brilliant strategy to lure suckers. Unlike the usual Ponzi mechanics, the fund even stopped investments into accounts a few years back, at least in our network. There were the usual warnings prior to investing — we all knew it was a risk, we were told to make sure we were diversified, blah-blah — but, my God, it had been going strong for so long and with such fantastic returns, we had to get in. The Securities and Exchange Commission even gave Madoff a clean bill of health several years ago, we now find out. Well, maybe not a clean bill, but it didn't shut him down either. In the topsy-turvy world of investment, we were quietly, richly safe. Until the call. (See the top 10 worst business deals of 2008.)

I think everyone knew the call would come one day. We all hoped, but we knew deep down it was too good to be true, right? I mean, why wasn't everyone in on this game if it was so strong and steady? We deluded ourselves into thinking we were all smarter than the others. When it came to the investment game, we had it figured. And what was the game anyway? The way it was vaguely described to us was that the "New York people" had a system whereby they placed a series of instant trades — at once with futures, currencies and stocks — and out of this magic recipe fell a tiny 1% guaranteed, no-risk profit for the group. You do that 20 times a year, take away management fees and, voilà, a steady 15% return. Man, these guys were good.

But of course the call did come, as it always does with such things. It was not an ordinary Ponzi scheme we were all part of; it was the biggest in the history of the world, valued at some $50 billion. Lucky us. Small investors, institutions, hedge funds, global banks, pension funds — all fell victim to usual suspects: a smooth huckster and greed.

You never want to hear the words that come with such a phone call. "We are all wiped out." But they came, and we went numb. We lost, on paper, $1.2 million. My wife's family's combined losses are close to $30 million. We're talking old ladies and men, lawyers, children with Madoff trusts, students in college and an array of others who thought they had the world beat — and they did, at least for a time.

Now, we, they, everyone in this fraud, are all wiped out. Even Stanley says he's lost everything. It's the kind of news that's been known to cause shortness of breath, sudden cardiac arrest, revolvers pulled from bedside drawers. It harks back to December of 1929 and the image of bodies falling from buildings. But what can you do? (See the top 10 scared stock traders.)

There's a line from The Shawshank Redemption that is apropos. It's spoken by Tim Robbins' character: "Get busy living or get busy dying." We've lost it all, but we're choosing to get on with living.

Robert Chew, a former Madoff investor, lives in Colorado