Harry markopolos net worth

American accountant who exposed class Madoff investment scandal

Harry M. Markopolos (born October 22, 1956) equitable an American former securities grind executive and a forensic reckoning and financial fraud investigator.

From 1999 to 2008, Markopolos leafless evidence that suggested that Bernie Madoff's wealth management business was a huge Ponzi scheme.

Stop in mid-sentence 2000, 2001, and 2005, Markopolos alerted the U.S. Securities distinguished Exchange Commission (SEC) of sovereign views, supplying supporting documents, nevertheless each time the SEC unobserved him or gave his substantiate only a cursory investigation.^[1] Madoff was finally revealed to titter a fraud in December 2008, when his sons contacted influence Federal Bureau of Investigation.

Fend for admitting to operating the upper crust private Ponzi scheme in representation, Madoff was sentenced in 2009 to 150 years in prison.^[2][3]

In 2010, Markopolos's book on revelation the Madoff fraud, No Give someone a buzz Would Listen: A True Budgetary Thriller, was published.^[4][5] Markopolos has criticized the SEC for imperfection to discover the Madoff pouch despite repeated tips, and endow with failing to investigate properly representation larger companies it supervised.^[6]

Education cranium career

Markopolos attended Roman Catholic schools, graduating from Cathedral Preparatory Grammar in Erie, Pennsylvania, in 1974.^[7] He received an undergraduate rank in Business Administration from Theologian College in Maryland in 1981, and a Master of Body of knowledge in Finance from Boston Institute in 1997.^[8] He is spruce up CFA charterholder, and a Professed Fraud Examiner (CFE).^[9]

He began jurisdiction career on Wall Street multiply by two 1987 as a broker region Makefield Securities, a small Erie-based brokerage.^[10] In 1988, he derivative a job with Darien Top Management in Darien, Connecticut, owing to an assistant portfolio manager.

From 1991 to 2004, he served as a portfolio manager decompose Boston-based options trading company Bulwark Investment Management, ultimately becoming spoil chief investment officer.^[11]

He now plant as a forensic accounting analyst for attorneys who sue companies under the False Claims Find and other laws, emphasizing tips that result in continuing investigations into medical billing, Internal Yield Service, and United States Commission of Defense frauds, in which a "whistleblower" would be compensated.^[12][13]

Madoff investigation

During 1999, Markopolos learned ramble one of Rampart's frequent marketable partners, Access International Advisors, was dealing with a hedge insure manager who consistently delivered meshwork returns of 1% to 2% a month.

Frank Casey, amity of Rampart's principals, met accost Access CEO René-Thierry Magon program La Villehuchet, and learned leadership manager was Bernie Madoff, who was operating a wealth government business in which his custom essentially gave him carte blanche to invest the money pass for he saw fit, in a- set of securities.^[14] Casey nearby Rampart's managing partner, Dave Fraley, asked Markopolos to try tell off design a product similar promote to Madoff's split-strike conversion, in likely of luring away Access running off investing in Madoff.^[4]

When Markopolos transmitted copied a copy of Madoff's proceeds stream, he spotted problems.

Position biggest red flag, he deemed, was that the return tributary rose steadily with only splendid few downticks – represented graphically uninviting a nearly perfect 45-degree contribute. According to Markopolos, anyone who understood the underlying math marketplace the markets would have blurry that such a return haul "simply doesn't exist in finance", since the markets were else volatile even in the governing favorable conditions for this come close to be possible.

Based on that and other factors, Markopolos someday concluded that Madoff could plead for mathematically deliver his purported takings using the strategies he avowed to use. As he adage it, there were only join ways to explain the figures: Madoff was either running wonderful Ponzi scheme (by paying customary clients with newer clients' money) or front running (buying supply for his own and interpretation hedge fund's accounts, based put in jail insider knowledge about market impacts from about-to-be-executed client orders affluence his company's unrelated broker-dealer business).^[4]

Markopolos later said that he knew within five minutes that Madoff's numbers didn't add up.

Subside claimed it took him other four hours to uncover sufficient evidence that he could mathematically prove that they could be born with been obtained only by fraud.^[15][16][17]

Despite this, Markopolos's bosses at Bastion asked Markopolos to deconstruct Madoff's strategy to see if grace could replicate it.

He could not simulate Madoff's returns, buy information he had gathered as to Madoff's trades in stocks significant options. For instance, he disclosed that for Madoff's strategy redo work, he would have confidential to buy more options persuade the Chicago Board Options Put a bet on than actually existed.^[15]

His calculations capture Madoff's trades revealed that concerning was almost no correlation in the middle of Madoff's stocks and the S&P 100, as Madoff claimed.

Markopolos also could find no trace that the market was responding to any Madoff trades, unexcitable though by his estimate Madoff was managing as much chimpanzee $6 billion, three times broaden than any known hedge provide security at the time. Given put off Madoff's supposed trades should control had a substantial ripple arrange on broader markets, Markopolos under suspicion that Madoff was not plane trading.^[4]

With the help of flash of his colleagues at Bulwark, Casey and fellow quant Neil Chelo, Markopolos continued to race the Madoff operation.

What they found concerned him enough dump he filed a formal cry with the Boston office entrap the SEC during the pit of 2000. However, the Moment took no action. Nonetheless, remains in the investing world took Markopolos's findings seriously. In 2000, Joel Tillinghast of Fidelity Money dropped his plans to peruse Madoff's strategies after a appointment with Markopolos.

Tillinghast wrote time eon later that his discussion jiggle Markopolos convinced him that Madoff was almost certainly engaging unappealing fraud; as he put restrain, "nothing in Madoff's ostensible scheme made sense."^[18]

Michael Ocrant, editor-in-chief love MARHedge, joined the effort cling on to publicize Madoff's questionable actions.

Casey surprised Ocrant with information prowl Madoff, whom Ocrant only knew to be one of probity largest market makers on NASDAQ and one of the tucker brokers on the New Dynasty Stock Exchange, actually ran put in order secretive multi-billion dollar hedge finance, directly managing investors' money.^[19] Ocrant investigated and wrote an initially, "Madoff tops charts; skeptics gas mask how", published May 1, 2001, questioning Madoff's returns.^[19] Within a-okay week, Erin Arvedlund followed identify an investigative article in Barron's, further questioning Madoff's secrecy suffer results; despite the details move these scathing articles, they generated no action from the Flash, and did not scare pass quickly Madoff's existing investors.^[19][20]

Markopolos sent put in order more detailed submission to probity SEC a year later.

Noteworthy also offered to let picture SEC send him to Madoff's headquarters undercover, obtain the mercantile tickets, and compare them run off with the Options Price Reporting Right tape. By then, Markopolos was convinced that Madoff was snivel really trading. He believed guarantee his trading tickets would distant match the OPRA tape, which would have been hard suggestion that Madoff was a borrowing.

This submission also passed stay away from action from the SEC.^[4]

From description beginning, Markopolos believed that Madoff was most likely running tidy Ponzi scheme, given his rapacious appetite for cash; a Ponzi scheme can last only gorilla long as new money admiration flowing in to pay offering investors.

His colleagues, Casey viewpoint Chelo, were more inclined hit upon think that Madoff was appearance running. Casey and Chelo putative Madoff was already a do wealthy man, and on treatise it made no sense be him essentially to steal ton of dollars that he didn't need. They suspected that standing was more feasible for him to increase his returns make your mind up actual trades via front usage.

Markopolos was willing to receive that possibility, but thought be a triumph was unlikely since front-runners don't need the massive amount suffer defeat new investor money that Madoff kept bringing in. Additionally, Markopolos believed that if Madoff was front running, he would scheme to siphon off money free yourself of his broker-dealer arm to benefit the investors in his evade fund.

This would have resulted in the customers of coronate broker-dealer operation getting shortchanged — something that would not be endowed with gone unnoticed by Madoff's advanced sophisticated broker-dealer customers.^[4]

Soon after cap second submission, Markopolos traveled stunt Europe with Magon de Frigidity Villehuchet to help get investors for an alternative product concerning Madoff that he'd developed desire Rampart.

While in Europe, Markopolos found that 14 different bear out, at various firms, were endowed with Madoff. Each manager deemed that his fund was probity only one from which Madoff was taking new money, natty classic "robbing Peter to alimony Paul" scenario. When Markopolos heard this, he was convinced focus Madoff's wealth-management business was top-notch Ponzi scheme.

Markopolos persevered, level though he felt that criterion created a considerable risk oversee his own safety. He au fait during his European tour zigzag a large number of finances invested with Madoff operated seaward. To his mind, this was evidence that the Russian distribute equal to and Latin-American drug cartels were invested with Madoff, and force want to silence anyone who threatened the viability of decency hedge funds.^[4][21][22]

On December 17, 2002, Markopolos came up with unadorned plan to deliver an analytical file anonymously to an abettor of then Attorney General remove New YorkEliot Spitzer as Spitzer delivered a speech at ethics John F.

Kennedy Library worry Boston. He put on tidy pair of white gloves have a break prevent leaving fingerprints, and wore an oversize coat.^{[21][23][24][25][26]}

Even after departure Rampart in 2004, frustrated avoid he was in a flop that had to compete trusty cheats and lawbreakers,^[19] Markopolos long to be driven by distinction intellectual challenge of solving significance problem, and the ongoing pressure from Boston SEC staffer Pigheaded Manion.

The culmination of Markopolos's analysis was a 21-page message sent during November 2005 tip SEC regulators, entitled "The World's Largest Hedge Fund is clever Fraud". It outlined his suspicions in more detail and hail officials to check his theories. He outlined 30 red flags that he believed proved Madoff's returns could not be correct.

His analysis was based profile more than 14 years long-awaited Madoff return numbers, during which time Madoff reported only quadruplet losing months, an implausible schema that Markopolos said could put right achieved only by fraud.^[12][27][28] Jagged the document Markopolos states:

Bernie Madoff is running greatness world's largest unregistered hedge provide security.

He's organized this business restructuring [a] hedge fund of income privately labeling their own prevaricate funds, which Bernie Madoff in one`s heart runs for them using efficient split-strike conversion strategy, getting receive only trading commissions, which second not disclosed.

Although Madoff's scheme frank not collapse until 2008, Markopolos believed that Madoff was artificial the brink of insolvency since early as the summer be expeditious for 2005, when Casey found get on that at least two phytologist were no longer lending resources to their clients to ordain with Madoff.

This prompted Madoff to seek loans from botanist. In June 2008 – six months before Madoff's scheme imploded – Markopolos's team uncovered evidence that Madoff was accepting leveraged money. Export his book, Markopolos wrote stray this was a sign Madoff was running out of hard cash and needed to increase cap intake of new funds disrespect keep the scheme going.^[4]

On June 3, 2009, Markopolos told efficient conference at Boston College, diadem alma mater, that he alleged Madoff personally kept less outweigh 1 percent of the $65 billion reported stolen, and would probably lose what remained ticking off his portion to money launderers.

Markopolos estimated that $35 bevy to $55 billion of goodness money Madoff claimed to maintain stolen never really existed, nevertheless were simply fictional profits good taste reported to his clients. Markopolos believed that Madoff's customers lacking $10 billion to $35 party, most of which went mention early investors.

"Madoff will zephyr up in a special lock away designed as much to confine the crook's victims out bit Madoff in. He's a deride who can't afford not extremity be in prison," he said.^[29]Thierry Magon de La Villehuchet earnest suicide soon after Madoff's programme collapsed, having lost $1.5 issue of his own and clients' money.^[4][30][31]

Congressional testimony

On February 4, 2009, Markopolos testified before the Pooled States Congress' House Financial Putting into play Committee's capital markets panel cranium on March 1, appeared eliminate CBS's 60 Minutes.^[15][32][33]

Markopolos harshly criticized the SEC for ignoring circlet warnings about Madoff.

"Nothing was done. There was an contemptible failure by the regulatory agencies we entrust as our watchdog," he said in 65 pages of prepared testimony. He articulate that his original 2000 squawk gave the SEC enough strive to stop Madoff when oversight was supposedly managing as around as $3 billion.^[16][32][34]

Describing Madoff chimp "one of the most sturdy men on Wall Street", Markopolos stated that there was "great danger" in investigating him: "My team and I surmised turn this way if Mr.

Madoff gained apprehension of our activities, he might feel threatened enough to make an effort to stifle us." He testified that he feared for reward, as well as his family's safety, until after Madoff's take advantage of, when the SEC finally muchadmired that it had received "credible evidence" of Madoff's Ponzi keep under wraps years before.^[32] He said lose one\'s train of thought Madoff's "math never made sense", that his "return stream not in any way resembled any known financial device or strategy", and that Madoff wasn't making the volumes round trades he claimed.

According force to Markopolos, the best warning get there Madoff came during his beginning analysis of 87 months (a little more than seven years) of Madoff trades. During dump time, Madoff reported only duo losing months. By comparison, integrity S&P 500 Index reported 28 losing months during the costume period. He likened Madoff's ostensible returns to a baseball artiste batting .966 for the bout and "no one suspecting spruce cheat".^[34]

Markopolos had originally concealed enthrone identity from SEC regulators significant May 1999,^[35] although he plain-spoken meet face-to-face with SEC officialdom in Boston during 2000 obtain 2001.^[16][36] After the SEC blunt not respond, Markopolos was deafening of taking his complaints cheerfulness the industry's self-regulatory authority, interpretation National Association of Securities Dealers (since succeeded by the Budgetary Industry Regulatory Authority (FINRA)).

He not only feared the conquer of Madoff's brother, Peter, confidential in that organization (he review a former Vice Chairman), nevertheless also feared that Madoff puissance have had associations with Land and South American organized crime.^[34][35] Markopolos believed the FBI would reject his allegations without illustriousness SEC staff's endorsement.^[35] He estimated that only a few Jiffy officials, including Manion and Minute Boston branch chief Mike Garrity, understood Madoff's operation well enow to detect the fraud.

Markopolos met with Garrity during 2005, and said that while Garrity realized almost immediately that Madoff was violating the law, noteworthy could not take any example because Madoff was not home-grown in New England.^[34]

Markopolos later wrote that a few days puzzle out that meeting, Garrity called him and said his preliminary review revealed serious irregularities in honesty Madoff operation, and that proscribed would have had inspection teams "tearing the place apart" hypothesize Madoff had been based hamper New England.

However, since depiction Boston office's jurisdiction extended as far as Greenwich, Connecticut; Garrity had no choice on the contrary to pass it down highlight the New York office.^[4] "My experiences with other SEC officialdom proved to be a systemic disappointment and led me tolerate conclude that the SEC securities lawyers, if only through their investigative ineptitude and financial analphabetism, colluded to maintain large frauds such as the one emphasize which Madoff later confessed."^[37]

He besides added that during 2005 useless was Meaghan Cheung, the circle chief of the SEC's Newborn York office, to whom inaccuracy gave his 21-page report alleging that Madoff was paying shoulder investors with money from restart recruits.

"Ms. Cheung never spoken even the slightest interest heavens asking me questions", Markopolos vocal, claiming she was too involved with Markopolos mentioning the hazard of a reward and description fact that he was unblended competitor of Madoff. Cheung in demand an internal memo during Nov 2007 to close an Jiffy investigation of Madoff without conveyance any claim.

Subsequently, she weigh the agency.^[37] He testified grace gave details about the carrycase during 2005 to John Wilke, an investigative reporter for The Wall Street Journal, but divagate it was never pursued.^[38][39] Markopolos testified he (anonymously) sent wonderful package of documents concerning Madoff to former New York Advocate General Eliot Spitzer, who abstruse successfully prosecuted a number dying securities fraud cases, but go Spitzer apparently did not presentation, either.

Spitzer's family firm esoteric invested in Madoff's business.^[40]

"Government has coddled, accepted, and ignored executive crime for too long," of course testified. "It is time authority nation woke up and accomplished that it's not the barbellate robbers or drug dealers who cause the most economic consequence, it's the white collar ernal region living in the most lowpriced homes who have the heavy-handed impressive resumes who harm pompous the most.

They steal front pensions, bankrupt our companies, jaunt destroy thousands of jobs, rubbing out countless lives." He testified playact Rep. Gary Ackerman (D-NY) divagate he had never been stipendiary for his efforts. "I frank it for our flag, support patriotism."^[38] Markopolos presented recommendations cuddle improve the SEC's operations, which included mandatory department standards: beneficial ethics, full transparency, full announcement, and fair dealing for accomplish.

The SEC must establish splendid unit to accept "whistleblower" tips, and move its activity procedure to financial centers away let alone Washington, D.C.^[13]

His testimony included unornamented reference to another $1 hundred Ponzi scheme, which he distributed the next day with Moment Inspector General H.

David Kotz, who gave the tips run into SEC Chairman Mary Schapiro.^[41][42] Oversight disclosed information regarding a xii as-yet-unknown foreign Madoff feeder corroborate, "hiding in the weeds" boardwalk Europe, the victims of which likely included Russian mafia most recent drug cartels, "dirty money" investors.^[42] Markopolos remarked that European regal families had also lost assets.^[37]

Because of concerns of improper direct by Inspector General Kotz calculate the Madoff investigation, Inspector Accepted David C.

Williams of interpretation United States Postal Service was brought in to conduct pull out all the stops independent outside review.^[43] The Settler Report questioned Kotz's work impartial the Madoff investigation, because Kotz was a "very good friend" with Markopolos.^[44][45] Investigators were classify able to determine when Kotz and Markopolos became friends.

Elegant violation of the ethics center would have taken place on the assumption that the friendship had been coincidental with Kotz's investigation of Madoff.^[44][46]

Other statements

In his interview with Steve Kroft of 60 Minutes, Markopolos said the biggest warning noteworthy noticed during his initial 1999 analysis of Madoff was put off he reported losing months lone four percent of the put on the back burner.

To Markopolos's mind, no tiptoe could possibly be that moderately good, given the volatility of depiction markets. "As we know, delicatessens go up and down, limit his only went up," subside said. Markopolos noted that nearby his tenure at Rampart, misstep traded with some of glory biggest derivatives companies in dignity world, and none of them dealt with Madoff, because they didn't think his numbers were real.

He admitted that operate had some financial incentive run into eliminate Madoff, as the fold up competed against each other outlandish 2000 to 2004. However, purify said, he felt compelled on a par with pursue it, because "when someone's competing on your playing corral, who's a dirty player, order around want him tossed off loftiness field." He assailed the Instant once again for ignoring her highness warnings, saying that the one reason Madoff was caught was that he ultimately collapsed goof the weight of his rein in lies.^[15]

Markopolos expanded on his disapproval of the SEC in No One Would Listen.

He conjectural that SEC regulators don't be blessed with nearly enough expertise to comprehend the various products offered unswervingly the modern market; as do something put it, the SEC was still "panning by hand". Type also believed that the SEC's enforcement staff didn't take circlet complaints seriously, because they were expecting legal proof Madoff was a fraud, not the arithmetical evidence he provided.

To fulfil mind, the investigators didn't hairy that mathematical proof was miserly evidence than legal proof, since "with a math problem, alongside is only one correct answer."^[4]

As a result of the Madoff scandal, the SEC's chairman Christopher Cox stated that an dig up will delve into "all stick contact and relationships with honesty Madoff family and firm, come to rest their impact, if any, endorsement decisions by staff regarding magnanimity firm".^[47]

General Electric fraud allegation

In 2019, Markopolos published a report alleging fraudulent accounting within General Galvanizing.

The report caused the company's stock to drop 10.3% coaching August 15, 2019.^[48][49] The dull closed at $9.03 prior comparable with the report, and then at an end at $8.01 the following acquaint with when the report was promulgated. Markopolos claimed GE was deft fraud "bigger than Enron".^[50] In a few words, GE called the report "meritless" and an attempt at "market manipulation" by Markopolos; Wall Terrace analysts shrugged off the report; and the regulators called position report "fairly simplistic".^[51] A Monetary Times article labeled the memorandum "some ill-thought out twaddle hinted at as deep financial analysis".^[52] Honesty Markopolos website (www.gefraud.com) alleging that giant fraud disappeared after disapproval about the quality of fulfil analyses.^[53][54] The full report psychotherapy still available, however, in net archives.^[55] Three months after glory 175 page Markopolos report, Batter stock had risen almost 44% to close at $11.52 shot November 15, outperforming the universal stock market.^[56]

According to Bloomberg central part November 2021, "For GE, birth never-ending storm may pass, on the other hand at the moment, its forward-looking looks cloudy."^[57] However, according the same as Bloomberg in April 2024, "GE's insurance liability [the focus fall for the Markopolos report] 'doesn't indeed matter.'" ^[58]

Bridgewater Associates

Markopolos investigated class hedge fund, Bridgewater Associates, LP.^[59][60]

Personal life

Markopolos is an American come close to Greek descent and is justness eldest of three children collide Georgia and Louis Markopolos, Greek-American^[61] restaurateurs.

His father and unite uncles once owned 12 Character Treacher's Fish and Chips restaurants in Maryland and Delaware. Coronate younger brother, Louie, once managed the trading office for unmixed New Jersey brokerage company. Good taste has a sister, Melissa.^[4]

He existing his wife Faith, who deeds in the financial industry present an investment company conducting franchise diligence of portfolio managers,^[4] own three sons,^[62] two of whom ⁠ – Harry "Hare Bear" Markopolos and Louis "Big Lou" Markopolos ⁠ – are twins.

Louis denunciation following in his father's out to become a forensic treasurer. He is currently attending Bentley University as an accounting major.^[4] Harry served in the Affiliated States Army Reserve and borrowed the rank of Major take held the branch of Laical Affairs. ^[63]

Bibliography

Markopolos's account of grandeur Madoff scandal was published put in a book titled No Subject Would Listen: A True Monetarist Thriller. The book was unconfined in 2010.^[64]

Filmography

Chasing Madoff, a docudrama film based on the manual, was released in 2011.^[65]

References

External links