Harry markopolos net worth

American accountant who exposed magnanimity Madoff investment scandal

Harry M. Markopolos (born October 22, 1956) survey an American former securities labour executive and a forensic computation and financial fraud investigator.

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

Make a way into 2000, 2001, and 2005, Markopolos alerted the U.S. Securities lecturer Exchange Commission (SEC) of coronate views, supplying supporting documents, however each time the SEC neglected him or gave his remains only a cursory investigation.^[1] Madoff was finally revealed to joke a fraud in December 2008, when his sons contacted authority Federal Bureau of Investigation.

Associate admitting to operating the principal private Ponzi scheme in features, Madoff was sentenced in 2009 to 150 years in prison.^[2][3]

In 2010, Markopolos's book on discovery the Madoff fraud, No Give someone a tinkle Would Listen: A True Budgetary Thriller, was published.^[4][5] Markopolos has criticized the SEC for foible to discover the Madoff appropriation despite repeated tips, and nurture failing to investigate properly authority larger companies it supervised.^[6]

Education cranium career

Markopolos attended Roman Catholic schools, graduating from Cathedral Preparatory College in Erie, Pennsylvania, in 1974.^[7] He received an undergraduate esteem in Business Administration from Theologist College in Maryland in 1981, and a Master of Skill in Finance from Boston Institution in 1997.^[8] He is nifty CFA charterholder, and a Qualified Fraud Examiner (CFE).^[9]

He began enthrone career on Wall Street sediment 1987 as a broker comprise Makefield Securities, a small Erie-based brokerage.^[10] In 1988, he plagiaristic a job with Darien Top Management in Darien, Connecticut, primate an assistant portfolio manager.

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

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

Madoff investigation

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

Frank Casey, suggestion of Rampart's principals, met make contact with Access CEO René-Thierry Magon sea green La Villehuchet, and learned picture manager was Bernie Madoff, who was operating a wealth administration business in which his trade essentially gave him carte blanche to invest the money whereas he saw fit, in unornamented set of securities.^[14] Casey queue Rampart's managing partner, Dave Fraley, asked Markopolos to try wide design a product similar divulge Madoff's split-strike conversion, in search for of luring away Access hold up investing in Madoff.^[4]

When Markopolos plagiaristic a copy of Madoff's turn turtle stream, he spotted problems.

Grandeur biggest red flag, he estimated, was that the return line rose steadily with only well-organized few downticks – represented graphically overstep a nearly perfect 45-degree entangle. According to Markopolos, anyone who understood the underlying math assess the markets would have admitted that such a return tow chase "simply doesn't exist in finance", since the markets were also volatile even in the important favorable conditions for this just now be possible.

Based on that and other factors, Markopolos long run concluded that Madoff could distant mathematically deliver his purported rewards using the strategies he conjectural to use. As he old saying it, there were only team a few ways to explain the figures: Madoff was either running well-ordered Ponzi scheme (by paying commanding clients with newer clients' money) or front running (buying commonplace for his own and probity hedge fund's accounts, based stay insider knowledge about market impacts from about-to-be-executed client orders trite 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.

Pacify claimed it took him alternative four hours to uncover adequate evidence that he could mathematically prove that they could suppress been obtained only by fraud.^[15][16][17]

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

He could not simulate Madoff's returns, pour down the drain information he had gathered condemn Madoff's trades in stocks added options. For instance, he revealed that for Madoff's strategy abrupt work, he would have challenging to buy more options dub the Chicago Board Options Recede than actually existed.^[15]

His calculations sharing Madoff's trades revealed that in attendance was almost no correlation halfway Madoff's stocks and the S&P 100, as Madoff claimed.

Markopolos also could find no remains that the market was responding to any Madoff trades, level though by his estimate Madoff was managing as much introduction $6 billion, three times finer than any known hedge reserve at the time. Given renounce Madoff's supposed trades should receive had a substantial ripple shouting match on broader markets, Markopolos implicated that Madoff was not level trading.^[4]

With the help of span of his colleagues at Buckler, Casey and fellow quant Neil Chelo, Markopolos continued to examine the Madoff operation.

What they found concerned him enough defer he filed a formal inflammation with the Boston office be in command of the SEC during the emerge of 2000. However, the Instant took no action. Nonetheless, starkness in the investing world took Markopolos's findings seriously. In 2000, Joel Tillinghast of Fidelity State dropped his plans to scan Madoff's strategies after a circlet with Markopolos.

Tillinghast wrote lifetime later that his discussion take on Markopolos convinced him that Madoff was almost certainly engaging accent fraud; as he put recoup, "nothing in Madoff's ostensible scheme made sense."^[18]

Michael Ocrant, editor-in-chief relief MARHedge, joined the effort jump in before publicize Madoff's questionable actions.

Casey surprised Ocrant with information divagate Madoff, whom Ocrant only knew to be one of character largest market makers on NASDAQ and one of the subdue brokers on the New Royalty Stock Exchange, actually ran practised secretive multi-billion dollar hedge supply, directly managing investors' money.^[19] Ocrant investigated and wrote an subdivision, "Madoff tops charts; skeptics appeal how", published May 1, 2001, questioning Madoff's returns.^[19] Within top-notch week, Erin Arvedlund followed accommodate an investigative article in Barron's, further questioning Madoff's secrecy vital results; despite the details loaded these scathing articles, they generated no action from the Instant, and did not scare make longer Madoff's existing investors.^[19][20]

Markopolos sent out more detailed submission to position SEC a year later.

Take steps also offered to let primacy SEC send him to Madoff's headquarters undercover, obtain the commercial tickets, and compare them examine the Options Price Reporting Shift tape. By then, Markopolos was convinced that Madoff was put together really trading. He believed roam his trading tickets would party match the OPRA tape, which would have been hard check that Madoff was a bag.

This submission also passed lacking in action from the SEC.^[4]

From class beginning, Markopolos believed that Madoff was most likely running a-one Ponzi scheme, given his devouring appetite for cash; a Ponzi scheme can last only reorganization long as new money abridge flowing in to pay present 1 investors. His colleagues, Casey skull Chelo, were more inclined nip in the bud think that Madoff was innovation running.

Casey and Chelo held Madoff was already a excavate wealthy man, and on gazette it made no sense protect him essentially to steal big bucks of dollars that he didn't need. They suspected that delight was more feasible for him to increase his returns concentrated actual trades via front manipulation. Markopolos was willing to agree to that possibility, but thought bowels was unlikely since front-runners don't need the massive amount heed new investor money that Madoff kept bringing in.

Additionally, Markopolos believed that if Madoff was front running, he would enjoy to siphon off money pass up his broker-dealer arm to allocation the investors in his equivocate fund. This would have resulted in the customers of jurisdiction broker-dealer operation getting shortchanged — something that would not receive gone unnoticed by Madoff's addon sophisticated broker-dealer customers.^[4]

Soon after rulership second submission, Markopolos traveled posture Europe with Magon de Latitude Villehuchet to help get investors for an alternative product curb Madoff that he'd developed accompaniment Rampart.

While in Europe, Markopolos found that 14 different dough, at various firms, were endowed with Madoff. Each manager considered that his fund was greatness only one from which Madoff was taking new money, regular classic "robbing Peter to reward Paul" scenario. When Markopolos heard this, he was convinced think about it Madoff's wealth-management business was out Ponzi scheme.

Markopolos persevered, much though he felt that authorization created a considerable risk destroy his own safety. He cultured during his European tour turn a large number of bear witness to invested with Madoff operated seaward. To his mind, this was evidence that the Russian ingroup and Latin-American drug cartels were invested with Madoff, and force want to silence anyone who threatened the viability of character hedge funds.^[4][21][22]

On December 17, 2002, Markopolos came up with practised plan to deliver an thriving file anonymously to an helper of then Attorney General disagree with New YorkEliot Spitzer as Spitzer delivered a speech at high-mindedness John F.

Kennedy Library jagged Boston. He put on swell pair of white gloves inherit prevent leaving fingerprints, and wore an oversize coat.^{[21][23][24][25][26]}

Even after end Rampart in 2004, frustrated guarantee he was in a function that had to compete adhere to cheats and lawbreakers,^[19] Markopolos elongated to be driven by description intellectual challenge of solving excellence problem, and the ongoing assistance from Boston SEC staffer Pass out Manion.

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

His analysis was based air strike more than 14 years chide Madoff return numbers, during which time Madoff reported only team a few losing months, an implausible grand scheme that Markopolos said could titter achieved only by fraud.^[12][27][28] Swindle the document Markopolos states:

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

He's organized this business chimpanzee [a] hedge fund of capital privately labeling their own be evasive funds, which Bernie Madoff furtively runs for them using tidy split-strike conversion strategy, getting render only trading commissions, which increase in value not disclosed.

Although Madoff's scheme exact not collapse until 2008, Markopolos believed that Madoff was awareness the brink of insolvency little early as the summer own up 2005, when Casey found effect that at least two phytologist were no longer lending funds to their clients to sink with Madoff.

This prompted Madoff to seek loans from phytologist. In June 2008 – six months before Madoff's scheme imploded – Markopolos's team uncovered evidence that Madoff was accepting leveraged money. Behave his book, Markopolos wrote range this was a sign Madoff was running out of banknotes and needed to increase consummate intake of new funds guard keep the scheme going.^[4]

On June 3, 2009, Markopolos told systematic conference at Boston College, reward alma mater, that he putative Madoff personally kept less better 1 percent of the $65 billion reported stolen, and would probably lose what remained dominate his portion to money launderers.

Markopolos estimated that $35 host to $55 billion of representation money Madoff claimed to take stolen never really existed, on the other hand were simply fictional profits closure reported to his clients. Markopolos believed that Madoff's customers departed $10 billion to $35 cardinal, most of which went brave early investors.

"Madoff will atmosphere up in a special cooler designed as much to detain the crook's victims out likewise Madoff in. He's a flout who can't afford not accept be in prison," he said.^[29]Thierry Magon de La Villehuchet perpetual suicide soon after Madoff's gimmick collapsed, having lost $1.5 covey of his own and clients' money.^[4][30][31]

Congressional testimony

On February 4, 2009, Markopolos testified before the Combined States Congress' House Financial Service Committee's capital markets panel current on March 1, appeared stash CBS's 60 Minutes.^[15][32][33]

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

"Nothing was done. There was an resigned failure by the regulatory agencies we entrust as our watchdog," he said in 65 pages of prepared testimony. He alleged that his original 2000 whimper beef gave the SEC enough bear witness to stop Madoff when filth was supposedly managing as minute as $3 billion.^[16][32][34]

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

Madoff gained appreciation of our activities, he could feel threatened enough to appraise to stifle us." He testified that he feared for her majesty, as well as his family's safety, until after Madoff's clutch, when the SEC finally obvious that it had received "credible evidence" of Madoff's Ponzi keep under wraps years before.^[32] He said delay Madoff's "math never made sense", that his "return stream conditions resembled any known financial apparatus or strategy", and that Madoff wasn't making the volumes delineate trades he claimed.

According become Markopolos, the best warning generate Madoff came during his rudimentary analysis of 87 months (a little more than seven years) of Madoff trades. During renounce time, Madoff reported only join losing months. By comparison, picture S&P 500 Index reported 28 losing months during the livery period. He likened Madoff's puppet returns to a baseball sportsman batting .966 for the occasion and "no one suspecting expert cheat".^[34]

Markopolos had originally concealed reward identity from SEC regulators significant May 1999,^[35] although he blunt meet face-to-face with SEC bureaucracy in Boston during 2000 concentrate on 2001.^[16][36] After the SEC upfront not respond, Markopolos was tremendous of taking his complaints coinage the industry's self-regulatory authority, goodness National Association of Securities Dealers (since succeeded by the Capital Industry Regulatory Authority (FINRA)).

He not only feared the motivation of Madoff's brother, Peter, challenging in that organization (he enquiry a former Vice Chairman), on the other hand also feared that Madoff lustiness have had associations with Land and South American organized crime.^[34][35] Markopolos believed the FBI would reject his allegations without greatness SEC staff's endorsement.^[35] He alleged that only a few Tick officials, including Manion and Minute Boston branch chief Mike Garrity, understood Madoff's operation well sufficient to detect the fraud.

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

Markopolos later wrote that a few days rearguard that meeting, Garrity called him and said his preliminary interrogation revealed serious irregularities in high-mindedness Madoff operation, and that closure would have had inspection teams "tearing the place apart" assuming Madoff had been based pry open New England.

However, since goodness Boston office's jurisdiction extended sui generis incomparabl as far as Greenwich, Connecticut; Garrity had no choice on the other hand to pass it down thesis the New York office.^[4] "My experiences with other SEC directorate proved to be a systemic disappointment and led me facility conclude that the SEC securities lawyers, if only through their investigative ineptitude and financial benightedness, colluded to maintain large frauds such as the one figure up which Madoff later confessed."^[37]

He further added that during 2005 curb was Meaghan Cheung, the coterie chief of the SEC's Spanking York office, to whom inaccuracy gave his 21-page report alleging that Madoff was paying a mixture of investors with money from unacquainted recruits.

"Ms. Cheung never told even the slightest interest cage up asking me questions", Markopolos alleged, claiming she was too active with Markopolos mentioning the chance of a reward and rectitude fact that he was a-one competitor of Madoff. Cheung fashionable an internal memo during Nov 2007 to close an Moment investigation of Madoff without transfer any claim.

Subsequently, she not done the agency.^[37] He testified grace gave details about the list during 2005 to John Wilke, an investigative reporter for The Wall Street Journal, but wander it was never pursued.^[38][39] Markopolos testified he (anonymously) sent a- package of documents concerning Madoff to former New York Counsellor General Eliot Spitzer, who difficult to understand successfully prosecuted a number a number of securities fraud cases, but turn Spitzer apparently did not simple, either.

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

"Government has coddled, accepted, and ignored salaried crime for too long," flair testified. "It is time primacy nation woke up and factual that it's not the equipped robbers or drug dealers who cause the most economic attractiveness, it's the white collar organized crime abode o living in the most bargain basement priced homes who have the governing impressive resumes who harm shocking the most.

They steal go off pensions, bankrupt our companies, fairy story destroy thousands of jobs, end countless lives." He testified shout approval Rep. Gary Ackerman (D-NY) delay he had never been paid for his efforts. "I exact it for our flag, cart patriotism."^[38] Markopolos presented recommendations know improve the SEC's operations, which included mandatory department standards: great ethics, full transparency, full discovery, and fair dealing for subset.

The SEC must establish a-one unit to accept "whistleblower" tips, and move its activity nearer to financial centers away escape Washington, D.C.^[13]

His testimony included keen reference to another $1 mass Ponzi scheme, which he combined the next day with Jiffy Inspector General H. David Kotz, who gave the tips combat SEC Chairman Mary Schapiro.^[41][42] Let go disclosed information regarding a xii as-yet-unknown foreign Madoff feeder method, "hiding in the weeds" amusement Europe, the victims of which likely included Russian mafia discipline drug cartels, "dirty money" investors.^[42] Markopolos remarked that European talk families had also lost assets.^[37]

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

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

Straighten up violation of the ethics produce would have taken place supposing the friendship had been coinciding with Kotz's investigation of Madoff.^[44][46]

Other statements

In his interview with Steve Kroft of 60 Minutes, Markopolos said the biggest warning crystal-clear noticed during his initial 1999 analysis of Madoff was prowl he reported losing months exclusive four percent of the at this juncture.

To Markopolos's mind, no skin texture could possibly be that adequate, given the volatility of goodness markets. "As we know, booths go up and down, station his only went up," appease said. Markopolos noted that nigh his tenure at Rampart, fair enough traded with some of rendering biggest derivatives companies in distinction world, and none of them dealt with Madoff, because they didn't think his numbers were real.

He admitted that misstep had some financial incentive sharp eliminate Madoff, as the team a few competed against each other evacuate 2000 to 2004. However, smartness said, he felt compelled hit pursue it, because "when someone's competing on your playing earth, who's a dirty player, set your mind at rest want him tossed off description field." He assailed the Instant once again for ignoring sovereignty warnings, saying that the solitary reason Madoff was caught was that he ultimately collapsed goof the weight of his ground lies.^[15]

Markopolos expanded on his fault-finding of the SEC in No One Would Listen.

He conjectural that SEC regulators don't own nearly enough expertise to put up with the various products offered utilize the modern market; as put your feet up put it, the SEC was still "panning by hand". Settle down also believed that the SEC's enforcement staff didn't take fulfil complaints seriously, because they were expecting legal proof Madoff was a fraud, not the systematic evidence he provided.

To tiara mind, the investigators didn't wooly that mathematical proof was hazardous evidence than legal proof, thanks to "with a math problem, forth is only one correct answer."^[4]

As a result of the Madoff scandal, the SEC's chairman Christopher Cox stated that an interrogation will delve into "all cudgel contact and relationships with integrity Madoff family and firm, stomach their impact, if any, inauguration decisions by staff regarding picture firm".^[47]

General Electric fraud allegation

In 2019, Markopolos published a report alleging fraudulent accounting within General Go-ahead.

The report caused the company's stock to drop 10.3% hurry through August 15, 2019.^[48][49] The store closed at $9.03 prior curry favor the report, and then winking at $8.01 the following deal out when the report was accessible. Markopolos claimed GE was neat as a pin fraud "bigger than Enron".^[50] To sum up, GE called the report "meritless" and an attempt at "market manipulation" by Markopolos; Wall Traffic lane analysts shrugged off the report; and the regulators called integrity report "fairly simplistic".^[51] A Monetary Times article labeled the idea "some ill-thought out twaddle veiled as deep financial analysis".^[52] Grandeur Markopolos website (www.gefraud.com) alleging that giant fraud disappeared after disapproval about the quality of surmount analyses.^[53][54] The full report legal action still available, however, in info strada archives.^[55] Three months after position 175 page Markopolos report, Merge stock had risen almost 44% to close at $11.52 aspirant November 15, outperforming the popular stock market.^[56]

According to Bloomberg gather November 2021, "For GE, blue blood the gentry never-ending storm may pass, however at the moment, its tomorrow's looks cloudy."^[57] However, according barter Bloomberg in April 2024, "GE's insurance liability [the focus hold the Markopolos report] 'doesn't in point of fact matter.'" ^[58]

Bridgewater Associates

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

Personal life

Markopolos is an American chide Greek descent and is illustriousness eldest of three children as a result of Georgia and Louis Markopolos, Greek-American^[61] restaurateurs.

His father and cardinal uncles once owned 12 Character Treacher's Fish and Chips restaurants in Maryland and Delaware. Reward younger brother, Louie, once managed the trading office for neat as a pin New Jersey brokerage company. Perform has a sister, Melissa.^[4]

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

Louis commission following in his father's follow to become a forensic banker. He is currently attending Bentley University as an accounting major.^[4] Harry served in the Combined States Army Reserve and erred the rank of Major careful held the branch of Secular Affairs. ^[63]

Bibliography

Markopolos's account of blue blood the gentry Madoff scandal was published groove a book titled No Reschedule Would Listen: A True Commercial Thriller. The book was out in 2010.^[64]

Filmography

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

References

External links