Bernie Madoff is facing a long stretch in prison for bilking investors out of $50 billion, and plenty of theories have been batted around as to what might have motivated Madoff to carry out his devious scheme. Was it just about the money? Did he feel any sense of shame as he ripped off hundreds of investors and non-profits? And will there be any sort of redemption for Madoff at the end of the day? To get a little perspective on what it's like to carry out a massive financial fraud, keep the scam going undetected for years, eventually get caught, and then account for the wrongdoing, we turned to someone who's been through all that (and more): Sam Antar, who, along with his cousin Eddie Antar, built Crazy Eddie into a electronics powerhouse in the '70s and '80s until the company came crashing down and the Antars were indicted on a variety of charges.
If you weren't in NYC and watching local TV back when Crazy Eddie was in business (or you weren't born yet), Crazy Eddie was a chain of discount electronics stores, although it was best known—and remains famous on YouTube—for its legendarily hilarious TV commercials. (See here.)
The Antars took the company public in 1984. But by 1987, it had imploded amid charges the Antars were involved in money laundering, violating securities laws, skimming profits, paying employees off the books, and a long list of other crimes large and small. Eddie Antar escaped to Israel using a fake passport; he was later extradited back to the U.S, sentenced to eight years in prison, and ordered to pay $150 million in fines. Sam agreed to cooperate with the government and spent six months under house arrest, which, Sam would have you know, isn't nearly as painless as it might sound "when you're locked up inside with a wife and three kids."
Sam has since reinvented himself as a "fraudbuster," and he regularly speaks to groups about how white-collar schemes prosper. (He also posts his musings on the subject on his appropriately-named website, WhiteCollarFraud.com). He told us he wasn't in the least bit surprised to see men like Bernie Madoff in the news. "People think this is new. It isn't. These things don't happen in a day. They build up over years and when a bad economy comes along, it flushes them out like the tide. For us, it was when the electronics business tanked. These scams have been happening since, well, forever."
Perhaps the only thing that did surprise him was how quickly Madoff confessed. "I'm guessing he probably panicked. But that was a huge, huge mistake. It's the cardinal rule. You always keep your mouth shut." Antar isn't convinced that money was the primary motivation for Madoff. "Money is a major incentive, sure. But it often happens to create a false public image." The scheme has to continue to prop up the facade, he says, and it's only when the plot is exposed that it comes to an end. "I'll be honest with you. If I did not get caught, I'd probably still be a criminal today."
Sadly, he doesn't have very encouraging words about what's to come. Frauds like these, he believes, will continue for many years, and the recent downturn in the economy is only going to expose more of them. On the subject of Madoff, Antar's equally pessimistic. "There is never any redemption. There's no happy ending to this. You want me to tell you that now I walk old ladies across the street? I can tell you that, and it might make you feel better, but it isn't necessarily the truth. It doesn't happen that way."
Is there any hope for Madoff? "Hope is great when you want to get laid. But there really isn't any for Bernie. He's going to die in prison."