Stroking clients’ vanity

“What was Bernie Madoff’s secret charisma?” I asked best-selling author Diana Henriques, over cocktails last week.

We were chatting at a gathering of the New York Financial Writers Association, a group of journalists who had assembled to hear her comments on her latest book, The Wizard of Lies.  Henriques, a senior business reporter for the New York Times, obtained two prison interviews with Madoff. (She recounted how, having conducted over a hundred background interviews, it was a journalistic relief, at the 11th hour, to be allowed to meet the Wizard himself).

Henriques answered that, unlike most Ponzi schemers, Madoff did not try to impress with how intelligent or able he was. On the contrary, she said, “his entire emphasis is on you, to make you feel you are the smartest person he’s ever met.” She added that, by implication, his listener might find it hard to resist trusting such excellent judgment!

Was Madoff equally adept at dissembling to those closest to him? That remains one of the burning questions still unresolved in the mystery. During her presentation last week, Henriques said she does not believe his wife or sons were complicit. 

Yet he pulled the wool over so many eyes, as Henriques discussed in a television interview in 2009.  To a degree, she attributed investors’ naivete to the zeitgeist: “The mystique of a world full of Warren Buffetts, a world full of geniuses who could make money for you had become so embedded in the financial psychology.”

Henriques, who has covered the Securities and Exchange Commission for over 30 years, also tried to put the agency’s apparent neglect in context. In the laissez faire political environment, of both Bush and Clinton administrations, the commissioners and chairman reflected the hesitation to spend public money on “imposing ruinous fines” and pursuing “minor technical violations.”

What drove Madoff to cross the line? According to Henriques, two of the master criminal’s salient traits are that he (1) covets the spotlight and (2) hates to be seen as wrong. If so, he demonstrates a mighty act of ego suppression every time he woos his listeners by flattering theirs’.


Vanessa Drucker is the American Editor of Fund Strategy, based in New York City.  She has worked as a financial journalist for 20 years. In the 1980s, she practiced banking and securities law on Wall Street, and is the author of two business novels. Vanessa can be contacted at