Deceit and betrayal

Hoboken author/Times writer discusses her book about Madoff

Best-selling author and Hoboken resident Diana B. Henriques will appear at the Hoboken library on March 28 at 6 p.m. for a free lecture to discuss her recent book about disgraced financial advisor Bernie Madoff. The book is called “The Wizard of Lies: Bernie Madoff and the Death of Trust.”
After pulling off the largest Ponzi scheme ever, Madoff, a former Wall Street tycoon, was arrested in December 2008 and later sentenced to 150 years in prison. Dozens of his clients lost money due to his schemes. Madoff pleaded guilty to all 11 federal felony charges filed against him including money laundering and perjury and securities fraud.
As a senior financial writer at the New York Times, Henriques covered the events as they unfolded and began working on her book from the moment Madoff was arrested.
She drew on hundreds of interviews and extensive documentation to put together a financial thriller that takes readers through the day-to-day details of what transpired as Madoff’s grand scam came crashing down around him.
She even had the opportunity to interview Madoff face to face in prison. Her book tackles myths about the scandal, in particular, misperceptions people have about Ponzi schemers. She also addresses whether the victims knew about the scams.

A betrayal of great proportions

“The story hooked me from the very first night,” said Henriques. “Initially as a financial fraud story, it was off the charts, the biggest Ponzi scheme by any measure – $65 billion in loss, $20 billion in cash. We knew that this immensely respected Wall Street statesman had been turned in by his sons.”
Madoff defrauded thousands of investors, including major corporations, charities, and retired school teachers. No one escaped Madoff’s betrayal, including his own family. In December of 2010, his elder son committed suicide.
The Bernie Madoff saga is one that Henrique characterizes as “Shakespearean, even biblical.”
She said a major draw to the story is that everyone knows what it feels like to be betrayed.
“All of us can imagine what it is like to stand in the shoes of a Madoff victim,” said Henriques. “These are timeless stories about how we decide who we trust and how we recover once our trust is betrayed.”
Named after Charles Ponzi who became famous for the technique in 1920, a Ponzi scheme pays returns to its investors from their own money or money paid to the operation by future investors instead of from real profits earned.

Not your average Ponzi schemer

“If you were to meet him at a party, I’m not sure you’d remember him the next day,” said Henriques. “Most Ponzi schemers are social, buying drinks for everyone. They are charismatic and outgoing. That is not Bernie Madoff. He is reserved, cool, plain-spoken and a little self -deprecating.”
In her book she writes that he wasn’t out to impress people, and it was this trait that impressed them. While most Ponzi schemers try to make their victims believe that they are the smartest guy in the room, Madoff acted like the person he was talking to was the smartest person in the room, according to Henriques.
She noted that during her interview with him in prison, he dropped a lot of comments and had a way with flattery, which had a powerful effect, and was one of the reasons he was able to so convincingly win people’s trust.
“He reinforces your own confidence in yourself so that in turn you trust your decision to trust him, which is of course your fatal mistake,” said Henriques.

“The only person who can steal from you on a Ponzi scheme is someone you trust.”– Diana Henriques

Destruction of trust

Many people wonder how Madoff was able to pull off a scheme of such depth and global scale, and how victims involved in the scheme never caught on. Henriques said that most people falsely believe that it is easy to catch a Ponzi schemer.
“When it comes to Ponzi schemes, if it sounds too good to be true, you are dealing with an amateur,” said Henriques.
She said that the job of a Ponzi schemer is to seem trustworthy. Henriques said that once people trusted Madoff, they were unable to pick up on red flags that should have brought the scheme to light.
“We all have blind spots about people we trust,” said Henriques. “The only person who can steal from you on a Ponzi scheme is someone you trust, and that is what makes it so devastating…it destroys your faith in trust itself.”
She said she primarily hopes people will emerge from reading the book better able to understand the magnetic charm of the Ponzi schemer and how to protect themselves, but to also think about what we as a society can do to protect ourselves from Ponzi schemers.

On the writing process

Henriques said writing “The Wizard of Lies” occupied every free minute she had over a three-year period. She began writing the book in October 2009 and made the latest update just at the end of February for the paperback edition, which will be out in May.
She did double duty between her work reporting for the Times and the work on the book. She had help from two researchers who tracked down individuals for interviews. She said that every detail that could be documented has been.
“It occupies every spare moment on your calendar. It occupies the central real estate on your mind. You dream about it,” said Henriques.
Born in Texas but raised mostly in Roanoke, Va., Henriques is a Phi Beta Kappa graduate of what is now the Elliott School of International Affairs at the George Washington University in Washington. While a student there, she met and married her husband. They have been together 40 years.
They moved to Hoboken in 1988 from Lawrenceville, N.J. She joined the Times in October 1989 after almost 20 years’ experience elsewhere—as a government reporter at several New Jersey newspapers and as a financial reporter for The Philadelphia Inquirer and Barron’s magazine.
She found Hoboken conveniently situated between her job in Manhattan and her husband’s in Central New Jersey.
Henriques said that Hoboken is a wonderful place for a writer.
“In the depths of my work on the Madoff project, I’d take a break for coffee near our house at Maroon and feel refreshed by the vitality of the spot,” said Henriques. “On the night I signed my book contract, we celebrated at Amanda’s, and the wonderful Eugene Flinn [the owner] remembered that and hosted a lovely party for me when the book finally came out. It is a town big enough to attract a lot of writers – and small enough to make them all feel special!”

Adriana Rambay Fernández can be reached at


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