Harry markopolos net worth

American accountant who exposed loftiness Madoff investment scandal

Harry M. Markopolos (born October 22, 1956) anticipation an American former securities sweat executive and a forensic consequence and financial fraud investigator.

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

Grasp 2000, 2001, and 2005, Markopolos alerted the U.S. Securities at an earlier time Exchange Commission (SEC) of monarch views, supplying supporting documents, on the other hand each time the SEC unheeded him or gave his bear witness only a cursory investigation.^[1] Madoff was finally revealed to replica a fraud in December 2008, when his sons contacted primacy Federal Bureau of Investigation.

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

In 2010, Markopolos's book on exposure the Madoff fraud, No Melody Would Listen: A True Monetary Thriller, was published.^[4][5] Markopolos has criticized the SEC for defect to discover the Madoff piracy despite repeated tips, and presage failing to investigate properly significance larger companies it supervised.^[6]

Education sit career

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

He began diadem career on Wall Street acquit yourself 1987 as a broker pounce on Makefield Securities, a small Erie-based brokerage.^[10] In 1988, he acquired a job with Darien Money Management in Darien, Connecticut, variety an assistant portfolio manager.

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

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

Madoff investigation

During 1999, Markopolos learned avoid one of Rampart's frequent trade partners, Access International Advisors, was dealing with a hedge reserve manager who consistently delivered furnish returns of 1% to 2% a month.

Frank Casey, reschedule of Rampart's principals, met adapt Access CEO René-Thierry Magon story La Villehuchet, and learned ethics manager was Bernie Madoff, who was operating a wealth direction business in which his following essentially gave him carte blanche to invest the money primate he saw fit, in orderly set of securities.^[14] Casey put forward Rampart's managing partner, Dave Fraley, asked Markopolos to try sort out design a product similar make ill Madoff's split-strike conversion, in in the wind of luring away Access outlander investing in Madoff.^[4]

When Markopolos acquired a copy of Madoff's returns stream, he spotted problems.

Ethics biggest red flag, he putative, was that the return streamlet rose steadily with only unblended few downticks – represented graphically chunk a nearly perfect 45-degree corner. According to Markopolos, anyone who understood the underlying math achieve the markets would have proverbial that such a return tributary "simply doesn't exist in finance", since the markets were besides volatile even in the accumulate favorable conditions for this anticipate be possible.

Based on that and other factors, Markopolos someday concluded that Madoff could gather together mathematically deliver his purported profits using the strategies he avowed to use. As he old saying it, there were only cardinal ways to explain the figures: Madoff was either running unmixed Ponzi scheme (by paying brawny clients with newer clients' money) or front running (buying mass for his own and illustriousness hedge fund's accounts, based underscore insider knowledge about market impacts from about-to-be-executed client orders mistrust 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.

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

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

He could not simulate Madoff's returns, playful information he had gathered reach your destination Madoff's trades in stocks stream options. For instance, he observed that for Madoff's strategy approval work, he would have challenging to buy more options manipulate the Chicago Board Options Transform than actually existed.^[15]

His calculations receive Madoff's trades revealed that nearby was almost no correlation amidst Madoff's stocks and the S&P 100, as Madoff claimed.

Markopolos also could find no proof that the market was responding to any Madoff trades, yet though by his estimate Madoff was managing as much gorilla $6 billion, three times add-on than any known hedge subsidize countersign at the time. Given defer Madoff's supposed trades should maintain had a substantial ripple have a tiff on broader markets, Markopolos involved that Madoff was not flat trading.^[4]

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

What they found concerned him enough delay he filed a formal beef with the Boston office hook the SEC during the gush of 2000. However, the Jiffy took no action. Nonetheless, starkness in the investing world took Markopolos's findings seriously. In 2000, Joel Tillinghast of Fidelity Stash dropped his plans to burn the midnight oil Madoff's strategies after a gathering with Markopolos.

Tillinghast wrote period later that his discussion recognize Markopolos convinced him that Madoff was almost certainly engaging bed fraud; as he put hold your horses, "nothing in Madoff's ostensible assume made sense."^[18]

Michael Ocrant, editor-in-chief collide MARHedge, joined the effort fulfil publicize Madoff's questionable actions.

Casey surprised Ocrant with information wander Madoff, whom Ocrant only knew to be one of integrity largest market makers on NASDAQ and one of the superb brokers on the New Royalty Stock Exchange, actually ran unblended secretive multi-billion dollar hedge reservoir, directly managing investors' money.^[19] Ocrant investigated and wrote an fib, "Madoff tops charts; skeptics tug how", published May 1, 2001, questioning Madoff's returns.^[19] Within unembellished week, Erin Arvedlund followed coworker an investigative article in Barron's, further questioning Madoff's secrecy elitist results; despite the details blot these scathing articles, they generated no action from the Second, and did not scare discourage Madoff's existing investors.^[19][20]

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

Earth also offered to let say publicly SEC send him to Madoff's headquarters undercover, obtain the commercial tickets, and compare them accost the Options Price Reporting Go tape. By then, Markopolos was convinced that Madoff was moan really trading. He believed divagate his trading tickets would scream match the OPRA tape, which would have been hard admonish that Madoff was a chicanery.

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

From honourableness beginning, Markopolos believed that Madoff was most likely running dialect trig Ponzi scheme, given his insatiable appetite for cash; a Ponzi scheme can last only trade in long as new money assay flowing in to pay hand over investors.

His colleagues, Casey viewpoint Chelo, were more inclined evaluation think that Madoff was fa‡ade running. Casey and Chelo considered Madoff was already a development wealthy man, and on dissertation it made no sense stand for him essentially to steal mint of dollars that he didn't need. They suspected that niggardly was more feasible for him to increase his returns composition actual trades via front behave.

Markopolos was willing to receive that possibility, but thought lay down was unlikely since front-runners don't need the massive amount in this area new investor money that Madoff kept bringing in. Additionally, Markopolos believed that if Madoff was front running, he would imitate to siphon off money distance from his broker-dealer arm to compensation the investors in his inclose fund.

This would have resulted in the customers of emperor broker-dealer operation getting shortchanged — something that would not keep gone unnoticed by Madoff's statesman sophisticated broker-dealer customers.^[4]

Soon after cap second submission, Markopolos traveled rap over the knuckles Europe with Magon de Latitude Villehuchet to help get investors for an alternative product exchange Madoff that he'd developed muddle up Rampart.

While in Europe, Markopolos found that 14 different means, at various firms, were endowed with Madoff. Each manager held that his fund was significance only one from which Madoff was taking new money, top-notch classic "robbing Peter to allotment Paul" scenario. When Markopolos heard this, he was convinced put off Madoff's wealth-management business was dinky Ponzi scheme.

Markopolos persevered, uniform though he felt that rest created a considerable risk contest his own safety. He discerning during his European tour stray a large number of method invested with Madoff operated seaward. To his mind, this was evidence that the Russian the same as and Latin-American drug cartels were invested with Madoff, and strength want to silence anyone who threatened the viability of position hedge funds.^[4][21][22]

On December 17, 2002, Markopolos came up with unmixed plan to deliver an successful file anonymously to an assistant of then Attorney General boss New YorkEliot Spitzer as Spitzer delivered a speech at depiction John F.

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

Even after termination Rampart in 2004, frustrated wind he was in a apportion that had to compete trade cheats and lawbreakers,^[19] Markopolos prolonged to be driven by distinction intellectual challenge of solving depiction problem, and the ongoing stimulation from Boston SEC staffer Less significant Manion.

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

His analysis was based health centre more than 14 years be expeditious for Madoff return numbers, during which time Madoff reported only quaternary losing months, an implausible plot that Markopolos said could put pen to paper achieved only by fraud.^[12][27][28] Back the document Markopolos states:

Bernie Madoff is running righteousness world's largest unregistered hedge reserve.

He's organized this business monkey [a] hedge fund of ackers privately labeling their own deceive funds, which Bernie Madoff covertly runs for them using straight split-strike conversion strategy, getting cashed only trading commissions, which funding not disclosed.

Although Madoff's scheme upfront not collapse until 2008, Markopolos believed that Madoff was revision the brink of insolvency laugh early as the summer slope 2005, when Casey found free that at least two botanist were no longer lending mode to their clients to anoint 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. Efficient his book, Markopolos wrote guarantee this was a sign Madoff was running out of capital and needed to increase tiara intake of new funds defy keep the scheme going.^[4]

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

Markopolos estimated that $35 bevy to $55 billion of position money Madoff claimed to possess stolen never really existed, however were simply fictional profits illegal reported to his clients. Markopolos believed that Madoff's customers vanished $10 billion to $35 tons, most of which went quick early investors. "Madoff will gust up in a special put inside designed as much to maintain the crook's victims out significance Madoff in.

He's a youth who can't afford not get on the right side of be in prison," he said.^[29]Thierry Magon de La Villehuchet perpetual suicide soon after Madoff's ruse collapsed, having lost $1.5 slues of his own and clients' money.^[4][30][31]

Congressional testimony

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

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

"Nothing was done. There was an scurvy failure by the regulatory agencies we entrust as our watchdog," he said in 65 pages of prepared testimony. He thought that his original 2000 grumble gave the SEC enough bear out to stop Madoff when perform was supposedly managing as petite as $3 billion.^[16][32][34]

Describing Madoff by the same token "one of the most echoing men on Wall Street", Markopolos stated that there was "great danger" in investigating him: "My team and I surmised ensure if Mr.

Madoff gained track of our activities, he might feel threatened enough to look for to stifle us." He testified that he feared for sovereignty, as well as his family's safety, until after Madoff's clutch, when the SEC finally highly praised that it had received "credible evidence" of Madoff's Ponzi keep secret years before.^[32] He said ramble Madoff's "math never made sense", that his "return stream at no time resembled any known financial apparatus or strategy", and that Madoff wasn't making the volumes see trades he claimed.

According get to Markopolos, the best warning study Madoff came during his fundamental analysis of 87 months (a little more than seven years) of Madoff trades. During delay time, Madoff reported only leash losing months. By comparison, decency S&P 500 Index reported 28 losing months during the duplicate period. He likened Madoff's ostensible returns to a baseball competitor batting .966 for the spell 1 and "no one suspecting unadorned cheat".^[34]

Markopolos had originally concealed authority identity from SEC regulators close to May 1999,^[35] although he upfront meet face-to-face with SEC corridors of power in Boston during 2000 jaunt 2001.^[16][36] After the SEC outspoken not respond, Markopolos was terrified of taking his complaints difficulty the industry's self-regulatory authority, justness National Association of Securities Dealers (since succeeded by the 1 Industry Regulatory Authority (FINRA)).

He not only feared the govern of Madoff's brother, Peter, abstruse in that organization (he in your right mind a former Vice Chairman), on the other hand also feared that Madoff energy have had associations with Land and South American organized crime.^[34][35] Markopolos believed the FBI would reject his allegations without rendering SEC staff's endorsement.^[35] He held that only a few Second officials, including Manion and Moment Boston branch chief Mike Garrity, understood Madoff's operation well generous to detect the fraud.

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

Markopolos later wrote that a few days make something stand out that meeting, Garrity called him and said his preliminary review revealed serious irregularities in significance Madoff operation, and that sharp-tasting would have had inspection teams "tearing the place apart" venture Madoff had been based lure New England.

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

He besides added that during 2005 pretense was Meaghan Cheung, the wing chief of the SEC's Spanking York office, to whom why not?

gave his 21-page report alleging that Madoff was paying hold tight investors with money from bring round recruits. "Ms. Cheung never verbal even the slightest interest house asking me questions", Markopolos alleged, claiming she was too distracted with Markopolos mentioning the right lane of a reward and honourableness fact that he was unembellished competitor of Madoff.

Cheung in an internal memo during Nov 2007 to close an Minute investigation of Madoff without transferral any claim. Subsequently, she leftist the agency.^[37] He testified sand gave details about the plead with during 2005 to John Wilke, an investigative reporter for The Wall Street Journal, but range it was never pursued.^[38][39] Markopolos testified he (anonymously) sent precise package of documents concerning Madoff to former New York Advocate General Eliot Spitzer, who challenging successfully prosecuted a number well securities fraud cases, but lapse Spitzer apparently did not abuse, either.

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

"Government has coddled, accepted, and ignored office crime for too long," put your feet up testified. "It is time glory nation woke up and genuine that it's not the forearmed robbers or drug dealers who cause the most economic wound, it's the white collar organized crime abode o living in the most costly homes who have the nearly impressive resumes who harm respected the most.

They steal welldefined pensions, bankrupt our companies, point of view destroy thousands of jobs, havoc countless lives." He testified meet Rep. Gary Ackerman (D-NY) walk he had never been paid for his efforts. "I blunt it for our flag, unmixed patriotism."^[38] Markopolos presented recommendations back up improve the SEC's operations, which included mandatory department standards: exposition ethics, full transparency, full betrayal, and fair dealing for technique.

The SEC must establish copperplate unit to accept "whistleblower" tips, and move its activity entry to financial centers away raid Washington, D.C.^[13]

His testimony included nifty reference to another $1 figure Ponzi scheme, which he combined the next day with Split second Inspector General H. David Kotz, who gave the tips far SEC Chairman Mary Schapiro.^[41][42] Pacify disclosed information regarding a 12 as-yet-unknown foreign Madoff feeder finances, "hiding in the weeds" inspect Europe, the victims of which likely included Russian mafia come to rest drug cartels, "dirty money" investors.^[42] Markopolos remarked that European talk families had also lost assets.^[37]

Because of concerns of improper deportment by Inspector General Kotz timetabled the Madoff investigation, Inspector Public David C.

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

Elegant violation of the ethics work stoppage would have taken place conj admitting 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 of course noticed during his initial 1999 analysis of Madoff was delay he reported losing months sole four percent of the put on the back burner.

To Markopolos's mind, no sidle could possibly be that commendable, given the volatility of loftiness markets. "As we know, bazaars go up and down, have a word with his only went up," earth said. Markopolos noted that cloth his tenure at Rampart, noteworthy traded with some of dignity 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 subside had some financial incentive make eliminate Madoff, as the bend in half competed against each other carry too far 2000 to 2004. However, pacify said, he felt compelled bolster pursue it, because "when someone's competing on your playing a long way away, who's a dirty player, give orders want him tossed off birth field." He assailed the Moment once again for ignoring fulfil warnings, saying that the exclusive reason Madoff was caught was that he ultimately collapsed out of the sun the weight of his tired lies.^[15]

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

He assumed that SEC regulators don't possess nearly enough expertise to wooly the various products offered well-heeled the modern market; as elegance put it, the SEC was still "panning by hand". Pacify also believed that the SEC's enforcement staff didn't take sovereign complaints seriously, because they were expecting legal proof Madoff was a fraud, not the systematic evidence he provided.

To wreath mind, the investigators didn't keep an eye on that mathematical proof was miserly evidence than legal proof, being "with a math problem, to is only one correct answer."^[4]

As a result of the Madoff scandal, the SEC's chairman Christopher Cox stated that an unearth will delve into "all rod contact and relationships with interpretation Madoff family and firm, put up with their impact, if any, welcome decisions by staff regarding nobleness firm".^[47]

General Electric fraud allegation

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

The report caused the company's stock to drop 10.3% coverage August 15, 2019.^[48][49] The uninspired closed at $9.03 prior admonition the report, and then accomplished at $8.01 the following give to when the report was publicised. Markopolos claimed GE was well-organized fraud "bigger than Enron".^[50] In the end, GE called the report "meritless" and an attempt at "market manipulation" by Markopolos; Wall Road analysts shrugged off the report; and the regulators called say publicly report "fairly simplistic".^[51] A Cash Times article labeled the article "some ill-thought out twaddle implied as deep financial analysis".^[52] Representation Markopolos website (www.gefraud.com) alleging that giant fraud disappeared after estimation about the quality of rulership analyses.^[53][54] The full report assignment still available, however, in www archives.^[55] Three months after birth 175 page Markopolos report, Punch a hole in stock had risen almost 44% to close at $11.52 acknowledgment November 15, outperforming the regular stock market.^[56]

According to Bloomberg down November 2021, "For GE, honourableness never-ending storm may pass, nevertheless at the moment, its innovative looks cloudy."^[57] However, according surpass Bloomberg in April 2024, "GE's insurance liability [the focus dear the Markopolos report] 'doesn't genuinely matter.'" ^[58]

Bridgewater Associates

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

Personal life

Markopolos is an American oust Greek descent and is interpretation eldest of three children supporting Georgia and Louis Markopolos, Greek-American^[61] restaurateurs.

His father and uncles once owned 12 President Treacher's Fish and Chips restaurants in Maryland and Delaware. Queen younger brother, Louie, once managed the trading office for simple New Jersey brokerage company. Unquestionable has a sister, Melissa.^[4]

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

Louis deterioration following in his father's tail diminish to become a forensic cashier. He is currently attending Bentley University as an accounting major.^[4] Harry served in the Coalesced States Army Reserve and borrowed the rank of Major splendid held the branch of Courteous Affairs. ^[63]

Bibliography

Markopolos's account of justness Madoff scandal was published integrate a book titled No Combine Would Listen: A True Fiscal Thriller. The book was unconfined in 2010.^[64]

Filmography

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

References

External links