What Bernie Madoff might have been thinking

The psychic recompense that we expect from following a sordid story like Bernie Madoff’s has yet to come to be realized. Some minor justice will be done by locking him away forever. But we have only a murky idea of another burning issue: What lurked in his criminal mind? This question is more than academic for many financial advisors. I have spoken to reputable financial advisors in Florida who get questioned directly by clients about the safety of their funds. On Oct. 4, 60 Minutes aired an interview with a white collar thug named Marc Dreier who only managed to make off with $400 million. He’s a second-rate Madoff perhaps but his interview answers provide insight of the first order into what a rat is thinking when he smells the cheese.

Here is part of the interview as excerpted form a CBS News article entitled: Marc Dreier:The Mind of a Swindler. The interview was done in collaboration with Vanity Fair magazine.

Qustion: Steve Kroft , correspondent for 60 Minutes asks how Dreier was able to go about living his life with every appearance of normalcy while he was bilking people of millions of dollars and spending the money on his own lavish lifestyle?

A: Dreier: “I was doing alot of things at the same time…I was engaged in a fraud which took an enormous amount of energy to sustain. But I was also running a law firm…I was so busy during the day sustaiaining the legitimate things in my life that I almost didn’t have time to dwell on the elephant in the room. Which was the crime I was engaged in to keep this all up,” he told 60 Minutes.

Q: Kroft asks why he did it?

A: “I was very disappointed in my life. I guess some people would say maybe alot of men reach a so-called mid-lfe crisis. I was 52. I felt I wanted my life to be more successful than it was and I saw this as the opportunity to do that in a very obviously shortsighted, foolish and selfish way. I had never done anything illegal before but I remeber being in a place in my life where I was perhaps desperate to better myself and to make a place for myself.”

Q: Kroft’s questioning leads to Dreier talking about the secret to his criminal success?

A: “It was clear to me that the more you showed people you didn’t need the money, the easier it was to attract money.” He adds: “The more money you look for, the fewer questions people ask sometimes.”

(Dreier showed people that he didn’t need money by spending his ill-gotten gains on an $18 million yacht. It went nicely with his $11 million Long Island waterfront compound and his $10.5 million New York apartment, which contained a $40 million art collection, according to the story on the CBS News website about the 60 Minutes interview.)

Q: Dreier got his hands on the $400 million by borrowing it under false pretenses. Confronted by the lender over late payments on a $100 million loan from Sheldon Solow, Dreier told Kroft that he was still unworried.

A: “That’s called chutzpa…not emotion…Do I have chutzpa? Yes. Can I be very tough under pressure? Yes. So was I able to go into Mr. Solow’s office and pull off the charade without falling apart? Yes. Did I think I could do that? Yes, because I had done things that required nerves of steel before. You start with something you think is manageable and small. You know it’s wrong but you think you can fix it. And you can’t get out of it. it became quicksand.”