I recently ran across a Financial Times interview with Bernard Madoff.   Madoff operated a Ponzi scheme that defrauded investors of 20 billion dollars, and pled guilty in 2009 to 11 felony counts.  He now is incarcerated in the federal prison in Butner, North Carolina, where the interview took place.  I was curious as to how Mr. Madoff would describe his crime.  Would he attempt to justify it in some way?  Would he try to pull others into the circle of blame?  Is he regretful or apologetic? 

Madoff began the interview by stating, “I take full responsibility for what I did. I was aware of what I was doing.”  That doesn’t mean he was contrite, though.  When asked his reasons for committing fraud, he mentioned his drive to succeed, something that he attributed to his modest beginnings and to always having been an outsider.  Indeed, his family wasn’t wealthy and his brokerage firm was capitalized mainly with a small loan from his father-in-law.  Though he eventually achieved prominence, he seems to have always viewed himself as a small-time operator distained by the powerful.  His firm soon attracted four prominent clients—Jeffry Picower, Stanley Chaise, Norman Levy, and Carl Shapiro—as well as a number of smaller investors.  Madoff claims that for a number of years he successfully invested his clients’ funds in a combination of stocks and hedges.  However, when market conditions changed so that his investing strategy didn’t work, he began using money from new investors to pay earlier investors.  He claims that he expected market conditions to improve so that he could return to earning legitimate returns, but that never happened. 

Madoff was initially at a loss to explain to the interviewers why he started defrauding investors. “I try to piece it together; why didn’t I say, ‘I cannot do it?’ Why didn’t I return the money to those four or five clients – and the others – and say, ‘I can’t do it.’ Why?” He eventually did give more of an explanation.  He claimed that it wasn’t about the money, but about ego.  At the time his deception started, he had finally reached the point where the powers that be in the financial community were showing him respect, and he didn’t want to lose that. 

If ego was Madoff’s problem, perhaps the humiliations he has suffered would benefit him by fostering humility.  Judging by the evidence in the article, though, his ego is still as inflated as ever.  He spread blame to his big four investors, saying that they “pushed me into it” and had to know something was wrong, making them complicit. He called Henry Markopolos–a hedge-fund manager who rightly accused him of fraud in 1999—an “idiot” who only filed a complaint because of his own inadequacies as an investor.  He boasted about his ability to convince knowledgeable and sophisticated investors that his operation was legitimate.  He delighted in having fooled SEC investigators who had received complaints about his firm.  His self-image seems to be that of the little guy who succeeded at fooling the powerful and by so doing exposed their weaknesses.  Thus, by his own convoluted scorekeeping, he won.  Though he is well aware that he deeply harmed hundreds of people who trusted him, his account of what he did contains more pride than contrition.

In my work many years ago as a prison psychologist and subsequent involvement in prison ministries, I noticed that, like Madoff, many inmates have large egos.  They don’t take responsibility for their deeds, or take partial responsibility but are eager to diffuse the blame.  They seek to enhance their status in prison society, whether through intimidating others, hustling, or gaining social acceptance.  They brag about their character (mostly about their virtues when they are talking to me, but probably about their vices when with their peers). Many times, as I interacted with yet another prideful prisoner, I was struck that even the indignities of prison hadn’t put a dent in the person’s defenses.

Of course its not just Bernie Madoff and his companions behind bars who trip over their egos.  Like Mr. Madoff, there have been things I’ve done because of concern for my reputation rather than because it was the right thing to do.  When I’ve made bad choices, like him I’ve looked for mitigating circumstances.  I point out others’ mistakes so I don’t have to bear the blame all alone.  I’ve been overly impressed with my successes and not as ready as I should be to take responsibility for my shortcomings.  Sure, there is a huge difference in the amount of damage inflicted by my ego and by that of Mr. Madoff.  Nevertheless, I can’t deny that the factors that motivated him are present in me.  Pogo’s insight captures the matter best: “We have met the enemy, and he is us.”