Too Good to Be True - Arvedlund's In-Depth Look at Madoff

"Too Good to Be True" is a new book by Erin Arvedlund which chronicles the catastrophic fraud committed by Bernard Madoff over the last no-one-knows-how-many years.

Arvedlund wrote a Barron's article back in 2001 called "Don't Ask, Don't Tell" questioning the magical returns of Madoff's so-called "hedge fund," which is now widely accepted to have been the largest, most outrageous, most ginormously craptastic, how-do-I-express-without-cursing Ponzi scheme in history.

"Her article in Barron's, based on more than one hundred interviews, could have prevented a lot of misery, had the SEC followed up," boasts the jacket of her new book "Too Good to be True," which was released August 11.

I didn't know what to make of the book at first; it seemed to read somewhat Biblically -- a lot of begetting (who Madoff knew, how he knew them, etc.) and not a lot of action. For the first 100 pages or so I kept thinking "Arvedlund had better sex this up," especially considering the number of other books on Madoff, including the highly anticipated "Madoff's Other Secret: Love, Money, Bernie, and Me" by his mistress, Sheryl Weinstein, released August 25.

Well, if money is your porn, you won't get through this book without removing an article of clothing.

The book slowly becomes a whodunit, naming both names and numbers and ultimately presenting the unsatisfying fact that Madoff got away with one of the oldest tricks in the book -- the same trick relied upon by everyone from white collar criminals to wedding crashers and underage drinkers -- he pretended nothing was wrong, and so nobody asked him any questions.

As the story picks up, it becomes the heroic tale of Harry Markopolos, whom Arvedlund wisely and perhaps correctly dubs an Everyman; "a straightforward American guy who liked numbers." This man practically gift-wrapped red flags and hand-delivered them to the SEC for a decade preceding Bernard Madoff's arrest. Reading, I felt a discouragement with our country's level of corruption I haven't felt since I watched Michael Moore's damning portrait of war and the oil industry, "Fahrenheit 9/11." The SEC was created during the Great Depression to regulate our financial industry, but, according to Arvedlund, it's being run by a bunch of early-career lawyers who don't want to step on anyone's toes -- and who were getting their financial advice from Uncle Bernie himself.

The book has no mercy on Madoff -- there is no point at which we are expected to believe in him. It simply relays the facts like an obituary; one which gets juicier and juicier as it exposes the cyclone of fraud which took place. It was executed in such simple and easily understandable ways -- virtually the whole scheme seems to have relied upon Madoff's refusal to upgrade an archaic computer system which required one to enter stock price data manually. "Entering the data by hand [Robert] MacMahon noted, meant that the person doing it could put in whatever they wanted," writes Arvedlund. As you probably already know, Bernie found himself in the business of making up numbers. The book purports that he created monthly statements by going back over the last month's market and seeing what he would have had to trade to make the profit he claimed to have made (which I'm guessing someone else probably did for him while he was in France, buying his third boat).

The book recounts the aftermath well; the suicides, the testimonials in court (left me wanting more), and delicately suggests other individuals who could be to blame; for example Michael Bienes, who did a lot of recruiting for Madoff -- a pointed final statement in the section about him says "At the time of this writing, no one has sued Bienes over his ties to Madoff."

"Too Good to Be True" will appeal to both the savvier members of the financial community who knew (or should have known) better than to trust Madoff, and to the underdogs and mom-and-pops who were (or might have been) swindled. The lesson is clear: no one should be so well-respected that they don't have to answer questions, and if everyone pretends they understand something they don't so as to appear sophisticated, or they accept being kept in the dark about the means so long as the ends are 10-20+ percent, villains like Madoff will always be able to take advantage of that pride and greed -- not to say that his victims were guilty of either; it's the feeder funds and his recruiters at whom we should all be looking. And, of course, probably his family and everyone else who worked alongside his IBM AS/400.

In these economic times, most of us have had a taste of what it's like to lose money, and it's easy to identify with Madoff's victims. I found myself choked up at the end of the book -- not because the damages will perhaps never be repaid, not because our country seems to constantly wager the well-being of its citizens (I'm speaking of the SEC dot gov's alleged shameless favoritism), but because although he was one of the most well-connected, powerful, and untouchable figures in the world, they got him. It took the collapse of the financial market, but they finally, finally got him.

Well done to Arvedlund for telling the story clearly and with more facts than most of us knew were available. "Too Good to Be True" is available from Amazon for $17.13.