No One Would Listen: A True Financial Thriller by Harry Markopolos (rainbow fish read aloud .txt) 📗

his government health insurance for three more years until he reached retirement age. Segel assured me that nothing would happen to Manion. He and Ed had been friends for a long, long time, he told me, and Barney Frank also knew and respected Ed. That made me feel a lot better. The last thing I wanted was to see a man I considered a hero retaliated against for doing his job, for standing up for investors.

I also explained that I did not feel comfortable testifying before President-elect Obama took office in just a few weeks. I knew that what I was going to say would reflect very badly on the Bush administration, and an administration in its dying days was prone to do anything to avoid being embarrassed on its way out the door.

Then I made one additional request. I told Jim Segel that I had several quitam cases under court-ordered seal against major financial institutions for stealing from the government. As such, I needed to have two attorneys at the witness table with me, not the one attorney that House rules allow. One attorney, Phil Michael, would be there to represent the government’s interests in those cases. Gaytri Kachroo would be on my other side and she would be representing me personally. That wouldn’t be a problem, Jim replied.

Two days after that meeting, the day after Christmas, the SEC’s inspector general, David Kotz, called to introduce himself. Kotz had joined the SEC almost exactly a year earlier, after leaving his private law practice to become the inspector general of the Peace Corps. I didn’t know much about him, although people I respected told me he’d done a good job in a short time. Kotz then asked if I would be willing to cooperate with his investigation. He had been given a mandate to investigate the SEC’s failures in the Madoff case, he explained, and make the appropriate recommendations to fix what was broken. He told me he intended to make sure that the culture inside the agency that had allowed Madoff to survive would be changed.

Kotz sounded sincere, but it would be a stretch to say that I trusted anyone or anything inside the SEC (except Ed Manion and Mike Garrity, of course). I didn’t know Kotz, and I didn’t particularly like the concept of a government agency investigating itself. That’s not exactly a recipe for good government. I didn’t say no, though; instead I suggested he contact my attorney to see what we could work out.

Gaytri Kachroo was still in India, and Kotz reached her while she was at a dinner at the old British Turf Club. She walked outside into a gorgeous night and stood on a beautiful moonlit green while they spoke. The whole situation was surreal; two weeks earlier she had never even heard of Bernie Madoff, and now she was in India, representing a key player in what was being described as the greatest financial crime in history. Although she had traveled to India to attend a conference focusing on business opportunities emanating from the new nuclear agreement between the United States and India, she immediately decided to cut short her trip to return to Boston and help me prepare my testimony for the congressional hearing.

Gaytri, who was representing me personally on my False Claims Act cases, quickly got permission from the law firm she had recently joined, the Boston office of McCarter & English, to also represent me—pro bono—for these government hearings. It was very gracious of that firm, and I would estimate that over the next few months McCarter & English would absorb over $100,000 in legal fees. Burt Winnick, the managing partner of McCarter’s Boston office, told me he personally knew dozens of victims, so he felt obligated to help out. During our first meeting, several partners made a point of coming into the conference room to shake my hand, and each of them promised to do everything in their power to assist me in getting ready to testify.

Gaytri’s concern, beginning with this phone call from Kotz, was to protect me and to protect the other cases I was working on. All my other cases were under seal, meaning I could not talk about them publicly, and she wanted to ensure that those cases were not jeopardized. At that time we weren’t certain what kind of investigation Kotz intended to conduct. If it was going to be a whitewash or a cover-up, if low-level employees were going to get blamed, if Kotz was going to try to describe this as an anomaly rather than a systematic failure, I didn’t want anything to do with him. But if he was serious, I wanted in.

Kotz wanted to meet with me while I was in Washington to testify. Gaytri gave him a firm lawyerly nonanswer, telling him we would absolutely consider it. But almost immediately she ended her trip and returned to Boston.

During one of her subsequent conversations with Kotz, he asked for copies of all the documents I had previously provided to the SEC. That set Gaytri’s antenna straight up. “Why do you need all that material?” she asked. “Didn’t you already get them from the SEC? They have everything Harry’s submitted.”

Kotz’s answer to that was our first hint that he might be serious about going after his agency. They do have the documents, he agreed, “But to tell you the truth, I have no idea what the SEC is going to give me.” That was the moment that Gaytri and I began to believe he was earnest about investigating his own agency.

That was a stunning admission. The SEC’s own inspector general did not trust his agency to provide him with a complete set of my documents. It meant that Kotz was suspicious that there was a cover-up taking place inside the agency. If that was true, my papers would help him expose it. So we agreed to provide him with copies of all my submissions and supporting materials—but we did so only