Client Learns Madoff Returns Worthless
JACKI LYDEN, host:
Another financial calamity came to light this week, one that left investors with $50 billion worth of nothing. It's the biggest Ponzi scheme fraud in financial history. The man behind it, Wall Street money manager Bernard Madoff. He's a former chairman of the NASDAQ Stock Exchange, and he was arrested Thursday after confessing that his investment fund was, to use his words, one big lie.
His clients woke up yesterday morning to massive losses - hedgefunds, big universities, social climbers from Park Avenue to Palm Beach, and at least one former model. That's Barbara Flood. She's a stylist and designer in Manhattan, and she won't say exactly how much she's lost. The problem, she says, isn't just the money.
Ms. BARBARA FLOOD (Stylist and Designer, New York City): The thing for me about Madoff is the shock of people who knew him, and they were so friendly with him, as I was, could turn around and do something like this. I'm still quite stunned about the whole thing.
LYDEN: About what seems like a betrayal.
Ms. FLOOD: Absolutely. I mean, I dress a lot of people, and I style for people, and his wife was one of the people who I worked with and his brother's wife, also. So I knew them. I knew them very well.
And my uncle brought me to see him, and I didn't have the kind of money that people had to invest, and my uncle said, I think you should be with this man because this man never loses, you know, any money. So I said, OK.
And we started slowly and sure enough, he didn't lose any money, I thought, up until a few days ago, when I came home to three phone calls, you know, from my lawyer, from my accountant, from somebody in Palm Beach.
LYDEN: Investing with him was prestigious, wasn't it? I mean, didn't one have to be invited?
Ms. FLOOD: Yes. Why? I don't know. But it was the best thing in New York City was to try to get into Bernie Madoff. And to make enough money that you could get to go into Bernie Madoff because he only took people, this was not me because he did it as a friend, but he only took people that had a million dollars. And everybody wanted to be there because nobody thought that they would ever lose any money.
LYDEN: What did your statements show? How did it work? Did you make money all along?
Ms. FLOOD: You made money all along. The statement was a series of stocks that went up or down. And so, there were about 50 stocks, and you'd get a statement once a month. You could never talk directly to Bernie Madoff. He was not available, even to friends - I mean even to me, he was not available. And you'd get a statement, and you couldn't read the statement. And nobody could understand what the statement said.
But after trying to figure out apples and oranges, you know, my accountant would say, well, the thing is, he's always making money. And always making money sounded very good to all of us, especially at a time when you're trying to grow your little puske, you know. I was trying to grow my modeling money into something better, so when I finished modeling and started to do other things, it would really help.
On paper, I grew it. Now, I'm not sure. But if I asked for $10,000 or $15,000, I would get it within three days, you know. So did he actually invest in stocks? Could he possibly have done this on his own without that entire staff knowing about it? These are all questions that I'm sure all of us are asking today. And will we ever get an answer? I don't know.
LYDEN: Is everyone phoning everyone else? Are you phoning other friends?
Ms. FLOOD: Yes. I mean, we're phoning other friends, and I have some other relatives through that same family connection who put a little bit of money in. But they, in fact, put money in, and they lost everything. Nobody, even though we thought it was strange, nobody ever really sat down and said, wait a minute, this doesn't make any sense until now. The bottom question is, will any of us ever see our money again?
LYDEN: Barbara Flood is one of the thousands of victims who've lost money in the Bernard Madoff investment scandal, and she joins us from New York. Thank you very much for being with us, Barbara.
Ms. FLOOD: Oh, thank you so much, Jacki.
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