Author Jim Campbell on the 'untold story' behind Bernie Madoff

Jim Campbell, “Madoff Talks: Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History” Author, joined Yahoo Finance Live to discuss his new book and his inside look at Bernie Madoff.

Video Transcript

ADAM SHAPIRO: Bernie Madoff died two weeks ago, but Jim Campbell, the author of "Madoff Talks, Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History" is joining us now. His book is coming out this week. What new can you possibly tell us? I mean I thought it had all been written. We've had Diana Henriques on. What did you uncover?

JIM CAMPBELL: OK, thanks for having me on, first off. The book is actually coming out tomorrow from Mcgraw-Hill, so we're very excited and honored to be on your show. And I can tell you right now, people are going to be fundamentally amazed by how little they know of this entire story. Bernie did not act alone. The regulators and the entire systemic failure was complete from Wall Street to the feeder funds to the regulators to [INAUDIBLE]. There is just untold stories that are sitting right out there. This crime could have been solved in five minutes in several different ways. And it lasted for 40 years.

I wanted to write the first definitive account of the overall story, which includes all those components that I just listed, plus become the first media source of talks about whether the family knew, and then, of course, get inside Bernie's mind.

SEANA SMITH: And talking about getting inside Bernie's mind, I mean, give us a glimpse of what we are going to learn during this. Because I think this is something that people are still very interested in.

JIM CAMPBELL: Yeah, thank you. You know, you would have thought that what happened was Bernie ran a legitimate market-making business that was from scratch. It became the number three volume market share on Wall Street. It was above the ethics of an average Wall Street firm. And he had tremendous credibility. So you would assume that what happened was, he must have gotten into trouble and said, I got to double down, like take a gambler's loss. We'll get it back. And everything will be fine.

Actually, inside the same compartmentalized head, he was running one of the most ethical businesses on Wall Street in the Lipstick Building on the 19th floor. Two floors below, behind lock and key, he was running the biggest criminal enterprise in history, $65 billion Ponzi scheme. He ran both of those simultaneously, lithely, over 40 years.

ADAM SHAPIRO: When you talk about people who helped him, are you talking about Carl Shapiro, Jeffrey Picower. Are you talking about JPMorgan Chase? I mean, Picard tried to bring a suit against Chase. It was thrown out on standing, not on the grounds. And Chase wound up paying the federal government $3 billion, neither admitting nor denying its role in this tragedy. What did you uncover?

JIM CAMPBELL: OK, let me tell you first off, Jeff Picower took out $7 billion from the Ponzi scheme, probably eight times what Bernie stole. And it's unusual that there be an investor that is making more than the man behind the screen running the Ponzi scheme. Now, when I say conspirators, I say co-conspirators, the big four-- Picower and the other three gentlemen. When I say willfully blind conspirators, I'm talking about the hedge funds, the feeder funds, that sent all that money into Bernie. He passed on the asset management fees into their pockets. Highly unusual-- essentially equivalent to bribes-- for them not to ask questions and not to do due diligence.

Unwitting conspirators-- JP JPMorgan Chase-- you just mentioned them. Witless co-conspirators-- his 17th floor staff, which were high school graduates purposely selected because they were unsophisticated. All of these folks essentially conspired, whether witless, witting, unwitting, willfully blind, and none of them figured out that it was actually a Ponzi scheme that we were facilitating.

ADAM SHAPIRO: Yeah, and one of them-- I forget the guy's name-- DiPascali-- he's dead.


ADAM SHAPIRO: The others all went to jail. What happened to the family behind Fairfield Greenwich when you talk about the feeder funds? I mean, they're still active on Wall Street, aren't they?

JIM CAMPBELL: I don't know how active they are now. But I can tell you right now, Bernie Madoff scripted their answers to the SEC and regulators and didn't allow any due diligence and actually wrote out what they were said. And basically, he didn't even allow these hedge funds to say that he was the managing money guru behind it. He wanted to give the image that he was running it like the market making firm, executing trades for investment firms. At the same time, he was having each firm sign a waiver that he had 100% discretion over their investments. If that is the definition of willful blindness, I don't know what is.

ADAM SHAPIRO: Yeah, and when you talk about those four who were around him, Carl Shapiro, who died-- he was, like, 106 years old-- just died within the last six months. Jeffrey Picower, the family returned the $7 billion. I think there were Stanley Chase. And the fourth one-- you know, age, it's getting to me.

JIM CAMPBELL: Norm Levy. It was Norm Levy.

ADAM SHAPIRO: Norm-- there you go. That's right, here in Manhattan. Jim Campbell, "Madoff Talks--

JIM CAMPBELL: Norm Levy was the--

ADAM SHAPIRO: --Uncovering the Untold Story Behind--

JIM CAMPBELL: Yeah, Norm was the--

ADAM SHAPIRO: --Scheme in History." The book comes out tomorrow. We appreciate your being here.