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Frank Casey, along with his colleagues Harry Markopolos and Neil Chelo, spent nearly a decade trying to get the Securities and Exchange Commission (SEC) to take a closer look at the business dealings of Bernard Madoff, a financier with the reputation of Midas among his investors.

Their warnings, we now know, went unheeded. In Dec. 2008, Madoff turned himself in to authorities and the world learned what Casey and his colleagues had long suspected: the so-called financial wizard was a sham. Indeed, he was the perpetrator of the largest Ponzi scheme in history, having defrauded thousands of investors of tens of billions of dollars over nearly two decades. In 2009, he was sentenced to 150 years in prison for his crimes.

New Jersey attorneys will get to hear Casey’s story at “The Madoff Fraud: An Insider Speaks,” an event hosted by the New Jersey Institute for Continuing Education to be held Tuesday, Oct. 24 at the Wilshire Grand in West Orange. After Casey speaks, he will be joined by members of the NJSBA from the financial industry for a roundtable discussion on how the Madoff crime continues to resonate, how to take safeguards to ensure against fraud, and an opportunity to answer audience questions. New Jersey Institute for Continuing Legal Education credits are available for this program.

We spoke with Casey ahead of his talk. Here are some excerpts from that conversation.

What you don’t know about the Madoff story
“One of the things (the public doesn’t) know about the story is that everybody knew about the story,” Casey said. Any analyst would have known that the returns Madoff was supposedly getting were not possible. Casey recalls that Markopolos, who ultimately testified before Congress, knew within minutes.

Casey believes the senior executives of the various private wealth banks were, in a sense, complicit. “They knew or they did not want to know that this fraud was being perpetrated,” he said. “They knew this was wrong, and yet no one said anything because they were all making money. They were saying to themselves this is the responsibility of the SEC…if the regulators can’t find it, we don’t need to know about it.”
“The story is that we’re all greedy. We all want to make good money. And we will be subject to willful blindness if it’s in our best interest. That’s something we have to guard against.”

That quirky whistleblower
Casey travels around the country several times a year telling the inside story on the Madoff fraud. His audiences have included finance people, Wall-Street types, investment advisers, medical companies who were trying to stave off fraud in the industry, church congregants, the opening of a university ethics center and a student group of investigative journalists.

He recalled what he told the students. “If you’re going to become investigative journalists, don’t discount the joker that’s jumping up and down on the milk box yelling the emperor has no clothes…Whistleblowers are quirky…Don’t discount them. You’ve got to investigate them.”

Could a scheme like Madoff’s happen again?
“It’s happening now. Every week in the news there’s another Ponzi scheme out there. If not Ponzi, other high-level frauds. People are so busy with their own lives, they just brush it aside. If they’re benefitting from it they keep their mouth shut.”

The impact of the Madoff scheme on public trust
“I think that the SEC was horribly damaged as a regulatory body. I think individual investors believe you can’t win in Wall Street.”

Casey says one of the positive things to emerge in the years since the Madoff scheme was exposed was the creation of a whistle-blowing program at the SEC. “I think whistle-blowing is changing the landscape,” Casey said. “It allows a smaller member of the company to right a wrong. The companies find it a thorn in their side, but it shifts the work load in a way from top down policing to bottom up blowing the whistle. I think it’s more effective coming from the bottom up.”

For additional information and to register for this program, go to www.njicle.com.