04/12/2011 07:49 pm ET Updated Jun 12, 2011

What Made Bernie Madoff Tick?

"What Makes Sammy Run" by Bud Schulberg, was the fictional story of Sammy Glick, an unscrupulous Hollywood hustler, that fascinated me as a young man. So, I was curious to see what today's Sammy Glick, the Ponzi schemer Bernie Madoff, had revealed to the Financial Times in a brilliant pursuit of his character and the truth (unrealized) in the weekend FT. Must reading.

Like Sammy Glick Madoff was an outsider, born in Queens, not Manhattan, educated at Hofstra, not Harvard, and bitter at being an outsider, desperately hungry to be a part of the financial establishment -- or if not, feared by it. All his life Madoff reveals a sad desire to be a BIG man, to impress men wealthier than he, members of the wealthy class, residents of Palm Beach, the Hamptons, the south of France. Yet, under the surface of his carefully crafted image, it appears that Madoff was harboring an intense loathing of the financial establishment, that he had outwitted for so long.

"I started with $500 in capital. I watched my father go bankrupt. I was very driven... I was always outside the club, the club being the New York Stock Exchange and white shoe firms," Madoff told the FT.

Madoff claims he was legitimate until the 23% crash of the stock market in 1987. He makes up a complicated yarn for the FT which just doesn't pan out in reality. He claims he was "at the mercy" of his 4 major clients like Jeffry Picower, Norman Levy, Stanley Chais and Carl Shapiro, whom he appears in thrall to and beleaguered by the need to please them.

Madoff tells the FT these 4 wealthy men "were complicit, all of them." He appears to mean that they brought in new clients, whose money was then used to give these 4 what apparently were greater returns than anybody else. Whatever the truth, and it is hard to absorb or believe his tortured yarn, it is evident that he means to bring them down to his level, to "out" them as the ruthless rich who forced little Bernie into a life of crime.

By comparison, Sammy Glick was on the surface as well as underneath a ruthless slime ball, who would go to any length to rise to the peak of Hollywood. The movie made from the novel was a nasty terrible portrait of the culture in Tinseltown -- just as Madoff's career is a testament to the gullibility of the investment class who believed Bernie was a sure-thing moneymaker.

I doubt that Madoff operated legitimately up until the 1987 break. A Madoff client from a 7th Avenue garment family was receiving a return of 20% every year from 1980 until 1992, which does not seem possible. No stock records, only a year-end statement; she made 20% come hell or high water.

Madoff was hungry to be seen by rich clients on both sides of the Atlantic as some sort of investment genius. "I did it for all of them -- so many important people from France and elsewhere... I even impressed myself. They came up to my office to meet me. They really wanted to deal with me." Bernie was "impressed" with himself -- so pedigreed were the investors in awe of him. Yet, all the while he was a fake, stealing from Aunt Sadie to buy the unctuous appeals of feeder funds for the sure thing. Pretending all the while to be of service to his co-religionists.

The small man from Queens, from Hofstra, whose father had gone bankrupt, was legendary. Wealthy people, even "senior partners at Goldman Sachs" begged to be included in this steady goldmine. Today, Madoff seems to have scorn for all these people including the regulators and his bank, JP Morgan Chase.

"I know that billions of dollars going in and out of a bank account is something that should alert you to something. They got all the financial statements... I was using them as custodian and they never raised alarm bells."