Psychic Profiles | 03/13/2009 7:30 am

Bernard Madoff Psychic Profile: Peggy Rometo on Where the Money Went and More

Where did Madoff stash the billions? How much did Ruth know? Does the former NASDAQ chairman feel any shame? wowOwow’s Intuitive speaks.

By The Staff at wowOwow.com

Bernard L. Madoff, the man who masterminded what is believed to be the largest Ponzi scheme in history, was jailed yesterday after pleading guilty to 11 charges including securities fraud, wire fraud, mail fraud and money laundering. The disgraced Wall Street trader, who said he was "deeply sorry and ashamed" for swindling investors out of $65 billion, will face 150 years behind bars when he is sentenced in June. We asked wOw Intuitive Peggy Rometo how it all came to pass — and what’s in store for America’s most hated villain.

wOw: How did it all begin?

Peggy: My feeling is that Madoff was approached by an underground group, possibly originating in Argentina or somewhere else in South America, to find a simple, creative way to make some extra money. I think he saw it as easy, conceptual, no big deal. It all began with an offshore investment and willing partners. He felt very protected within this network, and well hidden from the law.

wOw: What were the logistics?

Peggy: My sense is that he started out with money laundering. As he demonstrated his ability and proved himself, the group he was working with began to appreciate him deeply, which sparked a new, power-hungry lust that he had never felt before. This attitude grew until he was no longer in control.

wOw: Where did the money go?

Peggy: That’s the billion-dollar question! Madoff has used an interrelated network of conspirators and fraudulent accounts to hide and conceal wealth. The majority of his personal wealth feels connected to Geneva, Brussels, France and Denmark. For some odd reason, the Ukraine is coming up as well. My sense is that much of the money was paid to the initial group in South America. I don’t know if the U.S. is using a team in Boston to track it down, but there is help or insight to be found there. Unfortunately, I don’t feel that more than a fraction of what was swindled will ever be recovered.

wOw: Did Madoff ever feel culpable about his illegal activities?

Peggy: I feel that he only developed a conscience in the last decade or so. He learned to justify what he was doing by thinking of himself as a sort of Robin Hood, robbing the rich to contribute to the many charities he invested in (especially those that involved children). People’s gratitude and respect fueled his ego, and he began to believe his own spin on reality. He developed a righteous energy that made him feel invincible. But deep down, he always knew it would fall apart. The problem was that once the game got out of control, he didn’t know how to stop it.

wOw: Was Ruth Madoff aware of the fraud from the beginning?

Peggy: Over time, she had an instinct that something was not quite right. It reminds me of a woman who knows her husband’s having an affair, but doesn’t want to look too closely because she wants to stay married: "It’s not my business, and I don’t really want to know." But I don’t think she ever had a clue just how big the scam really was.

wOw: When did she find out what he was up to?

Peggy: Again, my sense is that she felt something was off, triggered by feelings she had when she met certain people he was working with years ago. I feel that a more glaring truth had to be revealed to her within the past 18 months to two years.

wOw: Did their sons, Mark and Andrew, know what was going on?

44 Reader Comments (so far…) Sign In or Register to comment

The money went, for the most part, to investors. Many of the people who are impoverished were living off their "income." If you invested a million fifteen years ago and lived off the 10% per year interest, you used up your million plus (approx.) half a million of someone else’s - so that’s $1.5 million that disappeared right there, by going back into the real world, but looking like, now, a $1.5 million loss.

Charities that lost millions had taken out millions for their good works.

The reason that so much money disappeared is that so much was paid out.

Only a small fraction, relatively speaking, went to fund Madoff’s lavish lifestyle; some went to pay the expenses of his businesses in NYC and London; some went to his family and some went to the people running feeder funds and hedge funds.

I never took any money out and I "lost" six times my principal on Dec. 11th. However, in a sense, I only lost the principal, didn’t I? And my principal disappeared when it was used to pay, perhaps, the annual expenses of a few retirees who had invested with Madoff. And so on and so on, Ponzi-wise.

By Sam Mirando on 03/13/2009 8:09 am

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"The six times my principal" omitted to include the fact that, in the late 90’s, I added to my account, providing Mr. Madoff with a bit more money to pay out to others.

People (including psychics) seem to think that Mr. Madoff has my money stowed away somewhere. I know that it has been paid out to others and spent by them and by Madoff. That’s what a Ponzi scheme is: the people who get in early are paid with money invested by people who get in later. Moreover, Madoff was paying everyone, early and late investors, with whatever money he could scrounge from new investors at the time. The scheme crashed when there was no more money to pay out. If Madoff could have found the billions that he was seeking in, for example, Dubai and China, his scheme would still be in operation, using Arab and Chinese money to pay retirees and charities their annual expected income. Wouldn’t he have preferred that to going to jail? If there were billions socked away, he would have used them to pay people their incomes and, thus, stay out of jail, wouldn’t he?

By Sam Mirando on 03/13/2009 8:28 am

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Sam, your explanation of the Ponzi scheme and what happens to the money is clear - good education for us! I agree with you that the "losses" were in a sense not real… they consisted of future money that was being counted on, and never materialized because Madoff ran out of new investors and new sources of funding. But still, if I had invested my principal there and lost it, I would also consider myself to have lost at least the amount of interest I could have earned in a legitimate investment elsewhere. So maybe I couldn’t reasonably say I lost my principal + 600%, but I certainly would say I lost my principal + 100%, or whatever would have been the market average over the term of my investment. It’s a lost opportunity.

By Lila Kuh on 03/13/2009 8:56 am

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Yes, my real losses were what I could have made with a rock-solid investment plus the difference between the taxes that I would have paid on the latter investment and the taxes that I paid on my Madoff investment. But, in a capitalist society, why should the rich have the opportunity to get money by doing nothing? I earned my principal by hard work. Am I really entitled to sit back and see it increase annually by 10% while I do nothing?

Supposedly, in a capitalist society, I make money by lending my money to others and they make money by using my money for some good purpose. Then they return my money plus a share of their profit (= the interest) to me. However, we have moved so far from this basic principle that it is not surprising that the system is broken.

By Sam Mirando on 03/13/2009 9:29 am

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But… if I put my money in a bank and earn interest, and the bank is also lending money to others and charging interest, and using that to pay their depositors like me, isn’t that (indirectly) the same thing as your capitalist example here?

Maybe we can’t expect 10%… unsustainable… but yes, if I earn my principal by my own hard work, I do feel entitled to sit back and watch it grow by 3 or 4% APY in a reputable institution.

By Lila Kuh on 03/13/2009 10:01 am

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Yes, banking is the simplest form of lending for interest. And that’s why your money is safe when you "lend" it to a bank (in addition to being FDIC insured up to $250,000) - everyone understands such banking. There are very few risks (normally) and that’s why interest is so low. You are, indeed, allowed to enjoy your 3 or 4% (not that you can get that these days; my bank was offering 2.9% for nine months this week). That’s how the system works. But expecting and getting huge returns (and without risk) unrealistic, as Mr. Markopolos so rapidly realised. Moreover, you have to pay tax on the interest, just like everyone else.

By Sam Mirando on 03/13/2009 10:24 am

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Peggy, do me a favour (if ethics in your line of work allows) I had from the beginning the hunch that the corrupted politicians of my country had been either madoffed or madoffmade….. Now you just mentioned Argentina for starters, I call this serendipity, Could you please elaborate on this eerie geographical connection. Thank you.

By marta pont on 03/13/2009 8:53 am

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So are you suggesting that he was of ‘criminal mind’ to begin with? Money laundering is a criminal activity—-Argentina became the home of many Jewish who escaped from Germany—-putting that together…are you suggesting that the Jewish who escaped the holocaust, by going to Argentina, became criminals, themselves?

By Patty E on 03/13/2009 9:32 am

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Not really, what I’d like to know is 1) why Rometo associates Madoff with Argentina 2) in a serendipitous way I always fel the Big M has somehow argie conexions, shoot me if I know why 3) I discussed this hunch with my first bosses (a jewish couple) back in November, knowing my long history in "hunches" they say, OK you may be right, let’s run some tests with people we know. That was all. Argentina is at present in a great turmoil, drugs & money laundering are the biggest issues, plus corruption in government+urban violence+increase in drugs consumption+inflation+unemployment , the works. I don’t know how many gentiles or jews were involved with the Big M, but I know many argies were. My lawyer friends in town tell me many very well known people (of both persuasions) are going beserk on this issue. I don’t give a s….. what religion they profess, as far as I am concerned all people involved in shady financial schemes should be brought to justice. We must know who they are, no matter where they come from. The money is gone, right???? Probably for good. Let us find the culprits.

Worldwide, OK???

By marta pont on 03/13/2009 10:00 am

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I have read a huge amount about the Madoff scandal, having lost my own money, and nothing (NOTHING) that I have read suggests that any particular country beyond our shores has any particularly unusual involvement in the scandal. As I have said, the money isn’t stashed somewhere. My money went to pay someone else’s expenses and that person’s money paid the expenses of someone else again. That’s a Ponzi Scheme. And, surely, if Madoff could have found money ($7 billion, I think he needed) to give people their money when they asked for it last December, he would have done so, just as he always did. The reason the scam collapsed was not because he had billions stashed away but because he DIDN’T - not in Argentina, Russia, Switzerland or anywhere else. He had, it seems, about a billion in assets, plus (or including) his possessions. That’s all. The Feds might find a bit more but nothing close the $60 billion (or $170 billion) that has made news.

By Sam Mirando on 03/13/2009 10:32 am

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Yes, Sam you are sooo right. It is stupid to think Madoff’s money is here when half of Argentina(the one who has some spare money at the moment,) is shipping it abroad in USD to escape the fangs of a lunatic administration. What intrigued me in Rometo’s post was the mention of Argentina. Look, I have talked with Rometo on the phone, I shared some of my fears about our national future, considering that for the first time in my adult life, I am unable to flee the country, just because I have a 90+ old father who refuses to leave his home. It’s a no-win situation, but I still think & try to foresee what to do next.

That was all, just curiosity. Whoever tries to find an antisemitic bias in my words, look elsewhere, please. If you ladies or gents so preoccupied by the Holocaust wonder, let me refer you to Mr Daniel Baremboim (an argentine born israeli, one of the best conductors in the world ) a jew, a humanitarian & a unique talent, whatever he says on the subject, I adhere to. Amen.

By marta pont on 03/13/2009 11:13 am

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Am totally ignorant about this kind of investing but what did people do - just give this guy money with no checking of the stock market listing or Better Business Bureau or whatever investors do at this level? Was it hey I heard about this guy making people money so I will just write a million dollar check to what? Bernie himself? I’m curious, can anyone enlighten me.

By Judy K. on 03/13/2009 10:49 am

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Yes, I can. Someone with the right connections(upper middle + classes) would let it drop that there were some excellent high yielding investments in NYC or MAD or GVA, thus the world spread in those circles. It was exclusive. Only to very fortunate few.

Most people wanted in. I don’t know how it worked in the rarefied circles of Mahattan/Hamptons or Palm Beach, but down here there was a very well known Spanish Bank that let their really "good" clients know about a special fund in euros with incredibly high returns. In a country like mine, where political uncertainty make people invest their monies in foreign countries, this looked like Shangri-la. Greed is just as powerful as lust/hunger or love. Mr Madoff knew perfectly well his victims psyches. The rest is history.

By marta pont on 03/13/2009 11:30 am

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In the 1990’s, my husband asked a very wealthy acquaintance (VWA) what we should do with some of our savings (which we had earned the hard way: by working!). The VWA said that he would ask someone (Madoff) whether he would allow us to invest our small nest egg in his small mutual fund. Madoff agreed, "as a favor to our VWA," and we duly sent our money to NYC. Then, over the years, we watched our money grow but never took any out. Now that money is gone. We did have "the right connection" and it seemed that, since our VWA had known Madoff for many decades and had invested large sums with him, it was a good idea. I had never heard of Madoff when we invested but, since we received incredibly detailed monthly statements and other paperwork, there never seemed a reason to worry. I was surprised that our money kept making money but never imagined a Ponzi scheme.

By Sam Mirando on 03/13/2009 12:39 pm