CHASING MADOFF
Produced, Written & Directed by Jeff Prosserman, based on the book No One Would Listen: A True Financial Thriller by Harry Markopolos
Released by Cohen Media Group
USA/Canada. 91 min. Not rated

There was a guy yelling that the emperor, Bernie Madoff, had no clothes, but no one would listen. He was Harry Markopolos, and Chasing Madoff gives him a platform to exclaim “I told you so!”

As a portfolio manager at a Boston investment firm, Markopolos was part of a team pitching their services to large hedge funds in the 1990s. But they kept hearing of a competitor whose results far exceeded their profit projections. His bosses insisted he should try to match them, so the straight-arrow, National Guard reserve lieutenant set out to find out the identity of the mysterious investor—Madoff—and how he achieved this. With leads from his supervisor, veteran equities manager Frank Casey (who provides some calming counterweight in his interviews), and help from his colleague Neil Chelo, they figured out that Madoff was literally batting a thousand—a statistical impossibility that no honest investor could possibly match. When potential clients couldn’t be swayed by suspicions about Madoff’s mysteriously positive numbers, Markopolos and his colleagues became determined to bring wider attention to their qualms.

Debut documentarian Jeff Prosserman then reveals how Markopolos reached out again and again to the financial press, and even had some success in generating articles that questioned Madoff’s results. Reporter Michael Ocrant, who started writing pieces targeted to institutional investors in 2001, is interviewed, but those journalists who rebuffed Markopolos after reviewing his growing cache of circumstantial evidence make no mea culpas on screen. Stymied by how the private sector dealt with his case against Madoff, Markopolos took the step of reporting his findings to the Securities and Exchange Commission, first in a lengthy 2005 accusation titled “The World’s Largest Hedge Fund Is a Fraud.” Entertaining clips of the SEC’s useless excuses in later Congressional testimony are interwoven with his recounting of the SEC’s lack of response.

But as Markopolos goes on and on, his detailed description of his heightened paranoia also explains why he became a less effective whistleblower; he must have seemed monomaniacal. In his frustration, he began to believe that the only possible explanation for investors, the financial media, and officials to ignore him was the involvement of organized crime. He bought a gun, added extra home security, and feared for his young family. Like a conspiracy theorist, he jumps to a bizarre conclusion rather than recognizing the flourishing of greed during an irrationally exuberant economy. Sadly and significantly, what finally forced Madoff’s admission of his gargantuan Ponzi scheme was not Markopolos’s findings but the precipitous popping of the economic bubble in 2008.

Compared to the story told in Alex Gibney’s Enron: The Smartest Guys In The Room (2005), there are some striking similarities between how the financial industry handled the revelations in that scandal, which came and went as Madoff gained prestige and raked in billions. One of the ignored whistleblowers against Enron was also a Boston-based investor, Richard Grubman. He was discounted by the financial press because he, too, was perceived as someone who could professionally benefit from the exposures. Today, Markopolos has found a way to channel his cynicism about the financial industry into a new crusading career as a fraud examiner for a litigation firm that welcomed his investigation business. (His new boss sees them as fox hounds sniffing out ethical abuses.)

Markopolos and his two associates rue the terrible financial impact on investors, but they admit that, as institutional advisors, they missed just how widely the Madoff octopus had spread (a visual metaphor used here), especially through feeder funds, philanthropies, and to individuals. Tearful testimonies about lifetime savings lost are interspersed throughout the film. (A Lifetime movie could focus on the four daughters of the founder of the Fairfield Greenwich feeder fund, each married to international financial salesmen who spread the scheme around the world.) But it certainly seems as if Irving Picard, the trustee liquidating Madoff’s company, has read Markopolos’s 2010 memoir No One Would Listen because he’s been winning court cases for “clawbacks” by making a clear point—that any “profits” investors made were fictional and that any rational major investor should have suspected it. Markopolos did, and he deserves his victory lap. Nora Lee Mandel
August 26, 2011