Author Jim Campbell shares insights into Bernie Madoff's Ponzi scheme

Wednesday, November 15, 2023
Rick Kilbride speaks to his financial scandals class at UNH.

Rick Kilbride introduces Jim Campbell, author of the book Madoff Talks: Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History, who recently spoke with Kilbride's financial scandals course via Zoom.

In finance, few scandals loom as large as the infamous Bernie Madoff $65 billion Ponzi scheme. It makes the perfect topic for students in a University of New Hampshire class focused on financial scandals, unheavals and crises. 

The course delves into the psychological and social factors that lead to financial scandals, providing students with a historical perspective on finance, covering both disruptions and innovations in the field.  

“If you look at the world through the lens of finance, you see and tell an entirely different story about the human saga. What breaks, what innovates, what changes and what disrupts,” says Rick Kilbride, senior lecturer at the UNH Peter T. Paul College of Business and Economics. 

The course once tackled how Taylor Swift reshaped the financial model for artists owning their music as an example of financial innovation. 

In the case of Madoff, the lesson is mostly about what broke in the system, although there are also examples of innovation, according to Kilbride. Concurrently with the investment scandal, Madoff built a legitimate $3 billion brokerage business, Bernard L. Madoff Investment Securities LLC, by being the first business to innovate by using computers to trade stocks, making it more efficient. 

Rick Kilbride

Kilbride, a former investment manager on Wall Street, often invites guest speakers with personal knowledge of scandals or innovation into class to expand on the lessons. Author Jim Campbell recently joined the class via Zoom to share his insights into the Madoff case.  

Campbell is the author of the 2021 book Madoff Talks: Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History, and co-executive producer of the popular Netflix docuseries Madoff: The Monster of Wall Street. The docuseries is based on Campbell’s book, and he’s featured throughout the series talking about Madoff. 

Campbell’s discussion with students dug into the psychological and social contexts of Madoff’s scheme that defrauded $65 billion from thousands of investors worldwide. 

Campbell said Madoff had an innate ability to compartmentalize his actions, drawing a parallel to how he structured his business in New York City, with his legitimate business on the 19th floor, and the Ponzi scheme on the 17th floor. This segregation helped maintain the illusion of legitimacy, even fooling his sons. 

“Bernie saw himself as wanting to be the go-to guy, a people pleaser, and he could not say no to people. In Bernie's mind, he was pressured by his customers to get these returns, to always get these returns, and to always deliver growth,” Campbell explained. 

Jim Campbell

Campbell described Madoff as a genius, narcissist and financial sociopath. During the scheme, Madoff never executed one trade for his 4,800 clients, and “profits” were paid out from other investors' funds. 

“I don’t know how he reconciled it in his mind other than the fact that he did not have remorse. He saw himself as a victim of all these greedy people,” Campbell says. 

Campbell and the students had a back-and-forth discussion about how Madoff got away with the fraud for so long, despite red flags and warnings. Campbell discussed the multiple factors that went into the regulatory failure including lack of due diligence, inadequate resources, poor culture and lack of understanding. 

Had the 2008 financial crisis not occurred, Campbell believes the scheme would have continued for several more years and that Madoff had no exit strategy. He described Madoff’s story as a Greek tragedy and urged students to stay on the right path. 

“This guy was brilliant. He could have been the Bill Gates of the financial trading world,” Campbell says. “If you get off that path a little bit, the next thing you know, you’re way off the path and you’re going to get caught.” 

Allie Reyes ’24 said surveying financial scandals is the best way for young students entering the business world to understand the conditions that create them, and not repeat the same mistakes.  

“I think it’s cool to hear it straight from the source, someone who has sat down with someone so prolific and notorious,” Reyes says. “Just like the degrees of separation, now we’re two degrees of separation from the late Bernie Madoff because we interacted with someone who talked to him for so long.” 

Noah Rairdon ’24 said he appreciates that Kilbride incorporates his experience in investment management on Wall Street into class while inviting in speakers with direct knowledge on topics. 

 “The fact Rick worked on Wall Street, and we get to interact with people like this (Campbell) provides you with an authentic experience,” Rairdon says. 

Other topics covered in the course through the years include the Lehman Brothers mortgage crisis collapse, the Elizabeth Holmes/Theranos fraud, the fraudulent luxury music festival known as Fyre Festival and the Volkswagen emissions scandal.