One highly condensed vignette from Fishman's NY Mag narrative is crafted to sound like a matter-of-fact account of the Ezra-Victor relationship that began 21 years ago. We read it as a flawed crime narrative. In this unsatisfying story, there is no heroic detective, no crime busting sheriff. The bad guys are not caught by forces of good.
Maybe Fishman's characterization is right and Madoff really is the arch criminal, the Joker of Wall Street. I'm just too uncomfortable granting him the stature of such mythic evil. And as I said, there's no Batman and Robin to the rescue in this story.
I prefer it if they'd knock Madoff and his cronies down to where they belong. Perhaps these guys should be portrayed as terrorist maniacs whose religion is cosmic greed.
Madoff and Merkin and Teicher – suicide bombers.
Madoff admits his evil – end of story for him. Merkin plays innocent – he reads and believes his own press releases. Teicher protests his new-found honesty and demands to be treated as a rehabilitated soul.
Main point: These "money managers" were brought down by their own misdeeds. They self destructed – blew themselves up – and they had to know that they would. You may say no, these are not terrorists. How can you make such a comparison?
I could say look around at the bodies lying all over the landscape. In their chosen and inevitable self-immolation these terrorists of greed took with them, in the resulting devastation and shrapnel, hordes of nearby innocent victims.
Anyway here is how Fishman narrates this chapter, the Ezra-Victor relationship.
…the first of Ezra’s finds was Victor Teicher. Teicher, a colorful, uncontrollable character with a faulty internal censor, was not the confidence-instilling type to put in front of prospective investors. But he had an instinctive gift for financial opportunity. Early on, he concentrated on merger arbitrage, betting on whether one firm would take over another. In this, he had some help. In 1986, he was investigated for insider trading in connection with what was known as the Yuppie Five case, in which young professionals at blue-chip firms passed along inside information about upcoming mergers.Source: New York Magazine, "The Monster Mensch. What made Bernie Madoff, a man who helped revolutionize Wall Street and built a completely legal billion-dollar business, perpetrate the greatest fraud in history? And what led Ezra Merkin, born to immense privilege, to enable him?" by Steve Fishman, published Feb 22, 2009.
The indictment might have put Teicher out of business, but he had been earning returns as high as 20 percent a year, and so most of his investors stayed. Merkin too was enticed by the returns, and beginning in 1988, the year Teicher was indicted, he started putting a substantial portion of the money he raised for Gabriel Capital with Teicher. Ezra kept 20 percent of the profits for his troubles, and gave Teicher half. Since Ezra was technically raising money for Gabriel and its offshore twin, Ariel, he didn’t need to cloud the waters by mentioning Teicher’s controversial name, a lapse that New York University alleges in a lawsuit. In 1992, the year Teicher was sentenced to eighteen months in prison, he was running about $500 million, perhaps three-quarters of that from Ezra’s investors.
Teicher spent most of 1994 in prison. When he got out expecting to return to work, Ezra decided to separate. The business was running well without Teicher’s day-to-day oversight. And, Ezra told Teicher, his lawyers thought working with a convicted felon wasn’t a great idea. Ezra threatened to yank his money. So Teicher gave in. In January 1995, Ezra took over the staff, put Gabriel Capital’s name on the door, and hired Nathan Leight, now at Terrapin Partners, to manage the money.
Teicher operated on his own until August 1998, when Ezra called again. It was a troubled year for the markets, and he needed help. Teicher, then running about $50 million, jumped at the chance and was soon managing roughly $1 billion for Ezra as an independent operator. It was a profitable arrangement for both—Teicher turned the fund around, and he might have continued except that in January 2000, with his appeals exhausted, the SEC finally banned Teicher from running other people’s money. Ezra replaced Teicher. But by then, Ezra was also showering money on another genius: Bernie Madoff.
… For Ezra, Madoff’s returns weren’t eye-popping—Teicher did better—though his average of more than 12 percent a year was more than respectable. But the real selling point was Bernie’s consistency—barely a down month in more than a decade.
There were many for whom Madoff’s consistency was a giant red flag. The SEC missed it, but Teicher, the inside trader, was a skeptic. Ezra and Teicher talked about Madoff on and off for years. Teicher scoffed. “The thing seemed ridiculous,” Teicher told Ezra. But then, Ezra must have thought, Teicher generally didn’t like anyone’s ideas but his own.