Matthew Schwartz, Boies Schiller Flexner

Ten years ago, financier Bernard Madoff was arrested and charged with securities fraud. Soon, the world would learn Madoff had orchestrated the largest Ponzi scheme in history. A year and a half later, he pleaded guilty to a host of charges and was sentenced to 150 years in prison.

Boies Schiller Flexner partner Matthew Schwartz led federal prosecutors’ investigation into Madoff for the U.S. Attorney’s Office for the Southern District of New York, where he was an assistant U.S. attorney for a decade before joining Boies Schiller in 2015.

Schwartz spoke with the New York Law Journal about his reflections on the anniversary.

Q: The Madoff story remains a point of interest even today—it must have been interesting seeing it adapted for television.

A: It’s an amazing story—a horrible story, of course. He got the best of so many people for so long. But a pretty remarkable story.

Ponzi schemes are usually fairly short-lived because they by necessity have to keep growing or they die, and he was able to keep going for 40 years, and billions of dollars and tens of thousands of victims, and through financial crises like market crashes and runs on the bank. All the sorts of things that usually spell the end for Ponzi schemes, they were just bumps in the road for him, until in a lot of ways he was another victim of the financial crisis and he just couldn’t sustain it any longer.

It’s a really remarkable story. Makes sense to make a movie out of it.

Q: Are you surprised the recovery efforts have managed to continue on for a decade?

A: If 10 years ago you had asked me to bet, will the asset recovery effort still be going strong, 10 years later, rather than just tying up loose ends? I probably would have been surprised by that.

But then again, if you asked me whether the recovery effort would have recovered more than $17 billion already of possibly $20 billion in stolen principle, I definitely would have been surprised by that. It’s sort of fitting and of course it’s enormously complex, for the largest and longest-running fraud of all time, that it should take so long to unravel.

Q: What have some of the effects been on white-collar enforcement after Madoff?

A: I think that it’s interesting to see that there’s been so much systemic change as a result of one case, even such a big one. In particular, the SEC has changed and reformed itself in a number of ways, as a direct result of the failure to stop the Madoff fraud.

It has focused in a new way on investor education. It has changed its coordination between the exam staff and the enforcement staff. It has created a robust whistleblower program. These things and others are traceable almost directly to the end of the failure to catch the Madoff plot.

Q: What are some of the things from the Madoff case you’ve taken with you into private practice?

A: Obviously the experience working on the team of prosecutors and law enforcement agents that unraveled that fraud, both from a law enforcement, putting-people-in-jail perspective and an asset recovery perspective, those were great experiences. I bring things to my life on the other side every day from those great experiences.

One thing that has become more important to me on this side of things is understanding the tools that are available to the government in really complicated asset recovery cases. The Madoff case has been one of the most successful asset recovery efforts of all time, both between the trustee’s recovery of more than $10 billion and the government recovery of another $4 billion through a whole array of means. Not just the sort of typical criminal forfeitures following conviction, but also through civil forfeitures and enforcement of other statutes against, for example, the banks, as we did when we entered into a deferred prosecution agreement with Madoff’s primary bank.

And that focus on recovering assets for victims of crime has been very important to me in my practice, today.


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