BUTNER, N.C. — After more than a decade building what has been called the biggest Ponzi scheme in history, Bernie Madoff often couldn't believe that federal regulators hadn't caught on to him, said a lawyer who interviewed the federal prisoner for nearly five hours Tuesday.
"There were several times when he thought, 'They've got me,'" said Joseph Cotchett, an attorney for some of Madoff's victims, who federal investigators think may have lost nearly $65 billion.
Cotchett and another lawyer from his California firm grilled Madoff, who had a lawyer present, about the long-speculated-upon workings of his scheme. They were his first visitors since Madoff arrived at Butner's federal prison two weeks ago to begin serving a 150-year sentence.
"He was very candid with us and very remorseful, and he gave us a lot of information," Cotchett said in a news conference after the interview. "He spelled out how the fraud was committed and when it started."
Although some have speculated that the fraud began as early as the 1970s, Madoff told the lawyers that he didn't start the scheme until the mid-1990s.
Madoff, whose sons turned him in late last year, said when he pleaded guilty in March that he was the only one responsible.
Cotchett and the other lawyer who questioned Madoff, Nancy Fineman, are keenly interested in how much Madoff's family and business associates knew. They are suing Madoff's brother, wife and two sons, as well as officials who ran funds that directed investments to Madoff.
Madoff was extremely cooperative in the interview, never dodged a question and repeatedly apologized about what he had done, Cotchett said.
Madoff's motivation for agreeing to answer the lawyers' questions was to get them to ease the pressure on his relatives. Based on what Madoff said, the lawyers plan to revise their suit and may drop Madoff's wife and sons, Cotchett said. But others who worked with Madoff will be added.
The level of detail Madoff offered was startling, Cotchett said, particularly in what it revealed about the lack of oversight by Securities and Exchange Commission regulators.
Basically, Madoff's scheme was to take money from investors, then pay some back while telling clients they were getting unusually large and steady returns.
In truth, Cotchett said, Madoff didn't properly invest the money. Cotchett said the SEC had been "incredibly ... extraordinarily negligent" and should have stopped Madoff long before he was caught.
"He hadn't been trading a dime for years," Cotchett said. "Why do we pay taxes for the SEC?"
He and Fineman represent about a dozen victims, ranging from a retired schoolteacher who lost her entire savings to wealthy people who lost large investments, he said.
"We've allowed Wall Street to overtake Main Street, and maybe today's five hours will shed some light on how that happened," Cotchett said.
When he and Fineman got clearance from Madoff's lawyers for the visit, they dashed to North Carolina "as quick as that little airplane would fly," Cotchett said. They feared the SEC or the Department of Justice might hear they were coming and block access to Madoff because of their continuing investigation.
Cotchett said he and Fineman were the first visitors of any type Madoff has received. Neither his wife nor his sons have been to Butner.
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