Module 2: “How Bernard Madoff Did It” by Liaquat Ahamed

Ever since the Madoff scandal broke in December 2008, the public has been morbidly fascinated by the affair.

How had so ordinary a man pulled off the largest swindle in history?

And what a spectrum of the world: Jewish philanthropists from the Upper East Side; almost half the membership of the Palm Beach Country Club; rich South Americans; retired accountants living in Florida; the demimonde of Monaco; even, it was whispered, figures from the Russian mafia and the Colombian drug cartels.

And what a spectrum of the world: Jewish philanthropists from the Upper East Side; almost half the membership of the Palm Beach Country Club; rich South Americans; retired accountants living in Florida; the demimonde of Monaco; even, it was whispered, figures from the Russian mafia and the Colombian drug cartels.

“The Wizard of Lies,” by Diana B. Henriques, a senior financial writer for The New York Times, makes for riveting reading because it covers all these dimensions.

How he generated these returns was always a mystery — he claimed to be offsetting the downside risks of his stock purchases by selectively using options to hedge the portfolio.

But the very secrecy added to his mystique.

At some point (no one is quite certain when; Madoff claims it was not until the early ’90s, while Henriques believes it to have been earlier), after losing money, rather than come clean to his clients, he fudged the numbers, hoping to recoup the losses later and get back on track.

Even a leveling off or a slight slowdown in the pace of money coming in can threaten the viability of the entire scam.

Henriques reveals how the operation came close to falling apart on several occasions, first after the stock market collapse of 1987, then again during the recession of the early 1990s, and yet again after the tech bubble burst in 2000.

Not everyone was duped.

The accounting firm Madoff employed to audit his books was a one-man operation run from an office park in the New York suburbs; the volume of option trading entailed by the amount of money he was supposedly managing would have far exceeded the capacity of the derivatives market; and the returns he claimed to be generating were far too steady and reliable to be plausible.

The accounting firm Madoff employed to audit his books was a one-man operation run from an office park in the New York suburbs; the volume of option trading entailed by the amount of money he was supposedly managing would have far exceeded the capacity of the derivatives market; and the returns he claimed to be generating were far too steady and reliable to be plausible.

The accounting firm Madoff employed to audit his books was a one-man operation run from an office park in the New York suburbs; the volume of option trading entailed by the amount of money he was supposedly managing would have far exceeded the capacity of the derivatives market; and the returns he claimed to be generating were far too steady and reliable to be plausible.

Henriques reveals how tantalizingly close the agency came time and again to uncovering the fraud.

In the end the story holds us not because of the engrossing details of the scam, but because of its human dimension.

It is a harrowing scene.

The other son, Andrew, “prostrate,” “slumps to the floor in tears”; at another point he wraps his arms around Madoff and tells him that what he has wrought upon them is “a father-­son betrayal of biblical proportions.”

But in Henriques’s telling, they were not among the criminals, and she concludes with an impassioned challenge to the way they have been subsequently demonized.

Madoff emerges here not as some master criminal, but as a sad, hapless man who, lacking the character to tell the truth at the critical moment, stumbled foolishly and blindly into one of the crimes of the century.

He is less a personification of the crass greed that lay behind the recent bubble decade and more the embodiment of our infinite capacity for self-delusion.

He is less a personification of the crass greed that lay behind the recent bubble decade and more the embodiment of our infinite capacity for self-delusion.