Few people get to enjoy the just desserts that now-famed whistleblower Harry Markopolos, ’81, experienced in February when he testified to Congress about his frus- trated attempt to warn the Securities and Exchange Commission (SEC) about Bernard Madoff’s alleged $50 billion Ponzi scheme. It wasn’t just that Markopolos had the entire House Finance Committee star-struck. As California Congressman Ed Royce put it, “It’s not too often we get good guys at this table.”

No, it wasn’t that Congress called him a Greek hero, urged him to take his story to Hollywood, or offered him a job leading a whistleblower department within the SEC.

Perhaps most gratifying for Markopolos was the rare chance he had to confront the massive bureaucracy that for nine years ignored his warnings that Bernie Madoff’s exclusive investment strategy was nothing more than a Ponzi scheme, a grubby little rip-off scam developed in the city where Markopolos proudly works, Boston.

Flagging fund as fraud

For nine years he badgered the SEC to investigate the Madoff investment club, which started as what Markopolos came to view as a $7 billion rip-off and now looms as the crippling salvo to the American market—an estimated loss of more than $50 billion to investors. In 2005 he sent the SEC a paper with 29 warning flags under a bold-faced headline: “The World’s Largest Hedge Fund is a Fraud.”

How easily Markopolos, a certified fraud examiner and former chief investment officer, was dismissed as a bottom-feeder eccentric.

“I gift-wrapped and delivered the largest Ponzi scheme in history to them, but somehow they couldn’t be bothered to conduct a thorough and open investigation because they were too busy with matters of high priority,” he said during his testimony.

Wetting his whistle at Loyola

Reached by phone, Markopolos said he couldn’t speak about the case, but he stayed on the line just long enough to recall his time at Loyola briefly.

He joked about spending too much time in the Rathskeller—a campus bar during the ’70s and early ’80s when the drinking age was 18—and marveling about a quaint now-gone era where students could drink beer with professors and have friends in the administration. “It was a close, tight-knit community,” he said.

During Markopolos’ years at Loyola, As and Bs were tough to come by and demanding professors could sense when students were taking their courses lightly. He remembered an economics professor throwing an eraser at a student—not Markopolos—who was dozing off during a lecture.

Serving as ‘the good guy’

According to 1998 press accounts, Markopolos’ company, Rampart Investment Management, asked him to decode the strategy behind Madoff’s stunning returns. It didn’t take long, Markopolos told Congress more than 10 years later, to realize that it would be impossible to match Madoff’s success without cheating. That’s because Madoff’s investments showed no fluctuations.

As he testified, Markopolos took some glee in explaining the impossibility of a fund completely avoiding the normal dips and climbs of the market. Not long after that, Markopolos received the cold shoulder from the SEC. He went on to form his own investigating company, building a case even as he feared for his life. As he looked more closely at Madoff’s investments, Markopolos allegedly discovered off-shore accounts which he suspected were involved in organized crime money.

When pressed by Congress to detail his perceived threat, Markopolos looked straight into the camera.

“I want to make this perfectly clear to all those Russian mobsters and Latin American drug cartels out there,” he said. “I was acting on your behalf, trying to stop him from zeroing out your accounts. I’m the good guy here.”

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