Bernard Madoff: the inside story of an obsessive control freak who fooled the world By July 1, the Securities Investor Protection Act (SIPA) Trustee, Irving Picard, who is leading the asset recovery from BLMS, had recovered or entered into agreements to recover approximately $9.348bn, representing about 53pc of the total lost in the Ponzi scheme by the BLMS customers who filed claims. In the UK, the focus is on recovering the millions of pounds funnelled through Madoff's London trading operation, Madoff Securities International (MSI), which was allegedly used as a cover for the Ponzi scheme. Last month, Grant Thornton, the liquidators of MSI, launched High Court proceedings to sue MSI's former London directors, including Stephen Raven, the former chief executive, and Madoff's son, Andrew, in an attempt to recover about £33m of alleged "improper" payments. These include $27m for research that the claimants allege was worthless, and lifestyle payments to Madoff's family, notably for an Aston Martin car and a 27-metre superyacht called Bull. The liquidators do not allege that the directors knew that Madoff's business was a Ponzi scheme, but claim they breached their fiduciary duties to MSI, which was owned by Madoff. All the directors contest the claims made against them and deny wrongdoing. Mr Justice Popplewell has deferred his judgement until September at the earliest. Witnesses called to give evidence have revealed remarkable new insights into the psyche of Madoff, the one-time vice-chairman of the National Association of Securities Dealers, his industry's own watchdog, who systematically deceived regulators, investors, banks and even, most chillingly, his own family. Over six weeks from June 12, a spellbound court has heard Madoff's former directors Anthony Marshall, Colin Bond, John Purcell and Philip Toop, describe him variously as "aggressive," a "wild man" and a "control freak" - a man so obsessive-compulsive he had been known to rip up dirty carpet tiles of his Mayfair office and dive under the desk to tidy stray computer wires. Transcripts revealed here for the first time paint a picture of a man under intense pressure, possibly struggling with the growing realisation that the deceit could not last indefinitely. Purcell, who worked in Madoff's London office for 13 years until 2001, said under cross-examination: "I've seen him [Madoff] being a hell of a bully, a terrible bully, and tear a broker's throat out who worked for us . I personally would stay well clear of Bernie as best I can. Madoff appeared to choose his cast of characters in the London office with care. Seemingly scornful of their intellect - "no-one in London had a clue," he said in interviews after his arrest - the traders come across in the court transcripts as straightforward workers happy to take a fixed salary plus 30pc share of the profits in return for regular hours and daily lunchtime sessions in the much-mentioned local "hostelries." Even Purcell admitted that he and his colleagues were "probably past our sell-by dates." "I mean, when you're in your late 50s and you're still trading, it means we haven't blown ourselves away," he said. But if they weren't the sharpest money-dealers the City has ever seen, these men couldn't ignore the warning signs of their employer's volatile streak. At first, Madoff kept his "authoritarian" side semi-hidden. As Bond described him: "He could be charming, charismatic, but he could also be quite aggressive." Toop, the former head of trading, who claimed he has been "misled by the same villain who misled the rest of the world," recalled: "He had, from my perspective, a way of controlling you that was so subtle, it turns out that you didn't actually realise that you were being controlled." Further details emerged in a court exchange between Pushpinder Saini QC, acting for Grant Thornton, and Antony Marshall. Saini opened: "Is it fair to say that he [Madoff] was a controlling type, who expected to be obeyed in all respects?" Marshall: "I would think that's a fair description, my Lord." Mr Saini: "He was not somebody that you would cross lightly?" Marshall: "No." Madoff's ruthless side erupted after the 9/11 terrorist attacks, when he "absolutely exploded" when the New York Stock Exchange was closed for more than a week, according to Bond. "I couldn't even repeat the few conversations I had with him at that stage," he said. Bond elaborated: "After 9/11, the atmosphere changed dramatically in the office. Bernie became like a wild man. I took some very bad calls from Bernie. I think at the time when the Twin Towers went down Johnny [Purcell] was on holiday. He wasn't there so Bernie went absolutely ballistic. And John had arranged this holiday before so he had obviously no inkling what was going to happen. They closed [the exchange] and Bernie was swearing, using very strong language. Bond, Purcell and Marshall all resigned within a month. Pressed on why he left MSI so suddenly, Marshall told the court that, in addition to the "general atmosphere" of unease, the traders felt as though they were being spied on. He said: "They were putting in cameras in the dealing room, and generally we felt we were being watched, and as traders we had run the book for 13 years and I thought the behaviour was inappropriate." "Can I ask you about these cameras?" said Saini. Was any particular reason given as to why it was necessary to have CCTV cameras in the trading room? Marshall: "No, I don't think it was at the time." Saini: "Who was actually looking at these cameras?" Marshall: "I understand there was a camera in ... a transmitter in New York, and one upstairs in the back office." Saini: "Do you know whether Mr Madoff would actually look at the images of what was going on in the trading room in London? Marshall: "I think that's one of the reasons he put it in, yes." Madoff has claimed his descent into fraud began in 1992, when his trading operation turned from a genuine investment business, with four prominent clients - Jeffry Picower, Stanley Chais, Norman Levy and Carl Shapiro - into an illegal Ponzi scheme, so-named after the Boston clerk Charles Ponzi, but on a far bigger scale. Madoff was simply paying long-term investors with money received from new entrants to his fund, using the proceeds to fund a lavish lifestyle that maintained a beachfront mansion in the Hamptons, a villa overlooking Cap d'Antibes in the South of France, and yachts in New York, Florida and the Mediterranean. Bernie Madoff is alleged to have used a London subsidiary to purchase gifts for his family that included an Aston Martin and a yacht. With the lifestyle came the ultimate acceptance for a man who had grown up on the wrong side of the tracks in Queens, New York, where he watched his father go bankrupt before supporting himself through college by installing sprinkler systems. Madoff went on to launch his own tiny brokerage in 1960 with $500 of capital and office space borrowed from his father-in-law. Madoff has said: "Put yourself in my place. Your whole career you are outside the club but then suddenly you have all the big banks - Deutsche Bank, Credit Suisse, all their chairmen - knocking on your door and asking, 'Can you do this for me?"" So by the time the cameras were installed in the London trading room in 2001, seven years before his arrest, Madoff had too much to lose not to "control every situation," according to Bond. He said: "He [Madoff] wanted 24 hours a day to see what was going on. If anybody phoned up and asked about the company, about his family, anything that was not to do with the trading, they had to be redirected to New York. He said: 'Put them through to either myself or my sons if anybody asked any questions."" The need to control every situation spilled over into increasingly obsessive compulsive behaviour. Purcell recalled: "He [Madoff] had certain strange habits. When he came into the office, instead of turning left into the dealing room, he would turn right into the directors" room and straighten up every chair. [Then] he would turn right into the boardroom and make sure every blind was totally straight, and every computer had to be at the right level. Madoff had such a "hatred of clutter and mess," it has emerged, that he didn't like his employees to have pictures of their families on their desks and the offices had to be decorated in a strict monochrome colour-scheme. Purcell revealed: "He [Madoff] had this colour phobia, everything was black and white or grey and white. The desks had to be black, the computers had to have a black surround, and the walls were grey. Bond added: "If you had your jacket on the back of the chair, he would - while he was talking to you - he would adjust your jacket. One time, he actually climbed under the desk where I was sitting and he was rearranging the wires because the trunking and the electrical work at the old building [in London Wall] was not high tech. He was actually underneath my desk and I had to kind of move back while he just carried on. He just came out as though nothing had happened. Before Madoff came to visit, all the traders" desks had to be tidied free of papers, which gave rise to a practical joke - to put the paintings in the office at a slight angle "to wind the boys in the back office up who were scurrying around making sure everything was straight," recalled Purcell. Madoff "carried micromanagement to a new level" on Toop's first day at Madoff's New York office. "I'd brought a pear in for my lunch," Toop recalled. Something fell from the pear on to the floor and he [Madoff] came out of his office and said, 'What is this? "And he ripped up the carpet tile that the pear juice had spilt on to, he went to a closet that was right behind where the trader I worked for, Marty Joel, sat, and he got a fresh carpet tile out, put it back into the floor and said 'Wear it in" and walked back into his office." Toop continued: "Then there was Frank Di Pascali, who we know was the right-hand man in New York. He used to tell a story about a boat that Bernie had in the US, where every screw was turned to be vertical. "I can relate to that," said Purcell, who once stayed in Madoff's apartment, where "everything was absolutely in line." "Quite ridiculous, but that was him," he said. Almost like he was a failed interior designer. Purcell added: "When we were about to move into the Berkeley Street offices [in 1997] ... [Madoff] did ask us to come up on the Sunday and look at the design of the office, but we didn't turn up. So on Monday, he said: 'Where were you guys?. And then Ruth [Madoff's wife] interrupted him, and said: 'You will be pleased you didn't turn up, they spent three, three and a half hours arguing where the plumb line, the exact middle of the room, was. And that did sum up Bernie. Obsessive about detail, yes. But also - as the traders have described - by turns ruthless, manipulative, controlling, bullying, paranoid and secretive. But perhaps his most dangerous character trait was the ability to make his investors, who ranged from the L'Oreal heiress Liliane Bettencourt and Hollywood mogul Stephen Spielberg to Wall Street banks, worthy charities and members of his own family, feel as though they were becoming part of an elite club. Even after Purcell and Marshall resigned, they had conversations saying that, even though they no longer worked for Madoff, they continued to hope - right up until the time of his arrest - that he would let them leave their money in his fund. "We thought we were fortunate to be allowed to still remain in the scheme despite resigning," said Purcell. You were invited in, that was the whole thing. So I felt one of the special ones. Except, as the thousands whose lives have been ruined by Madoff will attest. It didn't turn out too special.