Bernie Madoff executed the largest Ponzi scheme in financial history, swindling money from the rich and famous for 17 years. Among his victims? Celebrity couple Kevin Bacon and Kyra Sedgwick. For more than a decade, they stayed mum about the major loss. But recently Bacon broke his silence on the SmartLess podcast, speaking openly with hosts Will Arnett, Jason Bateman, and Sean Hayes.
The Ponzi Scheme
Bernie Madoff was a Wall Street outsider. Born and raised in Queens, Madoff was a plumber before entering the financial sector, starting off as a penny stock trader. He experienced some early failures — Madoff was bailed out by his father-in-law — but eventually founded Bernard L. Madoff Investment Securities, a big-time investment firm which had grown from his early penny stock brokerage.
By the time Madoff was arrested in 2008, his company was the sixth-largest market maker in the S&P 500.
And it was all built on lies.
As a money manager for America’s wealthiest echelon, Madoff appeared to be a solid bet. With his scrappy backstory, Madoff seemed not only dependable but respectable and he offered clients a history of seemingly high returns with little risk.
Those returns were created using split-strike conversion, according to Madoff, which is a real trading strategy. But Madoff was depositing client money into one single bank account — which was then used to pay off older clients who wanted to cash out. In short: he was defrauding investors.
It’s been proven that Madoff ran his Ponzi scheme for 17 years, though it likely stretched back further. Madoff’s account manager Frank DiPascali later testified that the fraud dated back to 1975, at least.
In 2008, though, it all came crashing down. When the financial crisis hit, clients suddenly requested a total $7 billion in returns — which Madoff simply didn’t have. Desperate, Madoff came clean to both his sons, Andrew and Mark, who were employed at Bernard L. Madoff Investment Securities. And the next day, they turned their father in.
Madoff was arrested on Dec. 11, 2008, and three months later, pleaded guilty to 11 federal felonies. He was sentenced to 50 years in prison and forced to give up $170 billion as restitution. But that was just the beginning of the Madoff family’s fall from grace.
Exactly two years later, Mark committed suicide by hanging. He was found dead in his New York apartment on December 11, 2010. Then, in 2014, Andrew passed of lymphoma at age 48.
All told, Madoff stole $20 billion in principal funds but, since clients were expecting growth, the real missing amount was closer to $65 billion.
Only some of that money was ever recovered for victims, as the actor Kevin Bacon recently discussed on the podcast, SmartLess.
Kevin Bacon’s Reaction
When Kevin Bacon appeared on the popular podcast SmartLess, listeners were not expecting the guest to shed any light on the Ponzi scheme scandal. Save for a brief comment in 2017, both Kevin Bacon and his wife, fellow performer Kyra Sedgwick, have remained tight-lipped about the debacle.
But Bacon is very friendly with the SmartLess co-hosts: actors Jason Bateman, Will Arnett, and Sean Hayes. So, naturally, their conversation was unguarded. And it took an especially blunt turn when Hayes asked Bacon directly about the Bernie Madoff fallout.
“We can edit this out,” Hayes said to Bacon, knowing this was uncharted territory. (Hayes’ and Bacon’s relationship dates back to the early 2000s, when Bacon appeared twice on Will and Grace.) But clearly, Hayes was curious. And Bacon indulged him.
“We had most of our money in Madoff,” Kevin Bacon admitted on-air. And he went on:
“There’s obvious life lessons there. You know, if something is too good to be true, it’s too good to be true. And when something like that happens, you know, you look at each other, then you go, ‘Well, that sucks. Let’s, roll up our sleeves and get to work.’”— Kevin Bacon on SmartLess
When asked whether any of his wealth was recovered, Bacon said that, “It’s a complicated thing to explain… but yes, we got a portion of some money back and there was also a lawsuit.” However, whatever he and Sedgwick received was obviously not close to their projected returns.
Still, Bacon made sure to acknowledge who had it worse: “Old people, people whose retirement funds were completely decimated,” Bacon said. “There’s always gonna be somebody that’s gonna have it a lot worse than you.” Unlike those other victims, both he and Sedgwick can continue to work — as highly paid actors, no less.
“We’ve made it this far, our kids are healthy, we’re healthy… we can still both work,” he said, providing a purely positive perspective on the situation. As Bacon himself concluded: “I think people will be not happy to hear me whining about money.”
…Especially considering his current slate of new projects.