Ponzi schemer Bernie Madoff has died in federal prison: AP

Yahoo Finance’s, Adam Shapiro and Myles Udland report the death of Bernie Madoff.

Video transcript

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MYLES UDLAND: All right, welcome back to Yahoo Finance Live on this Wednesday morning. Some breaking news just crossing the wire. The Associated Press reporting that Bernie Madoff has died in federal prison. Madoff, of course, famous for the Ponzi scheme he carried out over many years leading into the 2008 financial crisis.

Yahoo Finance's Adam Shapiro joins us now. And Adam, you spoke to Mr. Madoff many times through the years. And I guess, as we think now about the totality of Madoff's legacy on financial markets, on the Wealth Management Business, how are you kind of thinking about this news in the initial aftermath of this breaking story?

ADAM SHAPIRO: Well, a lot of people have been waiting for Bernie Madoff to die for a long time. He had, I think, it was stage four kidney disease. So, it had been expected. But when you talk about the Madoff Ponzi scheme, remember, this was huge. Had the investment returns been legitimate, this would have been a $65 billion enterprise.

But in fact, what he had done, it was a Ponzi scheme. You should know that Irving Picard, who is the bankruptcy court trustee, has actually been able to recover close to $19 billion on behalf of the thousands upon thousands of people that Bernie Madoff was able to scam.

Now, they've also denied several claims because there are people who are referred to as winners, because they took money out greater than the amounts that they put in. But they've received more than 16,000 claims. But when you talk about Bernie Madoff and the scope of what he did, Myles, I interviewed him at federal prison in Butner, North Carolina, back in 2013, face to face.

He insists that only 4,000 people were harmed by what he did. The problem with that is those were direct investors into the Madoff firm. There were thousands upon thousands of people who invested via companies like Fairfield Greenwich, which were funneling money to Mr. Madoff, unaware that they were being invested in Madoff kinds of what we now know to be a Ponzi scheme.

Just about everybody surrounding Mr. Madoff has died or gone to prison. His right-hand man, he actually died about three years ago. Madoff's two sons, one committed suicide. The other died from cancer. I mean, this is a tragedy on the scale of a Greek tragedy in so many ways.

But the bankruptcy court trustee continues, that office, Picard's office, continues to claw back money from people who took more out of the Madoff Ponzi scheme than they put in. And in that interview with him, Myles, I remember my impression was, he's just like your grandfather. He's-- he was kind, he was calm. He insisted that the 4,000 people he had harmed had been made whole.

That was not true, but he insisted they had made-- been made whole. The one thing he pointed out is that very large banks, like JPMorgan Chase, he said they knew what he was doing. Remember, they had been his bank for 20 plus years. And in fact, there are court documents that were never allowed to go to trial, that Irving Picard had filed, in which they showed emails in which people at JPMorgan Chase raised the flag, the red flag that Madoff was running a Ponzi scheme at the very time Chase was getting ready to offer investment vehicles in Madoff to its clients.

They did not pull the plug on that. They just cut the amount of the investment they were going to offer the clients from $1 billion to, I think, it was a 1/4 million dollars. So there's a lot to be said about whether JPMorgan Chase actually knew.

Remember too, they paid a fine, JPMorgan Chase, of more than $3 billion, but either admitted or denied knowing anything about it. You tell me, who pays $3 billion when you neither admit nor deny, you know something about something going on, $3 billion? Madoff is dead, 82 years-old, and a lot of people probably breathing a sigh of relief, people he harmed. Myles.

MYLES UDLAND: Yeah, and Adam, just finally, before we let you go, and you kind of talked about a little bit in your interaction with him, but you know, do you think he really understood what he had done? I mean, it sounds kind of the way that Madoff is pitching it to you years later, while he's sitting in prison, he's insisting to a member of the media that everyone was made whole. It seems that he just never fully grasped the magnitude of this scam that he had pulled off. How did you kind of--

ADAM SHAPIRO: He grasped it. He knew exactly what he was doing. He was a liar. He was a cheat.

His brother helped him. His brother served 10 years in federal prison for it. He knew exactly what he was doing. And there were five money folk around him, who as far back as 1987, were helping him finance the beginning of the Ponzi scheme, and they were getting returns.

Remember, they were allowed to dictate how much of a return they would get. One of those gentlemen was found dead at the bottom of his swimming pool, and that was ruled because of a heart attack. I think only one may still be alive.

Carl Shapiro may still be alive. He was in his 90s when this all blew up. So, no good comes to anybody who was in the orbit of Bernie Madoff.

MYLES UDLAND: All right, Yahoo Finance's Adam Shapiro with an update on that breaking news for us. Again, Bernie Madoff, dead at 82 in federal prison.