On March 12, 2009, Bernard Madoff pleaded guilty to operating the biggest Ponzi scheme in history.

It was redemption of a sort for Harry Markopolos, a financial analyst-turned-investigator who spent nearly a decade on Madoff's trail — and whose warnings were largely ignored by securities regulators.

Markopolos writes about his crusade in No One Would Listen: A True Financial Thriller. It's a chronicle of what Markopolos and many other critics see as ineptitude at the Securities and Exchange Commission.

Madoff didn't leave any footprints in the market because he never traded stock, Markopolos explains: "It was all made up and his story was so fanciful and far-fetched that the SEC should have seen through it immediately. And they didn't."

The SEC's Office Of Investigations issued a report last August on why they overlooked Bernard Madoff and Markopolos' tips for so long.

Regional Turf Wars At The SEC

Markopolos tells NPR's Steve Inskeep that one of the problems with the SEC was "regional turf rivalries" between the Boston and New York offices that resulted in a lack of communication between the two: "They got along about as well as the Yankees and Red Sox did, unfortunately."

He also says the SEC is staffed by lawyers who don't understand the mathematically complex financial products that are traded on the markets these days.

Finally, Markopolos describes poor investigative ability at the SEC. One staffer at the agency wouldn't follow up on his tips because he wasn't an employee of Madoff's, and she therefore didn't consider Markopolos an insider.

"That same person in her deposition said that the only way I would qualify as a whistleblower was if I came in with a tape recording of Bernie Madoff admitting he was running a Ponzi scheme," Markopolos says. "Obviously I didn't have that tape and if I did I wouldn't have needed the SEC."

Uncovering Madoff's Scheme Years Ago

Markopolos realized Madoff was running a Ponzi scheme nearly a decade ago, when he was working as an options trader at a Boston financial firm that was losing customers to Madoff's more profitable strategy. His boss asked him to replicate Madoff's strategy, but Markopolos couldn't, because it wasn't real.

"It's hard to compete with a Ponzi scammer, because all he has to do is type his performance returns into the computer," Markopolos says. "He doesn't have to manage his returns according to the market, whereas I had to."

Doing The Math

Markopolos and his team analyzed publicly available information about Madoff's network of "feeder funds" from offshore companies. The team pretended they wanted to invest in these funds. Markopolos says he knew he was dealing with a fraud within minutes of examining the materials.

"I read his strategy statement, and it was so poorly put together," Markopolos recalls. "His strategy as depicted would have trouble beating a zero return, and his performance chart went up at a 45-degree line: that line doesn't exist in finance, it only exists in geometry classes."

But, Markopolos says, his bosses were taken in by Madoff's reputation.

"They bought into the story. They bought into his patina of respectability that he was a market maker — one of the largest on the street," Markopolos recalls. "They thought he was a Wall Street titan, and they had no reason to doubt him. But they didn't know that math like I did."

A Ruthless Portrait Of Madoff

Markopolos offers a ruthless depiction of Madoff, claiming he was taking money from organized crime. He says Madoff would have had him killed had he known the financial analyst was on his trail rather than let organized crime groups find out their money was going into a Ponzi scheme.

Despite spending a decade nearly obsessed by Madoff, Markopolos has never met the man and says he doesn't want to.

"I think he is a pathological liar," Markopolos says. "Why would I want to sit there and be lied to?"

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