The End of the Feast (1)
“Young miss, isn't Arthur Andersen one of the Big Five accounting firms? If they were in charge of the audits, there's no way they wouldn't have spotted a Ponzi scheme... that's what I'm thinking.”
Ha Young-il ventured the question cautiously. He was basically saying I might be wrong. But this time, I was right. Well, “this time too” would be more accurate.
“Yeah, if they'd actually looked properly, they would've known.”
I stood alone on the balcony of my villa in America, gazing out beyond the window. The banquet had ended, and the sunset was sinking languidly into the horizon.
“So... does that mean Arthur Andersen didn't even bother checking the books properly?”
“...”
I paused at his words. I still hadn't pieced it all together myself.
Was it coincidence... or deliberate...?
Arthur Andersen. One of America's premier accounting firms. These days, they even dabbled in corporate consulting, making it no exaggeration to call them the top earner among accounting firms. And yet, they didn't just turn a blind eye to accounting fraud—they actively encouraged it, only for it all to blow up in their faces about a decade later, shattering the company completely.
That's what had me puzzled now. Did Madoff know and hand over the books for them to falsify...? Or was it just a name-drop for credibility?
If the latter, Arthur Andersen probably just rubber-stamped the fake books after a cursory glance. Sure, that's fraud, but the “we didn't know” defense tends to hold water enough to get by.
But if they took those books and actively cooked them themselves? That's a whole different story. Failing to report a Ponzi scheme of this insane scale right away means their balls are already hanging out there, and they'd fight tooth and nail to cover it up. You wouldn't think anyone sane would try to bury something this big, but these guys had already done it multiple times in my past life before their firm got ripped apart...
“Sigh. Guess I'll have to go see for myself. Back to New York... time to clock in after a long break.”
-Thud.
The documents Madoff had sent came spilling out. The statements and performance reports, complete with Arthur Andersen's seal of approval, looked perfectly legitimate. At a glance, anyway.
I'd be the one verifying that.
Wall Street, Bernard L. Madoff Investment Securities.
“Move those files, quick!”
“Oh, they're coming? Right now?”
“Yeah! Aren't there copies in the other office...? Shred the copies, and stack anything that's only in original into those boxes over there!”
Employees with panicked looks scurried about, hiding documents here and there. It was completely unexpected timing—like they'd planned it perfectly for this moment—that word came of the audit team arriving.
Damn, how did they move this fast...?
No time even to organize; it was a total raid. They were acting like they knew exactly when those $3 billion would fill up. In reality, they'd probably been sharpening their knives ever since the proposal dropped, ready to strike at any moment.
The thought of Alpha Fund pulling out all the stops to crush a rival made his teeth chatter. No business ethics from those supposed partners.
The silver lining? They'd prepared for this long ago. Madoff hadn't assumed the party would last forever. That's why he'd set up all these safeguards in a frenzy...
His heart pounded. How long had he waited in anxiety? Then an employee waiting at the front gate came rushing in with a report.
“Th-they're here! The audit team's pulling into the front lot right now...”
“Stop everything and stuff those files away!”
He gritted his teeth and barked the order. He couldn't give them a single inch. They'd nitpick everything to tarnish the fund's reputation. And if that led to discovery...
It was over.
Ha Young-il, director of Alpha Fund, stepped into the Madoff offices with a polished business smile. Madoff shook his hand, sweating bullets despite his efforts.
Director title or not, the rumors say he's MD level—Managing Director. No ordinary guy.
Considering only the top rep outranked MDs at Alpha Fund, he was essentially one of the fund's key principals. One of Wall Street's top-performing fund managers over the past few years... So Madoff hadn't let his guard down; he'd prepared meticulously. The short notice was the only hitch..., but Arthur Andersen had smoothed that over nicely.
“Hmm, as expected from a fund with such a long-standing reputation—the office setup is top-notch. Maybe we should get some furniture like this for ours...”
“Money management was with... JP Morgan, right? Let me see... Ah, BBB? Not bad here, aside from the godawful naming sense. Alpha Fund's name is kinda weird too, huh? Just saying.”
Ha Young-il strolled casually through the building for a supposed raid, making small talk. Madoff filtered his words carefully, guiding him away from sensitive areas as much as possible. Anywhere without key ledgers.
“Haha, look around all you want. Oh, the folks from the accounting firm... my staff will show them around.”
The good news was that Ha Young-il's team members were from different departments. As a rival, he didn't have much access authority to Madoff Fund to begin with. What he could see was limited to what any fund investor could view—nothing more.
The foundations that invested in Madoff hadn't sent him for no reason. They'd judged it fine to do so.
Of course, given the nature of a Ponzi scheme, even that level of access was enough to doom the fund...
“Hmm... no issues here.”
-Rustle.
“Looks like the handover docs here are sloppy. I get it was rushed, but there are big gaps in the stock trading records. Especially the off-exchange trades—feels like a ton of option short positions are missing...”
-Rustle.
“Huh, this is odd... No auditors been to other spots? It's so disorganized, hard to find anything...”
One accountant flipping through binders asked. The employee, sweating profusely, replied.
“Pardon? Ah, yes. We've hardly ever had auditors come inside the fund before... Sorry about that!”
He looked suspicious but nodded soon enough.
“Well, could be. Maybe they just reviewed docs remotely... Lots of places do that these days. Still, mind if we dig deeper?”
The accountants naturally started fudging the gaps. It was normal. All within normal bounds.
The problem—and he'd say it again and again—was that Ponzi schemes blow wide open under a proper audit!
It'll be fine. It has to be...
Arthur Andersen's handiwork was solid. They could nitpick minor spots, but the fund flows were airtight. Ghost companies set up for “investments,” then “profits” from stock trades reported back... Rotating through multiple shells made it tough to trace without checking every single one.
And all the accountants were right here.
No way they'd track down every “invested” company one by one for cross-checks.
Wait... every one...?
Something felt off about “every.” Could he be sure all accountants were accounted for?
A chill hit Madoff. He asked Ha Young-il.
“Oh, by the way... where'd that young lady who was with you go? She seemed pretty close...”
Yoo Ha-yeon, that clueless investor. That loose woman had piled up $100 million in donations just on auction day. Normally, he wouldn't suspect. She wasn't even on the audit team.
Boards could bring one extra with director-level access, though...
Madoff's instincts screamed. Something was wrong.
This feels like...
Like stalling for time. But why? What good did dragging it out here do?
“Ah, her? She's off elsewhere now. Said she needed to check the accounting firm separately...”
“Oh, Arthur Andersen?”
Ha Young-il smiled thinly and whispered.
“No, not them. The previous firm. Oddly enough, a tiny little office in New York New City.”
One with just a single accountant... Suspicious as hell to anyone looking.
Ha, there it was.
“Guys, load every last scrap from here onto the trucks.”
“Yes, ma'am!”
People bustled in and out of the cramped office.
-Thump.
I propped my legs on the desk, black suit pants hugging tight. A men's dress shoe dangled playfully from the crossed ankle. Hands clasped, chin resting on them, I flashed a wide grin at the pale-faced accountant, who trembled at the sight.
I straightened my tie and asked.
“Well...? Care to explain how one guy audited a fund over $50 billion all by himself?”
He said nothing.