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A Decade on, the Fate of Madoff’s Mansions

The fallen financier’s real estate in New York, Palm Beach and the French Riviera were sold for restitution, but now the properties have a new life—and far bigger price tags.

What I Did
     This story took months to develop, and the reporter worked hard to determine the properties' histories through U.S. Marshals Service and public records. I edited this to make the technical aspects more readable. Like other stories of this nature, it required significant vetting from the legal team.

By Katherine Clarke

June 21, 2018

When real-estate agent Jason Haber first viewed Bernard Madoff’s penthouse on Manhattan’s Upper East Side in 2009, he saw Mr. Madoff’s personal belongings still in the apartment—as if the disgraced financier had just stepped out of the room. White polo shirts were stacked in a drawer. An electric shaver sat on the bathroom vanity.


“It was so awkward because you knew it was all his and it felt weird being there,” said Mr. Haber of Warburg Realty, who was vying to get the listing from the government. “There were federal agents all over the house inventorying everything. They asked me to surrender my phone because no one was allowed to take photographs.”


It has been almost 10 years since Mr. Madoff confessed to his sons that his investment company was basically “a giant Ponzi scheme,” estimated at the time to represent about $50 billion.

His confession set off a chain of events that led to the court-ordered seizure and sale of his four prime real-estate properties, including the Manhattan penthouse where Mr. Madoff had spent several months under house arrest. Proceeds from the sale of the penthouse, his Hamptons beach house, a Florida home and a villa in the South of France, among other assets, were used to pay restitution to his victims.

Today, Mr. Madoff is nearly nine years into a 150-year prison sentence after pleading guilty to 11 counts of financial and mail fraud, money laundering and perjury related to the Ponzi scheme. Meanwhile, the properties, mostly sold at the bottom of the real-estate bust, have gained in value by millions of dollars, partly because of the real-estate recovery and partly because of improvements made by the homes’ new owners.

The infamous Manhattan penthouse where Mr. Madoff and his wife, Ruth, spent most of their time, for example, sold in 2010 for $8 million. Today, its estimated value tops $13 million, according to industry experts. Here is the story behind the sales, most of which were organized by the U.S. Marshals Service, with estimates by real-estate professionals of what they are worth today.

New York penthouse

Sold for: $8 million

Estimated value today: $13.268 million

Mr. Haber, who interviewed to get the East 64th Street listing but wasn’t awarded it, recalls the apartment looked dated when he toured it in 2009.

“I remember I said to one of the marshals, ‘Madoff certainly didn’t use the money to keep up the house,’” he recalled. “Whoever bought it was going to need to put a lot into it.”

The property had been purchased by Ruth Madoff in 1984 and was valued at about $7 million by the authorities. It sold for $8 million in 2010 to Alfred Kahn, the former chairman and CEO of 4Kids Entertainment and the executive behind the Cabbage Patch Kids phenomenon, and his wife, Patsy. Mr. Kahn said he thought the penthouse was a value proposition at the time.

“I thought no one would buy it, period,” he said. “The government was vetting everyone before they’d let you see it. I thought it would take out a lot of buyers who didn’t want to be vetted.”

The Kahns later divorced, and Patsy Kahn relisted the home for $17.25 million in 2013, later reducing the price to $14.5 million. It ultimately sold for the lower figure in 2014 to Lawrence Benenson, a real-estate executive, public records show. Mr. Benenson didn’t respond to a request for comment. Ruth Madoff, who was never charged with any crime pertaining to the scheme, couldn’t be reached.

The duplex apartment, located in a building dating to 1927, had Neo-Classic-style features, including Greek-inspired window frames, attenuated pilasters and a Vitruvian wave in limestone, according to a listing for the property from that period. It had three bedrooms and 4½ bathrooms and a sprawling terrace with triple exposures

Michael Graves of Douglas Elliman, Ms. Kahn’s real-estate agent at the time, said the Madoff name was good for publicity but also worked against the seller, because some prospective buyers found the connection off-putting. They couldn’t imagine hosting friends in the former home of the swindler who had possibly lost their friends’ money, he said.

“It was a complicated affiliation,” Mr. Graves added. “Over time, it’s gotten better. But at that time, it was a little more poignant. There were people still grappling with their losses. There were people who simply turned away from even looking at that home based on the historical context.”

Ms. Kahn recalled first visiting the home out of curiosity but quickly saw how she could improve it. “There were big awnings that hung over the windows, so you never saw a glimpse of sky,” she said. “It was as if he was consciously, or subconsciously, trying to hide.”

When she moved in, Ms. Kahn invited her friends over for a so-called smudging party, she said, where they burned lavender and sage, and recited prayers and poems, to rid the home of negative energy.

Mr. Graves said it helped that his client had banished the dark-colored drapes and brightened up the home with whimsical art. She also hosted charity fundraisers there and would have guests write their names on the door. “She had this rainbow collection of permanent markers everyone used as they came in,” he recalled. Anyone willing to see the home, he added, would be met with a cheerful image.

If the apartment were to sell today, it would likely trade for a similar price to its 2014 sales price, provided no further work has been done, Mr. Graves said. In 2014, the median price for a three-bedroom Manhattan home was $3.728 million, compared with $4.094 million in 2017, according to a report by Douglas Elliman.

Appraiser Jonathan Miller said the market for luxury New York sales—classified as the top 10% of homes—had dipped by about 8.5% since 2014. All other factors being equal, that would equate to a value for the apartment of about $13.268 million today.

Cap d’Antibes villa

Sold for: About $1.3 million

Estimated value today: $1.6 million

Mr. Madoff’s home in the Cap d’Antibes area of the South of France was a three-bedroom apartment in a Mediterranean-style villa with terra-cotta roof tiles and green shutters, according to Guillaume Turquois, the agent who represented Mr. Madoff in his purchase of the property.

It was located in the Chateau des Pins development, a luxury community with tennis courts and sea views. It has 24 apartments across seven villas, Mr. Turquois said.

The Madoffs bought the property in 2000 or 2001, according to a filing by Mr. Madoff’s lawyer in 2009.

It was sold by public prosecutors in France to a Russian businessman for about $1.3 million in 2009, Mr. Turquois said, confirming reports in the French press. Mr. Turquois didn’t represent the French government in that sale of the property.

Mr. Turquois said the apartment was unremarkable. “It was nice. I won’t say luxury fixtures. There was nothing extraordinary,” he said.

If it were to come on the market today, the apartment would likely be valued at roughly $1.6 million, based on current market conditions, Mr. Turquois said.

Palm Beach waterfront home

Sold for: $5.65 million

Estimated value today: $12.1 million

The Madoffs bought their Caribbean-style Palm Beach, Fla., property in 1994 and didn’t do much work on it. Mr. Madoff and many of his clients were members of the Palm Beach Country Club.

The real-estate agents marketing the property for the Marshals Service in 2009 called the five bedroom, roughly 8,800-square-foot property a “classic island home.” It had high vaulted ceilings, a covered loggia, a pool and a private deepwater dock for a yacht.

While it lagged behind the other Madoff properties during a weak Florida luxury market, the home was purchased from the marshals by the Texas-based Bray Children’s Trust for $5.65 million in 2010. The buyer hired Michael Perry of MP Design & Architecture in Palm Beach to renovate it.

The trust then resold the home in 2013 for $9.1 million to a Garden City, N.Y.-based company identified in public records as Algonquin Partners LLC. Records link that company to Austrian Prince Alexander von Auersperg. Neither the trust nor Mr. von Auersperg could immediately be reached for comment.

As for what the property might sell for today, prices for high-end homes in Palm Beach have risen substantially since the home last sold in 2013, according to findings by Mr. Miller. For luxury homes, defined as the top 10% of sales, they increased by 33%, meaning the home could be worth as much as $12.1 million, all other factors being equal.

Hamptons beach house

Sold for: $9.41 million

Estimated value today: $21 million

The Madoffs’ Montauk, N.Y., home was decorated in a similarly dark aesthetic, with Formica countertops and dark oriental rugs.

Mr. Miller, an appraiser with Miller Samuel, recalled watching a video tour of the property offered to the media, and remembered that the host, a U.S. Marshal with a bulge from a firearm on his side, speaking of the property’s “understated elegance.”

Owners Steven and Daryl Roth bought the roughly 3,000-square-foot beachfront home, which has unobstructed views of a public beach and a gunite pool overlooking the ocean, for $9.41 million in 2009 and completed a huge renovation spearheaded by designer Thierry Despont. They installed a new staircase and moved the master suite from the ground floor to the second floor.

The Roths are selling because they have two other homes nearby in East Hampton and don’t have much time to spend at the Montauk property, listing agents Gary DePersia and Joan Hegner of the Corcoran Group previously told The Wall Street Journal. The property is on the market for $21 million. Mr. Roth is chairman of Vornado Realty Trust, a real-estate company. The Roths declined to comment.

Mr. Miller said he rarely saw a substantial premium or a discount on a property based on its connection to a boldface name such as Madoff’s.

“For every example that can be provided for someone that paid a premium, you can provide one or more examples of a discount,” he said.

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