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Erin Arvedlund is an investigative journalist who wrote one of the first investigations into Bernard Madoff, back in 2000, for Barron's.

Her book, Madoff: The Man Who Stole $65 billion is an attempt to answer the questions left when Madoff pleaded guilty to all counts, with no trial held.

Madoff is the result of Erin's investigations into the $65 billion fraud that left Americans reeling. In an interview with Myfinances, Erin talks about what we can learn from the case and how he got away with the fraud for so long.

You obviously put a lot of research into the book. Did you feel like you knew Madoff by the time you finished?

I would say it was a lot like investigating a crime story. I did find that he was a pathological liar, I mean, he lied even up to the end in his guilty plea, by saying he had committed the crime alone, but we now know that to be false.

His right-hand man Frank DiPascali just pleaded guilty a few weeks ago and explained that he was helping Madoff produce these millions of pages of phony statements and trades and so forth.

So I would say that I discovered that Madoff was a liar, I wouldn't believe a word he says.

Do you think we will see more people being indicted for their part in the fraud?

I think that Madoff's brother Peter will be indicted and DiPascalli and other co-conspirators, although I'm not sure it's going to be his sons.

There's not enough evidence to indict Madoff's wife Ruth, yet, according to the trustees who are sorting out the mess of getting the money back.

You mention many red flags in your book that put off several investors, yet many still gave Madoff their money.

Why do you think they ignored these warnings?

Nobody likes to question their own judgement when it comes to their finances but I'm sure you've taken referrals when it comes to your accountant, or where to bank, and no-one likes to be told, no, you're not taking the right decisions.

He also marketed himself as the anti-scam. He really wasn't returning a sky-high annual performance, so people felt they were doing the prudent thing by investing with him.

Are investors to blame for not asking enough questions?

In some cases investors are to blame, they had the opportunity to do due diligence. The people who had no idea he was running their money, from feeder funds and so forth, they're the people I really feel sorry for because they had no opportunity to investigate him.

Where you surprised when your original article in Barron's was not followed up by the Securities and Exchange Commission (SEC)? Were the regulators to blame for not asking enough questions about Madoff?

I was expecting an angry call from Madoff or a heads up from the SEC, but apparently they did pass the article around, if you read the inspector general's report, the one that came out a week or two ago on the SEC's internal affairs division, there was a series of bumbling mistakes.

It was almost like The Office meets Scotland Yard. It was inexperienced, young lawyers running the place who didn't really know what they were looking for.

Hopefully with hedge funds, people are going back to their portfolio manager and asking who has custody over their funds, they're asking how their returns are made, just general common sense questions.

And maybe there will be more regulation of hedge funds, but that remains to be seen.

Are there more Madoffs out there?

Definitely. More Madoffs came out in the intervening months, I mean, some people in the US say social security is a giant Ponzi scheme, with more money coming in than being paid out. But I think it has definitely drawn attention to the hedge fund industry.

Could this have happened in the UK, or was it unique to the US?

I think not to this scale and not to this length. really Madoff was preying on large populations and on the hedge fund industry, which really coincided with the bull market in the US, in an age where people were very greedy and thought that the market could only go up.

Has regulation tightened since the financial crisis?

I think it's getting harder to hide, I think the UBS case shows this. It is so easy to trace bank account transfers now. It is still very easy to launder money, though, in my opinion, if you are coming in through another country to do business in the US you can get away with anything.

There is actually a new law pending in Congress which retracts offshore money laundering but I don't see how it's possible.

Do you think better financial education could help people avoid becoming victims to fraud, and how can we avoid scams like this?

I think all we really need to do is ask really basic questions like how does this person make their money and if I don't understand it then. just more common sense.

I think the main thing is you have to find out who has custody of the assets, make sure that the portfolio manager can't move your money around without first getting their permission, common sense things like that.

Sarah Routledge

Madoff: The Man who Stole $65 billion by Erin Arvedlund is published by Penguin Non-Fiction, £9.99.

Read Sarah Routledge's review of Erin Arvedlund's book on inthenews.co.uk.