In the wealthy enclaves of Long Island and Palm Beach, people spent years trying to get on to Bernie Madoff’s client list. Some even joined the blue-blooded golf clubs where he was a member – and where he recruited many of his investors – just for the chance of meeting him.

Inside this world of predominately older, less flashy investors, there is not just shock and panic over the huge losses inflicted by Mr Madoff’s colossal swindle. There is a profound sense of betrayal. To many he was not just a philanthropic pillar of the community: many considered him a friend.

Mr Madoff’s modus operandi was based on his membership of exclusive clubs in New York and Florida, and on his image as an unimpeachable old-school banker. His company website even praised his personal touch that “harks back to an earlier era in the financial world” and his “unblemished record of value, fair dealing and high ethical standards”.

If you gave your money to Bernie, he would see you right. Nothing flashy, sure, but he was safe and would always get you a steady return. Yet he often turned investors down.

A chance to send your funds to Mr Madoff was so coveted that it was in essence by invitation only. Mr Madoff played golf, often with his wife Ruth, at the Atlantic in the Hamptons, at the venerable Old Oaks in the wealthy Westchester County, New York, and at the Boca Rio in Boca Raton, Florida, an area filled with immensely rich retired people. Some of his wealthiest clients were fellow members of the exclusive Palm Beach Country Club.

In Palm Beach, Florida, many were happy to part with hundreds of thousands of dollars of membership fees each year in the hope of an encounter with Mr Madoff. Roughly a third of the club’s members had invested with him.

He would not even consider taking a client on inside the club without an initial investment of at least $1 million (£654,000).

One of the most prominent victims of the scheme is Mort Zuckerman, owner of the New York Daily News and US News & World Report, who ran a fund with considerable sums invested. Steven Spielberg, the Hollywood director, has also been affected; his charity, the Wunderkinder Foundation, was a client.

Two of the key “go-to” men for access to Mr Madoff were Robert Jaffe, a club member and old friend, who would initiate meetings, and his 95-year-old father-in-law, Carl Shapiro. There is no suggestion that either was involved in the fraud. Indeed, they appear to have been duped as well and have lost significant sums.

The membership of the Palm Beach Country Club is, like Mr Madoff, actively involved in charitable concerns. Philanthropic interest is a requisite to join the club, which was established in the 1950s by Jews excluded from Anglo-Saxon clubs. Mr Madoff ran the Madoff Family Foundation, which donated money to numerous Jewish charities. Jewish schools and charities have been particularly badly hit. One is the Elie Wiesel Foundation for Humanity, founded by the Holocaust survivor. Yeshiva University, in New York, where Mr Madoff served on the board, also had investments with him. Some charities have already had to close down.

The shock and distress throughout Palm Beach was widespread and profound yesterday. Dozens of investors, and entire families, face ruin.

Behind the story

How to earn a place in history: Charles Ponzi

The Ponzi scheme allegedly run by Bernard Madoff takes its name from Charles Ponzi, an Italian immigrant to the United States who persuaded investors to part with their savings in 1921 by promising a 40 per cent return.

The former postal clerk said they could profit in a wheeze that used postage stamps to profit from differences between US and foreign currencies. He took money from one client, then used the cash from another to repay the first while keeping something for himself.

Ponzi arrived in the US in 1903 with just $2.50 in his pocket after gambling his savings on the journey. But he was considerably better off after taking $1 million in three hours with his first scheme. Eventually the Boston Post rumbled him and he was jailed for 3½ years.

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