Making Peace With Madoff: An Interview With Alexandra Penney

Alexandra Penney/Image: Donna Svennevik

The author of a bold new memoir tells longtime friend Joni Evans about the singular experience of losing it all.

Editor’s Note: Alexandra Penney is the author of The Bag Lady Papers: The Priceless Experience of Losing It All, just published by Voice/Hyperion. The former editor-in-chief of Self magazine, she also penned the New York Times bestseller How To Make Love to a Man.

JONI: Alexandra, I’m thrilled to have you as wOw’s guest this morning.

ALEXANDRA: Hello, Joni. My old friend.

JONI: I should reveal that we are old, old buddies. While we haven’t been in touch recently, we have loved each other and admired each other from afar. And as people will understand in this emotionally moving book, The Bag Lady Papers, this is really the story of Alexandra’s disastrous brush with Bernard Madoff, whom she brilliantly refers to as “the MF.” Right?

: Yes, MF. You can decide what that stands for.

JONI: The chronicle here really starts the very first day Alexandra discovers that all her money (and this was considerable money, which we’ll talk about in a moment) has been lost in the hands of Bernie Madoff. And she finds herself, at a time when most people in their 50s and 60s are retiring, almost totally penniless – not in terms of assets, but in terms of all her savings. So Alexandra, to start – how did this happen to you?  Could you have done anything, or thought of anything, that would have prevented this disaster?

ALEXANDRA: Well, it’s very interesting. I got into Madoff through an old friend about ten years ago, because I’d always had fears of being a bag lady. I’d saved a lot of money, because I’ve worked every day since I was 16, and I had it in the bank because I’d had sort of a bad run-in with a financial adviser. Then a friend of mine said, “I can get you into this fund with an old and trusted friend,” and I did my homework. The name of the fund was Bernard Madoff. I asked about ten people – Harvard MBAs, Wharton MBAs, financial people, people who really knew how to take care of their money – what do you know about this Madoff? “He’s legendary, you’re golden if you go with him,” was the response. So I put my money into Bernard Madoff’s hands. The market tanked, as you know, last fall, the fall of 2008. And I called Madoff — I had never met the man — and spoke to somebody in his office and said, “I want to get my money out.” And she said, “Someone will call you back, but you are 100 percent in U.S. Treasuries.” So I said, “I still want to get my money out.” That was on my father’s birthday. I remember it was November 11, and I didn’t hear from them, didn’t get a statement, which usually came regularly, for that month. So I called again around Thanksgiving. Same thing, “I want to get my money out.” “Somebody will call you back, but you’re completely safe, you’re in U.S. Treasuries.” Thanksgiving came around and I got distracted, and I meant to call yet again. And then ten days after the Thanksgiving vacation all hell broke loose and my best friend called me and she said, “Madoff’s been arrested.”

JONI: God. We now know how many people were victims of the Madoff scandal, people who were multimillionaires and people who were living off the foundations that his “successes” supported. So this is a tsunami for everyone — rich and poor. In your case you had money gleaned off a spectacular career – editor-in-chief of Self magazine; you were the beauty editor before that, many years before, at Glamour; you wrote bestselling books, which we’ll get into. So what were your assets with the MF? How much money did you have with him, or in general?

ALEXANDRA: Joni, I’m … I’m always asked how much money I had with him. There are still losses pending, because I had my money, like most people, in an individual retirement account (IRA), which is like a 401K. And there are lawsuits pending for the people that had the IRAs, and the lawyers have said to us, “Do not give numbers.” However, I will tell you it was everything I’d ever saved, and I was living off of that money and whatever money I made from photography, because I was always an artist and went back to art. At the time Madoff was arrested, the art market was tanking, so I wasn’t making any money in the art market either. So it really was a catastrophic time. And it was, as I said, all the money I’ve ever earned. But that, in a way, was the saving thing. I’ve always worked, so what do you do? Photography wasn’t going well; I called Ed Victor, probably someone you know …

JONI: Ed, we should explain, is a spectacular literary agent of note. So yes, go ahead.

ALEXANDRA: So I said, “Ed, I need work.” He’s been a guardian angel. I found out the Madoff thing happened on Thursday night at 6:30. I went to Madoff’s offices, because I didn’t know what else to do with myself, the next morning at eight o’clock and of course couldn’t see him. I was trying to wait until people’s offices opened, and then I called Ed at nine. And he called me back and he said, “Tina Brown wants you to do a blog for The Daily Beast.” I learned from doing that blog — literally that day — the power of online, and what you are doing with your own website. It is an astonishing medium, as we all know. So I started these blogs called “The Bag Lady Papers” because I really was afraid I was going to end up as a bag lady. The fears were real, but my situation — well, I wasn’t going to be a bag lady. There are millions of people, and many thousands of Madoff victims, who are far worse off than I was. But I immediately had to start to work.

JONI: Well, let’s talk about this bag lady fear, which plays throughout your book so realistically. You had these fears even as a child, when you really didn’t need to have fears about being a bag lady.

ALEXANDRA: Yes, they’re extreme.

JONI: Tell us a little bit about that.

ALEXANDRA: Joni, the fear is basically that you will be alone, destitute, abandoned. And it is common to women; very few men have it. It is usually common to successful women. A couple of months ago I read in the paper that Oprah Winfrey kept a $50 million “bag-lady fund.” But many of us have this fear. It comes – and I started to do a lot of psychological background on it – it comes from early childhood. I had a very comfortable childhood, lived in a beautiful house, cars, a housekeeper. But it comes from an absent parent, which I had; or a sense of emotional abandonment, which many men and women have, but women seem to get these fears most. So that’s where the bag lady fear comes from.

JONI: And this indeed prompted a renewal of bag lady fears, whether it’s real or not. I mean, it’s palpable, reading your panic and what it’s like for you to wake up every morning at 4:30 and wonder, “What the hell’s going to happen? What’s next?”

ALEXANDRA: I still have that.

JONI: But you had very good friends; you had a son who reached out to you right away; you have a companion or boyfriend who was there for you; and you had friends who came forth. Did that alleviate the panic?

ALEXANDRA: Well, first of all, nothing alleviates the panic. I still have it. And what I have done to deal with it is to discipline myself. And here’s the key to the whole thing: to not think about anything more than the present. In other words, if I think about what’s going to happen to me when I get older, if I get sick, or I can’t work, I get a real – not anxiety attack, but a panic attack. So my discipline has been to say, “I’m sitting here. I’m talking to Joni. We’re having a good conversation.” I don’t think about what tomorrow might bring. So that’s the first thing, is you have to alleviate your own panic, or you have to find a way to deal with it. That was my way. Friends and family – I have a very small family. I have one son and one niece, and they both live in California, and I would never want to be a burden to anyone (although both have said, “Come live with us.”) Friends will surprise you. They will be so extraordinarily generous; people that you hardly know, or acquaintances, will offer their houses, whatever they can do. There are other friends, who will also surprise you … I guess they would be what is called “fair-weather friends.” They shy away from me. I had this funny experience. I went to a party right after it happened and had the most fabulous time. Everybody was just terrific, and I didn’t want to talk about, you know, the Madoff thing. I wanted to have a good time at the party, which I did. A few days later I went to another party and I felt, “There’s something really weird going on here,” and it was another group of friends and I figured it out. They were uncomfortable having me around. I think maybe they thought I’d ask for money, or I’d cry, or something weird would happen. So you learn that you have a spectrum of friends, and what happens will surprise you. But people are so generous and so caring that it’s really astonishing, especially – I’m from New York and New Yorkers are considered pretty chilly. Not so. It’s really an amazing experience to have a catastrophe.

JONI: Well, in your professional life, you have done spectacular things. You worked with such billionaires like Si Newhouse and Evelyn Lauder and other generous people. Did those people reach out to you?

ALEXANDRA: No. It was very interesting. Work people … I was not immediately in touch with people, and I’m talking about in the next few weeks after it happened. With the exception of Tina Brown and Ed Victor and actually Anna Wintour, I didn’t really talk to many work people. I just buckled down and started writing and trying to do more photography immediately. What came out of it were friends who said, “Let us help you try and get work”; people who I hadn’t worked with before. So it was quite extraordinary. Richard Story, the editor of Departures magazine, called me up and he said, “What do you want to do?” He said, “I’m sure you want to take a great trip. How would you like to go to China and do a piece for us?” Well, pre-Madoff I would never have gotten to China. So this was fabulous.

JONI: That’s so great. Were there friends who you expected to hear from, who you haven’t? I’m thinking of my own divorce, where people who were really close to me left me forever — and I’ve never felt good about them again, even when they called me decades later. Did that ever happen to you?

ALEXANDRA: Sure. I sort of expected it because, you know, they say people disappear on you. But what happened was people that I never thought – for instance, a woman that I would have dinner with maybe once a year — called me and said, “Is there anything I can do?” Now, I never asked for anything, and it was the hardest thing. This is like a week after the Madoff thing happened, and I said, “If by any chance you could in any way get me to one of the curators at the Whitney Museum, I’d be forever grateful.” An hour later she had done that. Now, first of all, I never would have asked. And now, a year later, I would never ask anybody anything like that. But at the time I was in such a panic, but she took it as something she wanted to do. The other thing I learned, Joni, is ask. I’m not an asker, but if you ask for things and it’s all in the context and the way that you do it, I think you will be surprised. You will get what you want like 60 percent of the time. It’s amazing.

JONI: Isn’t that something? That’s great to know. The juxtapositions in this story – the worrying about subway fare to get to a Teterboro private jet when a friend is taking you somewhere, the high/low, the reinvention – are fascinating. After all of these lessons that we watch you live through, what have you learned about your own strength? How many months is it now?

ALEXANDRA: It’s a year and a month. Yes.

JONI: So one year later, what have you learned about you?

ALEXANDRA: Well, first of all I thought, “My worst fear has come true. I am going to be a bag lady. I am going to end up on the street.” Truly I believed it, Joni. Because fear can seem real when it completely strangulates you, and I had a complete sort of paralysis when I thought of that. And then the next thing I knew, I watched myself calling Ed Victor, writing a blog, getting to work, getting dressed every day, going to the studio, working, calling people, meeting people. I was so surprised at how strong I was. I couldn’t believe it. I thought I would have collapsed, but I didn’t. So there is a huge lesson here, I think. First of all, you will surprise yourself when a catastrophe happens. You are so much stronger than you think you are — at least, that’s what happened to me. But I’ve talked to other people who’ve had much worse things happen to them – terrible health diagnoses, divorces, deaths in the family – people are much stronger and more resilient than they think they might be.

JONI: Well, you were always enterprising. I mean you always took a road that nobody else took, in writing How to Make Love to a Man, if I have that title right, that was a real departure and an adventure, and you exposed yourself by taking a risk on a daring book. And, of course, you won. It became a big bestseller. You did it by being adventurous, so I’m not surprised.

ALEXANDRA: Oh, I am. But still, because it’s my worst fear. It was my worst fear.

JONI: Yes, it played into your worst fear. But it plays into your worst fear at a time when everybody is losing their jobs in the world that we live in – the media world and the world of content – which must be a small comfort. You know, everyone is beginning to face this — perhaps not nearly as radically or traumatically as you have. But it’s in the air, it’s in the air. Reinvention is the future.

ALEXANDRA: Oh, you’ve just said it. You’ve just said it – reinvention is the word of the future. But I realized immediately that many worse things could have happened to me. I have my health, I have my son, I have my news – because you always have to think, “You’re lucky in comparison to others.” There were widows who were 80 years old who didn’t know where they were going to go, they had to live with their children who may or may not have wanted them. But one of the worst things I learned was when I had to come sell a little cottage that I had in Florida — which is less than a $200,000 house, so you can imagine what it actually sold for in this economy. I was talking to a policeman and he started talking about Madoff. “It didn’t happen to me,” he said, “but several buddies of mine in the Fire Department had their pensions with Madoff.” Now these are not rich people; these are firemen, policemen. They’re not high flyers, they’re everyday people that we know and that we work with, and all their savings were gone. It’s pretty horrible.

JONI: Yes, yes.

ALEXANDRA: And you always think there’s somebody who really has a far worse situation than I do, and that kept me going, too.

JONI: Yes. Well, I thank you for talking to us at wowOwow. I think there’s a wonderful subtitle to this book, which I felt was totally true in the experience of reading it, called The Priceless Experience of Losing It All, which is just so apt. And I think everyone will feel that. By the way, did you sell the apartment?

ALEXANDRA: Everything’s up for sale. The little Florida house sold; there’s a rental from my house which I’m desperately trying to sell in Long Island; and the apartment. My financial tax adviser said to me, “You’re too traumatized. You should stay here a few more months,” because I still am pretty traumatized.

JONI: Sure.

ALEXANDRA: And I’ve got to earn money.

JONI: So if we want to buy your art, or even your apartment, how do we go about contacting you?

ALEXANDRA: I am putting up a website: I will say one thing, I’m having a show of photographs that were done and they’re called “After Madoff.” They’re very sort of cinematic and noir and they’re being shown in New York, my first New York show – thanks to Madoff. It’s February 10. So a lot of good things have come out of this, Joni.

JONI: I’m so happy to hear that. I just want to thank you so much for being with us, and I wish you so much luck with this book, which I know is going to fly because, we’ll, we’re all voyeurs, but we all share a degree of what your fear is, and we all are rooting for you in such palpable ways. There’s something that gets under the skin here instantly because you’re so honest and you’re so appealing, Alexandra, and people don’t know how attractive you are. But they will. So I wish you luck, and I really thank you for being with us.

ALEXANDRA: It’s been my pleasure. wowOwow is a great new way for women to communicate — and if we communicate and talk about our fears, they go away.

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