may 1, 1989 - Moving on to Bigger Money

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Madoff is introduced to Jeffrey Tucker and Walter Noel, partners in Fairfield Greenwich Group, an investment firm located in Greenwich, Conn. In July 1989, Noel and Tucker give Madoff $1.5 million to manage and follow up the in January 1990 with an additional $1 million. In November 1990, Fairfield Greenwich starts the Fairfield Sentry Limited Fund, its $4 million entirely managed by Madoff. "Once they created Fairfield Sentry to invest exclusively with Madoff, that is when things really started to accelerate," recalls Sherry Cohen, Walter Noel's former assistant.

Around this time Madoff connects with Ezra Merkin, a well-known Wall Street money manager and philanthropist. In 1990, Merkin gives Madoff "a significant portion of the assets" of two of his hedge funds -- Ariel and Gabriel -- to manage, which Madoff does through 1992. In 1992, Merkin creates Ascot Partners LP and Ascot Fund Limited funds, which are managed almost exclusively by Madoff through 2008.

It was also around this time that Sandra Manzke, founder of hedge fund giant Tremont and later MAXAM Capital, tells FRONTLINE she met Madoff. When she begins investing with him, she says Madoff, whose investment advisory business is not registered with the SEC, insisted that she not publicly name him in her prospectus.

Madoff's unusual fee arrangement is attractive to hedge fund managers: Rather than charging fees, he tells them he makes his money through commissions.

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