Tuesday, February 16, 2010

The Bag Lady Papers: Alexandra Penney on Losing It All to Bernie Madoff

Crying the Gamblers Lament

By BRUCE WATSON Posted 8:00 AM 02/16/10 People, Media, Books

On Dec. 10, 2008, Alexandra Penney, the former editor of Self and Glamour magazines, was enjoying a second career as a professional photographer and artist. She had financial security, the apartment of her dreams in the Upper East Side of Manhattan and a sprawling studio in which she was launching her budding new career. The next day, she discovered that her investment adviser, Bernard Madoff, had massively defrauded his clients, including her. Over the next few months, Penney scrambled to sell her houses in Florida and Long Island, drastically cut back on her expenses and set off in a new career direction as a blogger and writer.

In her forthcoming book, The Bag Lady Papers: The Priceless Experience of Losing It All, Penney writes about her experiences dealing with the loss of her money and trying to rebuild her life. She shared some of the lessons of that experience with DailyFinance's Bruce Watson.

DailyFinance: After your money disappeared, you quickly began rebuilding your life. How long was it before you had another job?
Alexandra Penney: The next day. The morning after I found out about Madoff, I woke early, but couldn't look for work because nobody was open before 9:00. Then I remembered that my old friend Ed Victor was in London and would be up. Ed is a very prominent literary agent, and after I told him my story, he said that he would see what he could do. Ten minutes later, he called me back and told me that Tina Brown, an old colleague of mine from Conde Nast, wanted me to write a blog. So I just wrote about my experience, with no filter.

In your book, you talk about your luxurious lifestyle before Madoff defrauded you. What was the hardest luxury to give up?
Luxuries are easy to give up; the hard part is the things that you don't realize are luxuries. I found that the equilibrium and peace of mind that I got from having some money in the bank was a luxury, too. When that was gone, I was in a panic.

Before your Madoff experience, you had four properties that you owned or rented: a house in Long Island, a house in Florida, an apartment in Midtown and a studio. What happened to these places?
My landlord lowered the rent on my studio by a third, which made it possible for me to keep my work space. I'm trying to sell the house on Long Island. In the meantime, I'm renting it out. I sold the house in Florida and still have my apartment.

In the book, you spend quite a bit of time talking about Carmina, your maid. Does she still work for you?
Carmina still comes in for three hours a week. I do most of my own housekeeping, but she needs the money, and I need her. I couldn't not let her have income.

Suicide is a recurring theme in your book. After you learn about the Madoff scandal, one of your first impulses is to look into suicide, and your photographs after the event have also explored that. How have you dealt with those feelings?
After Madoff, I felt like I had lost control over my savings, my life and my identity. I felt like I had lost my dignity, my ability to do work. For example, I need a large work area, because the photographs that I work with take up a great deal of space, and it looked like I was going to lose my studio.

According to my internist, the realization that I could commit suicide -- along with the fact that I didn't do it! -- helped me regain my feeling of self worth and control.

Reading this book, it seems like this experience really helped you learn about what is valuable. Do you still hate Madoff?
I never hated him. I had a weird reaction: I was really angry one day after I spent 10 hours Xeroxing documents related to my case. Xeroxing isn't cheap!

Anyway, I never met the man; he was abstract to me. What I hated was the horrific feeling that I didn't have a cent in the bank.

What about your finances now? How is your life after Madoff progressing?
Well, the art market is improving, and I have a show in Chelsea that is going up soon. A friend of mine, Richard Story, is editor of Departures magazine, and he flew me out to Africa to do a story. I got to see amazing things that I never would have seen in my pre-Madoff days.

I was impressed with how quickly your son offered to put you up.
What a darling he is! His first words after Madoff were "Mom, you can come live with us."

And so many of your other friends jumped to your aid.
Isn't that amazing? People are so immediately thoughtful and generous. Before I knew it, I had friends saying: "Can you do this?" "Will you come here?" "Here's some work for you to do!"

Three of my friends -- Richard Story, Alex Mays and Patty Matson -- all jumped to my aid. They literally came to my apartment and told me that "we have to find ways for you to make money." Richard helped me with the Departures story, Patty sent art collectors to my studio and Alex helped me when I was first learning to write my blog.

And Ed Victor. Ed is like my guardian angel. How many agents call you every day to see how you're doing? When I think of Madoff's other victims, poor old women who never worked, I'm so completely lucky.

The Bag Lady Papers is being released by Hyperion books and will be in stores on Feb. 16.
Tagged: Bernie Madoff, interview, personal finance, Ponzi scheme


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