december 11, 2008, and within seconds, phones were ringing around the world. ( phones ringing ) michael bienes was in london when he got a phone call from his business partner, frank avellino. >> "and i said, frank, what's wrong?" because i could hear it in his voice. "michael, bernie madoff..." i said, "he died." in a nanosecond, "he died." "...was arrested..." i said, "oh, no," and then another nanosecond-- "...sex crime or some [no audio], you know?" "...for stock fraud." >> smith: phones were ringing in palm beach, too. >> i received a call from an investor in aspen who said that he had heard that bernie was arrested. and i called bernie's office, and i called his secretary. and i said, "gee, we just got this really strange call." and she said, "no, no, everything's fine." >> smith: e-mails were flying. >> i read it. and then, i read it again. i was, like, in shock-- like, non-believing shock. and i thought he couldn't... he couldn't possibly have... this isn't true. it's impossible to be true." >> smith: it was the largest stock fraud in history. >> ( laughing ) i said, "oh, my." you know