I carefully place the Waterford goblets on my lacquered dining room table. Dinner guests will be arriving in a couple of hours. The mobile rings in the kitchen. I’m hoping it’s a rumour, my best friend Alex says, but Bernard Madoff’s been arrested. All your money’s with him, right?

Jesus Christ. Right. Phone rings again. My wonderful son John, in California, repeats the news. “Don’t worry, Mom, you can always stay in our cute guesthouse.”

I immediately call my consort, Dennis. “Get here as fast as you humanly can. I can’t be alone. I’m beyond physically terrified.” I call my lawyer, leave a message.

It is Thursday evening, December 11. The world’s biggest fraud is just becoming public knowledge, and I am one of the casualties.

I start taking the silver and china off the table. When I can’t think and anxiety is avalanching over me, I clean or collect things into tidy piles. This is one of those moments.

That Waterford crystal was bought glass by glass because 25 years ago I didn’t have the money to buy more than one at a time. I have always been careful with money. As far back as I can remember I have had the most primal fear that I would end up as a bag lady on the street, or a ragged woman with thinning white hair living in a paint-peeling cupboard-sized room with a single lightbulb.

God in heaven. This will now actually happen to me.

Every cent I saved - from the time I worked summers at a shop, earning about $65 a week, to the time when I harvested amazingly large cheques for writing books, plus every farthing I could stash away when I was a magazine editor with Condé Nast - is in Madoff’s hands.

I have never and will never inherit anything. I have never taken a cent of alimony. Every dollar I have earned was from my own hard work.

Dennis flies in the door, gives me the biggest bear hug of my life. He cancels the dinner guests. I stand in my now tidy kitchen and don’t know what to do with my body. He gives me another huge hug, clicks on the television, Googles Madoff and tries to ingest what facts might be available. Nothing is clear. It’s pretty certain I have lost it all.

My friend Gayle calls, and says: “I had money in Madoff too. What should we do?” I don’t know what to tell her. We agree to stay in close touch.

I take out all the Madoff statements that have looked so real and reassuring over the past years. It appears that he put me into US treasury bonds. Hope! I call Gayle back, we compare statements. She has treasuries too. The numbers of the bills are exactly the same . . . Jesus! This is all fake too. It’s getting worse by the minute.

My dear friend Byron calls to remind me of Emerson’s line: “I am defeated all the time; yet to victory I am born.” I hang up and suddenly realise I have stashed away one strong tranquilliser in case there should be a death in the family. My money has passed away so it seems appropriate to gulp it down.

I have my laptop by my bed and Google the Hemlock Society. I want to know a painless way to die. Would you believe it, the site has died.

I find other sites. Cyanide, used in jewellery-making, seems to work best and fastest. I really love jewellery, especially pearls, so this link to the chemical that could end it all seems to reflect perfectly the irony and absurdity of what is happening to me. Before I can find out more, the tranquilliser takes over and I pass out.

FRIDAY, 4.46 am: Something so horrible has happened but I can’t remember what it is. I stumble out of bed, trip over a magazine (I’ll never be able to afford subscriptions again), turn on the TV, get into the shower, and stay there for half an hour, paralysed by the early morning news bulletins.

Bernard L Madoff, founder of Bernard L Madoff Investment Securities LLC, former chairman of the Nasdaq stock exchange - the Wall Street big cheese to whom I entrusted all my money - has been released on $10m bail after making an initial court appearance on charges that he ran a $50 billion Ponzi scheme.

A Ponzi scheme - as in Charles Ponzi, the crook who ripped off the gullible in 1920 with a pyramid investment fraud. He took from Peter to pay Paul, using money from new investors to pay interest and dividends to existing investors, and stole their capital.

Madoff has allegedly told his own sons he is “finished”, that he has “absolutely nothing” and “it’s all just one big lie”. He “paid investors with money that wasn’t there”.

An idea comes: I will go over to Madoff’s office two blocks away. I’ll never get upstairs into his room, but any kind of action helps.

I dress as I would for any day in the studio: white shirt, jeans, Hermès bag purchased during my Condé Nast days, the goosedown jacket with a mink collar — how much can I get for them on eBay, I wonder?

It is not even 8am when I get there, but people are milling around in the lobby of Madoff’s building. Fur coats abound. One older, perfectly groomed woman is swathed in golden sable with a prosperous-looking husband who is distraught.

I go up to the guard and say that we need to get to Madoff’s office, knowing it will be impossible. When people hear me politely but firmly talking to him they all chime in. The blonde sable woman says to me: “You’ve got the right attitude. Let’s get up there. I’ve lost everything, everything, everything.”

I wonder how much “everything” means. Does she still have a huge Park Avenue apartment, a silvery Maybach, a casa in Tuscany? I don’t. I have a small daily-use bank account and a big mortgage. I really have lost everything.

The group is young, old, in-between. Some look like bicycle messengers, others could have been pharmacists or librarians, and a good percentage look as if they go to the right barbers and have had subtle expensive Botox jobs and mini-lifts.

Finally a lawyer descends from the upper reaches of Madoff’s establishment. He is the interim “receiver” and says it will take days to establish any real facts. The crowd quietly asks: “Is there any money there?” and “Can we get insurance?”

One woman says: “I have only a small bank account. I can’t live on it. What should I do?”

Of course, he doesn’t answer. But, he says, there is to be some sort of motion in the federal court downtown this afternoon.

Nothing more to do until then, so I head for my own lawyer’s office. “Doesn’t look good,” he says. “These numbers don’t match up, the treasuries look fishy.” He says he’ll talk to colleagues who deal with securities fraud.

There is an organisation called the Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorised by Congress to help investors at failed brokerage firms. Are we eligible? “There’s no way of knowing yet.”

A crime has been committed against me, my first. I’ve never been mugged even in the worst New York neighbourhoods walking alone at 3am.

The victims — I hate that word, so I will use casualty, because it makes me think of the wounds I will bear — turn out to be thousands, many of whom, like me, have lost their life savings and have nowhere to turn. At least I have the offer of my son’s adorable back house in Santa Monica, but it’s not an option. I have never and will never be a burden.

Back at my apartment, Gayle and I compare notes. We still don’t know where we stand or if there is one dollar to be recovered.

I call my good friend Ed Victor, the literary agent, and say I need to write something, anything. Work keeps me sane. I simply don’t know what to do with my own body. If I sat and typed I could focus and hold back the panic. Panic? What’s a worse word than panic? That’s what I am feeling.

How did I get into Madoff’s “secret circle of investors”? An old trusted family friend told me about him when I revealed my bag-lady fears back in the mid-1990s. He didn’t laugh them off as most people do, but did me a “supreme favour” and got me in somehow.

His children’s money was with Madoff, his own money was with Madoff, his golf buddies’ money was with Madoff. The big shots were with Madoff: guys who ran great investment banks, billionaires. I’m a one-cent person compared to them, but being where the pension funds and hedge funds wanted to be made me feel secure. Madoff had been doing his thing since 1960. What could go wrong?

In the decade or so that he had my money, all went smoothly and I didn’t feel that I was being greedy. Many people I knew were raving about 15-20% returns on their investments, but I thought 9-10% and (wow!) 11% was wonderful. My cache kept growing, thanks to the magic of compound interest. I had a modest “fortune” (that term is so relative!) with him.

Words keep clanging in my mind: now you have nothing. The cottage in West Palm Beach is already on the market, my little country house is being appraised, and I can’t even think what will happen to my apartment.

I didn’t grow up poor. My father was a Greek immigrant who went to Harvard. He was a smart strict lawyer who had seen bad times. My mother was a charmer who was descended from Greek royalty. We lived comfortably in a waspy suburb, but I never felt rich or privileged. I learnt to save pennies from the minute I got an allowance. I was just like any other kid on the block.

When I was 18, my father said that any money he made would be given to charity and that I should learn to be independent. I think their idea was that I would marry a Greek shipowner and live richly ever after. That scenario was never for me.

They paid for my education at Smith, an expensive women-only liberal arts college. I moved to New York, dreamt of being a painter, but needed money. I began to work at Vogue and was married briefly to a talented industrial designer. We lived right off Park Avenue and had a son. But the chichi uptown lifestyle was not for me. My husband and I divorced, and I walked out without a penny. It was the 1970s, I was a feminist, and I would make it on my own.

I took three jobs to support myself and my son, including cashiering at the fish market. I also wrote advertising copy for Bloomingdale’s and freelanced for The New York Times magazine. We lived in a tiny two-room flat on West Broadway, where I slept on a mattress on the floor so my son could have his own room with his toys.

We lived cheaply and ate a lot of interesting pasta, but I always wanted my surroundings to be beautiful. Our life was more dash than cash.

In the early 1980s, needing money, I came up with a book idea: How to Make Love to a Man. My parents told me I’d lost my dignity and didn’t speak to me for nine years, but the book sold millions worldwide. Four others followed: all hit the New York Times bestseller list. Cheques rolled in. I bought a one-bedroom flat on Fifth Avenue, the first property I’d owned.

A few years later, Si Newhouse offered me a job as editor-in-chief of Self magazine. I worked there until the mid-1990s, when I left to pursue my art future. Two years ago I finally had my own sunny, hopeful studio in SoHo. I guess now I will have to let my studio go. How am I going to pay the rent when the art market is dead, dead, dead? Loss of the studio is an amputation.

FRIDAY afternoon, the courtroom: I am waiting for the judge to appear with some news. The room is packed with what seem to be lawyers and people from the morning gaggle up at Madoff’s. I sit behind two guys who are talking. I can tell they’re seriously smart, and for some reason, although I probably should never trust anyone again, my instinct tells me they have humanity.

The judge never appears. What the hell. I head home, taking a taxi. This is probably my last taxi ever.

There are tons of messages on my phone from people who knew I was in Madoff and it turns out they were too. One man tells me he’s in the middle of a divorce and has lost a bundle. He has kids to send to school, child support, alimony to pay . . . He’s in really bad shape.

My old family friend’s daughter calls; she had money with Madoff. What do I know? What lawyer am I using? She knows investors who have put hundreds of millions with Madoff; they’re all in denial or paralysed.

The next day Brad Friedman, one of the men I sat behind in court, is on the front page of The New York Times. He’s a lawyer. I call him. My friend Gayle calls him too.

He says they may find money somewhere, that there’s a chance of SIPC insurance — up to $500,000 — but it will take at least two to six years. I ain’t got that kind of time. I need money now.

I like Brad immediately: we are staying in touch by e-mail and he sends me all the latest news. Still nothing is certain about anything to do with Madoff, but the circle is widening. The Securities and Exchange Commission (SEC) is involved. People in many European countries have invested with him. The thing is going global.

Today I take my first subway ride in 30 years. Dennis comes with me to show me how to get a MetroCard. The world looks different from a crowded Lexington Avenue No 6 train.

SATURDAY: I shower and wash my hair with an expensive shampoo. No more Chanel, Lancôme, Lauder for me. I have blonde highlights. You need someone really good — and they’re always expensive if they’re good — to do the job. I’m going to look like an ageing hooker with striped hair if I try to do it myself.

I muster as much discipline as possible to stop myself from wallowing in thoughts about hairstylists and clothes and shoes, and good food, and pretty underwear, and eating out and going to the theatre. If I spend the least amount I can just to exist, I can hold on for a few months.

I get dressed and pull on my jeans . . . they’re loose. Hallelujah, finally some good news. I’ve lost 6lb in three days. The swindler’s diet is no-fail.

I power up the computer. On Ed Victor’s advice I start a blog on The Daily Beast — a hot news website set up by the former New Yorker editor Tina Brown — and my words are published the next morning.

I am suddenly inundated with comments: many simply say that I am a rich bitch and I’d better “start living like the rest of us”. I am untouched by all the vitriol. I earned every penny. I wasn’t greedy. Too bad for them! I probably have less in the bank than they do.

Smart Yolanda makes my life work. She comes in three mornings a week, whirlwinds around and — voila! — the shirts are ironed, the sheets are changed, the floors are vacuumed. She’s worked with me for seven years. She needs money. She sends it to her family in Colombia along with clothes and old computers and cameras I have given her. I have more than affection for Yolanda. I love her as part of my family.

There will be no more Yolanda sipping coffee at the kitchen counter. I tell her a disastrous thing has happened to me. I’ve lost all my money. But I don’t have the guts to tell her I cannot keep her with me any longer. I just cannot tell her — yet.

NOW: My friend Marie has been in touch with magazine people to see if I can get work as a roving editor.

Paul Wilmot, the PR eminence in this town and a dear friend, calls three times a day with countless pragmatic and money-making ideas. Richard Story, a big-deal editor-in-chief is in touch every couple of hours. He offers love, editorial work, Chinese food, back rubs, humour and solace. He is my life-blood. My pal Stephen Jacoby calls to say he’ll pay for my hair-colouring. He did that for his mother when she lost all her money. I can’t imagine taking him up on the offer but after a few home-dye disasters it could become tempting.

My friend Tommy says he’ll do anything he can to tide me over. My friends Jane and Michael call to say they have something for me to write . . . Jane is fighting cancer and is the gutsiest person I know, a role model for every one of us. Another friend, Eric, calls and says: “Let’s get together to see how I can help you.” There’s so much help and love that I can’t believe it.

I’ve been asked, is there a silver lining to this? When I hear the word silver I think of gold: should I have put all my money in bullion as a money guru once suggested?

No, I trusted in regular statements and ongoing interest and what I thought was benign neglect from the legendary Bernard Madoff, a man I never met but whose features I now know well. I think of him as an ice-cold, charming guy, something sharp, that kills. An icepick.

I am asked what I would say to him if I met him. I have no words. They don’t do any good anyway.

A psychiatrist once told me that solitary confinement in prison is far worse than death. I’m not a vindictive person but right now I hope Madoff will stay alone, without a book or a candle, sitting in a cell where nobody speaks to him for the rest of his life.

www.thedailybeast.com

Vitriol laced with some sympathy for the bag lady

Alexandra Penney’s blog brought a deluge of opposing e-mails, both condemning and praising her

- Hey, you’re worried about clean white shirts. So you’re going to have to learn how to iron and stand there until your back hurts, like most people. That’s life. Get off your ass, and get to work. And stop feeling sorry for yourself

- This is satire, right? Nobody could be this clueless

- Go get in line with the rest of us at Wal-Mart

- I’m sorry to say, but this didn’t make me feel anything approaching sympathy. I’m glad you lost your money. I’m glad it was stolen. Ultimately, I think this will be a good thing for you. You’ve lost your way. You’ve lost anything resembling a real life. You took everything you had for granted. You took your luxury for granted. You took your comfort for granted. You took anything resembling real responsibility for granted. You put your life savings in one pot and you got burned. Not Madoff’s fault. He is not to blame. You are

- I'll give you $50 for the Hermès bag

- Take a subway — most of us do. Get back to work — most of us do. Thank your God for what you have — most of us do. Shake your fists at the man who did this to you, then dust off and remember yourself

- I can’t believe these comments. This is a story of a single mom who worked hard to achieve her dreams and goals. And she did! She achieved what we all are working hard to achieve, the American Dream, legally too. Then some scum, low-life, thief came along and stole her life’s work away from her. And you small and mean-spirited people dare to criticise Ms Penney’s life. The poor and uneducated do not have a corner on sincerity, generosity and the human condition

- You dumb bunch of buffoons who think Alexandra is acting entitled or that an elitist just got her comeuppance. What part of: worked her whole life to get what she had and it is taken from her in an instant by a psychopath crook do you heartless bastards not get?

- Boo hoo. I’ll cry all night. The rich who invested with Madoff felt they deserved information available to only their privileged elite club. For those of us who have taken subways for years and iron our own shirts, your story reads like comeuppance

- Do us all a favour and take the pill. People are starving and living in their cars and you want to whine because if you sell your apartment, cottage and studio and wind up with probably close to a couple of million you will consider yourself poor? Karma hon, it’s a bitch

- You have got to be kidding me! You make me sick. I know you have worked hard for what you have, but sell some of that fine china, fancy purses and diamond earrings on eBay and get over yourself. You have lived life in a bubble. I am so sorry you had to see people up close and personal on the metro. Not! Maybe you should ride the train a lot more. Then you can see what most people are going through. Already small pay cheques are even smaller. Having to figure out how to feed my daughter a healthy dinner on $5 and going days myself without eating. Wake up, lady!

- Dear Ms Penney, I hope you take some comfort in the bitter and angry posts here — that you can see that, even with this horrific loss, yours is still a life that makes all too many people sick with envy. So sick as to completely forget — well, we hope they forgot and not simply never knew — their decency, humanity and, frankly, dignity

- Please do us all a favour and take the hemlock! I am sure Yolanda will find the jewellery, so you need not worry about her

- I am very surprised that so many of the comments have been so mean-spirited. A person who has been victimised, whether they are rich or poor, is often stunned, and often traumatised. Alexandra worked hard for a long period of time to set up a comfortable existence, yes. She earned it. It was not handed to her. She’s been the victim of a major-league mugging that will force her to replan her entire life and lifestyle. She should be allowed to vent a bit without so many wisecracks from the peanut gallery