The Observer: Do you feel like you’ve gotten enough credit for this?

Mr. Markopolos: Yes, too much. I’m not a hero, I don’t know why people would think that. I did what any similarly placed citizen was supposed to do. Yeah, my team and I took risks, it was a dangerous case to work on, but if you have core values and beliefs and believe in certain things, then you’ll do them, you just have to. Someone has to stand up, and if you don’t stand up, then civilized society falls apart. Heroes are brave. I wasn’t brave; I was very scared.

In your book, No One Would Listen, you mention that you kept a gun in your house and that you broke out your old army mask in the event the S.E.C. raided the place and used tear gas. Did you really think that was going to happen, or was it just for dramatic effect?

I thought the possibility was remote. Almost infinitesimal. But, here I had my gas mask sitting there, and if I put it where I could get to it, it doesn’t cost me anything. I’ve always learned that if it’s low or no cost to diversify against a risk, then you should do it. Would I have gone out and purchased a gas mask if I didn’t have one? No. But it was available, and the Army always trained me to take all precautions and do a worst-case analysis. Prepare for the worst case and you’re going to have a better result.

Who has a better chance of catching fraud on Wall Street, the S.E.C. or Inspector Clouseau?

I’d say it’s not a fair fight. Inspector Clouseau has a successful track record, whereas the S.E.C. does not these days. Inspector Clouseau is out there and has had a number of successful cases.

Why do they suck so much at this? Only a handful of them can play the “too busy watching tranny porn” card. [In February, an S.E.C. supervisor was reprimanded for more than 1,800 logged attempts to visit sites of that nature while on the job.]

They’re good at catching the small fry. Individuals that can’t fight back, small boiler rooms. But it’s the big firms that they haven’t been able to police because they lack the skill set and they lack the will to go after the large defendants who can actually mount substantial courtroom fights with lawyers who are better-skilled and higher-paid than the S.E.C.

Have you heard from any victims directly?

Yes. I run into victims a lot. And I always have private moments with then, and like to hear their stories. They all usually have very similar endings but how they got into the circumstances where they became victims is always different. And I’ve heard a lot of things that the press hasn’t reported, in these very private moments. Heartfelt, gut-wrenching things. People trying to commit suicide or losing loved ones who’ve died of heartbreak. You hear about so many people, older victims in their 70s, who’ve had to go back to work, or go on Medicaid, or leaving private nursing homes because they have to. For us, me and my team, it’s very hard.

Have you gotten any job offers? Are the short sellers dying to hire you?

Actually, I’ve gotten no job offers. My team and I have gotten dozens of offers from plaintiff’s law firms asking us to be expert witnesses in their cases against various Madoff feeder funds. We haven’t taken any, though, and let me tell you why. People are offering us lots of money to do this. But we all have Wall Street jobs, and we’re not going to leave those. And we’d rather write the book and diagram out a road map for all the victims and their lawyers so that they know what happened and they know how to try their cases based on what we’ve put in the book. So we didn’t want to take people’s money when we could write a book and do a public service. That was more important to us. For us, it wasn’t about the money; it was about getting the truth out.

What kind of cases are you working on right now?

There’s a large pension-fraud case that I mention at the end of my book that I’m still working on. And this is an industrywide practice that all the custody banks engage in, the fraud scheme, that tens of millions of pension account holders, including firemen, police, municipal workers and workers at private companies and public corporations have been victimized by. And foreign pension accounts have also been looted using the same foreign exchange trading scheme. So this case is certainly going to be the tip of the iceberg and it’s certainly going to be a case that’s going to run into the tens of billions of dollars. It’s a larger case then it appears, but it’s industrywide. I expect as pension funds start checking their foreign currency trading records, they’ll spot the fraud.

You’ve said you could see Nicolas Cage, Matt Damon or Tom Hanks playing you in the movie. Would you play yourself? Your own trailer … pretty tempting.

Oh, hell no. I was on a movie set one time, and watching Sean Penn go through the same breakfast scene was the most boring experience of my life. Also, I know what my capabilities are and I cannot operate at that speed. We do have a documentary coming out called Fox Hounds in the fall. It’s going to be very emotional. You’re going to see how traumatic this case was to work on.

I’m picturing your office looking like something out of A Beautiful Mind. Tell me if I’m off base there.

It does in the documentary because they wanted to do that for cinematic effect. But my office is actually very neat.

Ponzi schemes are so last season. What’s the next trend in financial fraud?

Off-balance-sheet transactions are always going to be in. We have not eliminated that threat to the American economy. It was supposed to be ended by the new accounting rules, post-Enron, post-WorldCom, but we still saw it in the financial collapse of 2008, where all the money in our banks have hidden offshore liabilities, and I’m sure they still do. Banks are still not reporting everything accurately on their balance sheets. That needs to end. We need a tough set of laws. I personally would like to see an automatic 40 years in prison for the CEO, the CFO and the general counsel of any publicly held American corporation that has anything off balance sheet, that’s not consolidated onto a balance sheet. That should be the sentence for any unconsolidated, off-balance-sheet liability. This has to end, this year, here. It can’t continue.

It’s not unusual for men who attain a certain level of fame to be approached by Playgirl. Have they asked you to pose yet, will you say yes and will there be a bearskin rug involved?

Oh my God. [laughs] Ummm … probably not … Actually, what my entire team and I are holding out for is an interview at the Playboy Mansion. Make sure you say that I say that half in jest. But as for the posing … we do have one member of the team, Neil Chelo, who’s single, his wife recently left him, and I think he would be the one to do it. I don’t think the rest of us see ourselves as sex objects. I can guarantee our wives don’t! But we are going to have to tell them now that women see us as sex objects. Hopefully, that’ll boost our status in their eyes. We are going to play this to the max.

Bess Levin is editor of DealBreaker.com