By Liz McNeil and Alex Tresniowski
Updated February 21, 2011 12:00 PM

Ruth Madoff was at home in Boca Raton, Fla., when, on Dec. 11-two years to the day after her husband Bernie’s arrest-she got a phone call from her son Andy. The news was shocking: Mark, 46, her other son with Madoff, had hanged himself in his Manhattan apartment. Still shattered by the events that destroyed her family and now devastated anew, Ruth, 69, packed a bag and flew to New York to say a last goodbye to her son. But, according to sources, she was not welcome at a memorial for Mark in his widow Stephanie’s Greenwich, Conn., home. Instead she sat shivah at a friend’s house nearby. Ruth was “sad and angry” about missing the memorial, says a family source close to her. “But she’s come to accept she is carrying the burden of shame and disgrace for Bernie. She knows she is wearing a scarlet letter.”

In the two years since Bernie Madoff’s $65 billion Ponzi scheme collapsed and landed him in jail, his wife, Ruth, has become a prisoner of a different sort. She’s been kicked out of her houses, cast out of her social circles, cut off by some relatives, and forced to live, says the family source, like “a pariah.” The source, who speaks to Ruth regularly and provided exclusive details of her life since the scandal broke, says that while she has not exhibited enough remorse to satisfy many people, she is “filled with pain over the scope of the wreckage her husband has caused”-to the point where she despairs of ever living an even remotely normal life again. “She told me, ‘During the days, I’m okay,'” says the source. “‘But at night, it gets to me-the shame, the disgrace, all the stuff that killed Mark.'”

The investigators trying to untangle Bernie Madoff’s web of deceit have not charged Ruth, his wife of 51 years, with any crime (she and her attorney Peter Chavkin declined to comment for this article; in the past Chavkin has said his client knew nothing about the fraud). But the investigation is ongoing, as Irving Picard, the pit bull trustee for thousands of scammed investors, tries to claw back billions in illegal profits; one recent lawsuit is seeking $1 billion from, among others, Madoff pal and investor Fred Wilpon, an owner of the New York Mets.

As part of an agreement with Picard, Ruth was allowed to keep $2.5 million of her personal fortune-most of which will likely be used for attorneys fees-in exchange for forfeiting her luxury homes in Manhattan, Long Island and Palm Beach and more than $60 million in family assets. At that same time, she was handed another ultimatum by her sons Mark and Andy, who turned Madoff in. “They told her to sever all ties with Bernie,” says the family source. “They said you can’t have him in your life and us. Look what that son of a bitch did to us and to everyone else. You need to walk away from him.” Ruth was ready to do that until Madoff reportedly suffered serious injuries while in prison in late 2009. After that, says the family source, “she could not walk away” from Madoff. “She didn’t feel her sons were in the position to make her choose.”

That decision made Ruth’s isolation even worse; she had virtually no contact with Andrew, 44, and Mark for the last two years. And while she made several trips to see Madoff in Butner Federal Correctional Complex (see box), since Mark’s suicide she has stopped going. Now, says the source, “she has no contact with Bernie.”

She lost other things as well. Early on Ruth believed she might be able to stay in New York City and maintain “some semblance of life as it had been,” says a source. But the media frenzy and hatred of her husband drove her out of the city. Without a home of her own, she embarked on a nomadic existence, staying with the few friends and relatives who have not cut her off. She is close to her sister Joan Roman, 73, who lives in Boca Raton with her husband (the couple lost millions with Madoff and now operate a car service to make ends meet). Ruth sometimes stays in their condo or in a home owned by friends, who let her live there rent-free. “We’ve heard she’s here,” says a neighbor. “But we never see her.”

That’s because Ruth “takes precautions when she’s out,” says the family source. “She avoids places where she might run into people she knows.” She will occasionally use her maiden name, Alpern, and she has dyed her blonde hair red. One of her primary activities these days is volunteering with the elderly. “The people she is helping don’t seem to know who she is, or if they do, they don’t seem to care,” says the source. “She’s not doing it to get good grades in the public eye. She enjoys it.”

Ruth also cooks for friends, reads books from the library (she recently finished Eat, Pray, Love) and watches DVDs she rents for a dollar from local kiosks. “She lives very frugally,” says the source. “She spends virtually nothing.” Ruth drives around in a 14-year-old four-door clunker, a car “she loves to death. She plugs an address in the GPS and away she goes. She says it makes her feel full of freedom, just like when she got her license.”

The car is also a symbol of how far she’s fallen since the days she and her high school sweetheart seemed to have it all. When they met in Queens, where they were raised, Ruth-the daughter of an accountant-was petite and preppy and “a good networker,” says high school classmate Millie Tirado, who remembers Bernie as “big and sulky.” They married in 1959 and became inseparable, playing golf and eating their customary early dinner at Manhattan’s Primola. “Ruth worshipped Bernie,” says one friend.

That closeness has led many to wonder how Ruth could possibly have been unaware of her husband’s activities, while others feel she’s never adequately renounced him for his crimes. In her only public statement about the scandal, she said, “I feel devastated…. Nothing I can say seems sufficient regarding the daily suffering that all those innocent people are enduring because of [Madoff].” Her actions, however, haven’t always matched her words. “She had delusions of grandeur,” says a former employee whom Ruth contacted a month after her husband’s arrest to order kitchen supplies from an office vendor for her house. “She called like nothing was wrong.”

But Ruth’s silence about her husband, and her decision to go underground, is not a sign of arrogance, says the family source, but rather a survival mechanism. Ruth is “numb” to the reality of what happened to her life in the last two years-including her son’s suicide. “She is still in some kind of shock. I think if Ruth were able to feel that pain right now, in the magnitude that it’s actually there, I don’t know if she wouldn’t do what Mark wound up doing.”

Her saving grace are the family members who have not abandoned her. She recently started trying to mend her relationship with her son Andy, and they occasionally speak on the phone. She also spends time with Andy’s two children and “meets them for lunch in New York City,” says the source. “They love her very much, and that’s one of the things that keeps her going, that gives her a reason to continue to survive.”

Still, there seems no end in sight to the Bernie Madoff scandal, no limit to the anguish and suffering he has caused. From the perspective of those who know her, at least, his wife is doomed to suffer as much as anyone else. “She thought Bernie was an absolute genius,” says the family source. “Now she’s paying a price, and she’s paying it dearly.”