<p>Madoff’s alleged $50 billion fraud hits other investors
By Jon Stempel and Christian Plumb
NEW YORK - Investors scrambled to assess potential losses from an alleged $50 billion fraud by Bernard Madoff, a day after the arrest of the prominent Wall Street trader.</p>
<p>Prosecutors and regulators accused the 70-year-old, who was chairman of the Nasdaq Stock Market in the early 1990s, of masterminding a fraud of epic proportions through his investment advisory business, which managed at least one hedge fund…</p>
<p>“Madoff’s investors included captains of industry, corporations – some of which are publicly traded – that used Madoff almost as a high-yielding cash management account, endowments, universities, foundations and, importantly, many high-profile funds of funds,” said Douglas Kass, who heads hedge fund Seabreeze Partners Management.</p>
<p>“It appears that at least $15 billion of wealth, much of which was concentrated in southern Florida and New York City, has gone to ‘money heaven,’” he said.</p>
<p>Sadly, Mr. Madoff was the Treasurer of the Board of Trustees of Yeshiva University and heavily involved in its business school. He has resigned those positions according to the New York Times. The list of those affected by his massive ponzi scheme include the owner of the New York Mets, the former owner of the Philadelphia Eagles, and some unnamed college endowments and universities. Some people affected were millionaires and if they had all of their money placed with Mr. Madoff will be utterly destitute according to news sources. One Miami attorney, whose family had invested with Mr. Madoff for over 30 years said his children’s college funds are now utterly worthless. </p>
<p>The sons that work at the firm didn’t know what was going on? I might be cynical, but for all you know he may be terminally ill and he’s taking the fall for the rest.</p>
<p>j’adoube: totally agree but in the end, won’t the family take a big hit as well? can’t imagine the sons not having some responsibility in this…and some liability…</p>
<p>j’adoube, that’s exactly what my H said yesterday! And I wonder how many more Bernie Madoffs are out there that we do not know of. Yet. My personal exposure to Mr. Madoff’s dealings was that his firm was one of the market makers in some of our stock holdings (thinly traded (ca. 1M shares/day) stocks that were clearly manipulated by mm). rodney: I think the choice for them was to go to jail with their dad and lose their fortunes or lose their fortunes.</p>
<p>Its hard to believe that he could carry this off alone for so many years. No comptroller seeing anything? His sons not knowing anything? I know they turned him in but how could they not have known that things didn’t add up. It just seems too big for one person. I guess the SEC isn’t returning phone calls about it. They were apparently alerted by some whistleblower in Boston MANY years ago.</p>
<p>It really is incredible. It has always amazed me how difficult it is to raise money for a fund, yet somehow the scammers manage to raise billions. And of course now people are coming out of the woodwork claiming that they knew all along something wasn’t right.
Some excerpts from a financial newsletter:</p>
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<p>It is sickening, but so is the stupidity. Just give me my 10% annual return and I won’t ask any questions.</p>
<p>The SEC has allot of egg on its face over this. A number of people in the past have reported this operation to the SEC and identified it as a Ponzi scheme. </p>
<p>Once again, if your money is in a “black box” or returns are too good to be true, it is not true. I always wondered how the “black box” could work. Now I know, it’s just the old fashioned way to make money, “they steal it”. AND everyone loved him.</p>
<p>How easy can these scammers get their victims? Really easily. My fIL had an attorney/investment counselor. My husband and I were really young, just married and very fortunate enough to be able to purchase a house. The attorney asked me “Why would you buy a house? It just gives the court something to take from you when you’re sued.” Bells rang…but my FIL trusted the guy. (After all, how many investments give you a 15% return on your money?!)</p>
<p>Five years later, and (in his case $5 million less) there were victims all over town. No assets (what a surprise!), no insurance…(my husband is an attorney and was able to recoup some money for his father through other sources)…but lives were ruined. </p>
<p>We had a guy in Boston that owned a radio show that was a scammer. He had a nice house on an island. He worked with his wife on the radio show. She didn’t know anything about it and was devastated when it was discovered. I wonder what kind of stress these guys live with should they be discovered.</p>
<p>I guess the Ponzi scheme fell apart because investors got afraid of the market in general? In this market, even if he would have told the investors that they had an annual return of 2% this year, they’d have been thrilled. I guess not enough new money came in to even fund that.</p>