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Robert Trigaux

Madoff's 'epic scam' claiming victims globally



Madoff2 Wake up and good morning. Well, the damage from Bernard Madoff's alleged Mother-Of-All Ponzi scheme is mounting rapidly from Palm Beach to New York to Los Angeles and overseas. Hardest hit are Jewish investors and charitable foundations who funneled billions in to Madoff's hands over the decades through social and country club word-of-mouth salesmanship. "An epic scam," is how the Wall Street Journal describes it.

But plenty of familiar names -- Sen. Frank Lautenberg of New Jersey, New York Daily News owner Mort Zuckerman, Philadelphia Eagles owner Norman Braman, New York Mets owner Fred Wilpon, film director Steven Spielberg and the HSBC banking giant, to name a few -- are potential victims. (Photo of Madoff courtesy of AP.) There's a more comprehensive list below.

Madoff's charged with securities fraud for bilking investors out of as much as $50-billion and admitting "it was all just one big lie" when his sons tipped off the feds. Here's the Securities and Exchange Commission's actual complaint against Madoff. Madoff supposedly admitted he was running a Ponzi scheme, using money from new investors to pay inflated dividends to old investors until the volume of people wanting their money back outstripped the flow of incoming investors.

Edpagecarltonfields Ed Page (shown in photo), a Carlton Fields shareholder in the Tampa office, told the Daily Business Review that Madoff no doubt was able to use the record-setting market to his advantage over the last few years until the Dow Jones Industrials and other closely watched indexes started to tumble. "When you're in a bull market, it's easy to disguise a problem," he said.

The Web site of Bernard L. Madoff's investment firm has been seized and now tells us U.S. District Court Judge Louis L. Stanton has appointed Lee S. Richards of the law firm Richards Kibbe & Orbe LLP to act as receiver. Here's the legal order.

We're still so early in assembling the depth and breadth of this financial hit, it's hard to gauge the repercussions. Here's a sampling of what we're seeing so far in publications ranging from the Wall Street Journal, New York Times, Palm Beach Post and Los Angeles Times, among  others.

* The Securities Investor Protection Corp. said it would be liquidating the investment firm run by Bernard L. Madoff in an effort to return cash and securities to the firm’s clients.

* Investors were said to have paid hundreds of thousands of dollars a year to remain members of the Palm Beach Country Club (a Web site so exclusive you need a password to get past the home page) in hopes of an introduction to Madoff, the New York Times reports.

* With Madoff's clients facing steep investment losses, a few have put their Palm Beach houses on the market to raise cash, says the Palm Beach Post. It quotes Paulette Koch, an agent at Corcoran Group in Palm Beach, saying she took on two listings over the weekend, although she declined to name the owners or repeat what they told her about Madoff. Koch said most homeowners who lost money to Madoff aren't panicking.

* Madoff's alleged scheme appears to have extended deeply into Southern California's Jewish community, with millions of dollars in losses tallied by charitable organizations, Hollywood executive Jeffrey Katzenberg and a foundation bankrolled by director Steven Spielberg, reports the Los Angeles Times. The area disclosures by Jewish organizations suggest a so-called affinity scam, in which members of a perpetrator's ethnic or religious group are targeted.

Here is one list (sure to grow in the coming months), compiled by Bloomberg News and other news organizations, showing who lost money, how much was lost and where the loss was disclosed:

Access International Advisors, undetermined loss, company statement

Ascot Partners, run by Jacob Ezra Merkin, GMAC’s chairman, most of its $1.8-billion in assets, Wall Street Journal

Banco Santander, $3.1-billion of client exposure, company statement

Banque Benedict Hentsch, $48-million, company statement

Benbassat & Cie., $935-million, Reuters, citing the Swiss newspaper Le Temps

BNP Paribas, undetermined loss, Wall Street Journal

Bramdean Alternatives, 9.5 percent of assets, company statement

The Boston philanthropist Carl Shapiro’s charitable foundation, $145-million, Boston Globe

EIM Group, $230-million, Reuters, citing Le Temps

Fairfield Greenwich Group, $7.3-billion, Bloomberg News

Fix Asset Management, $400-million, company statement

Harel Insurance, $10.9-million, company statement

HSBC, $1-billion, company statement

Julian J. Levitt Foundation, $6-million, Washington Post

Kingate Management, $2.8-billion, Bloomberg News

Madoff Family Foundation, $19-million, Washington Post

Maxam Capital Management, $280-million, Wall Street Journal

Mirabaud & Cie, A few million Swiss francs, Reuters, citing Le Temps

Neue Privat Bank, $5-million, Bloomberg News

Notz, Stucki & Cie, undetermined loss, Reuters, citing Le Temps

Nomura Holdings, $300-million, company statement

Norman Braman, former owners of the Philadelphia Eagles, undetermined loss, Wall Street Journal

North Shore-Long Island Jewish Health System, $5-million, company statement

Optimal Investment Services, undetermined loss, Bloomberg News

Pioneer Alternative Investments, almost all of its $280-million in assets, Bloomberg News

Robert I. Lappin Charitable Foundation, $8-million, Washington Post

Reichmuth Matterhorn fund, $330-million, letter to clients

Senator Frank Lautenberg’s charitable foundation, undetermined loss, The Record of Hackensack, N.J.

Sterling Equities, run by Fred Wilpon, owner of the New York Mets, undetermined loss, company statement

Tremont Capital Management, undetermined loss, Wall Street Journal

Union Bancaire Privee, $850-million, Reuters, citing Le Temps

Yeshiva University, undetermined loss, Washington Post and university statement

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 11:23am]


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