NEW YORK — In a Connecticut town, local officials scrambled to get a handle on damage to pension funds held for its police officers and firefighters. A Massachusetts charity announced it was shutting down. In New York, a distinguished economist feared he had lost his $2.2 million nest egg.
Damage continued to ripple from the massive fraud allegedly engineered by storied Wall Street money manager Bernard Madoff on Monday, even as investigators worked to unravel the scheme.
While details remained sketchy, the sudden collapse of Madoff’s firm began revealing an impact far beyond the ultra-wealthy and well-connected who were the mainstay of his client base. The firm’s extensive dealings with charitable groups and others suggest the fraud may take a toll in unexpected places.
“It’s devastating to people and communities and lives,” said Deborah Coltin, executive director of the Robert I. Lappin Charitable Foundation, a Salem, Mass., organization that sponsors Jewish educational programs and is being forced to close its doors.
The 70-year-old Madoff (MAY-doff), well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors. Some investors claim they’ve been wiped out, and it is thought many more are yet to come forward.
Monday, a federal judge ordered that proceedings to liquidate assets of Bernard L. Madoff Investment Securities LLC move to bankruptcy court.
The biggest victims include international banking institutions HSBC Holdings PLC of Britain, Royal Bank of Scotland Group PLC and Man Group PLC, Spain’s Grupo Santander SA, France’s BNP Paribas and Japan’s Nomura Holdings. All reported that they had fallen victim to Madoff’s alleged Ponzi, or pyramid, scheme.
The alleged victims who sunk cash into the veteran money manager’s investment pool include real-estate magnate Mortimer Zuckerman and a charity of movie director Steven Spielberg. Irwin Kellner, a well-known economist for , filed a lawsuit Friday against Madoff in U.S. District Court in Long Island, seeking repayment of more than $2.2 million he invested with the money manager.
But the list of people and organizations allegedly taken by Madoff reached into the ranks of the little guy, too.
When local officials in Fairfield, Conn., heard of Madoff’s arrest, “it set off every bell,” said Paul Hiller, the town’s chief fiscal officer.
The town’s employees board and police and fire board — which cover 971 workers — had $41.9 million invested with Madoff, said Paul Hiller, Fairfield’s chief fiscal officer.
Town officials immediately notified their investment fund to liquidate.
“At that point, it was too late,” Hiller said. “We obviously didn’t ask enough questions.”
Madoff’s alleged victims
Client, Investment
Fairfield Greenwich Group, $7.5 billion
Grupo Santander, $3.2 billion
HSBC Holdings, $1 billion
Natixis, $617 million
Royal Bank of Scotland, $612 million
BNP Paribas, $480 million
BBVA, $452 million
Man Group, $360 million
Reichmuth & Co., $332 million
Nomura Holdings, $304 million
Unicredit, $103 million
Benedict Hentsch & Cie, $48.3 million
Fairfield, Conn., Employees, $41.9 million
Mortimer Zuckerman Trust, $30 million
Phoenix Holdings, $15 million
Harel Insurance, $14.3 million
Societe Generale, $13.7 million
Credit Agricole, $13.7 million
Lappin Foundation, $8 million
Nordea, $6.6 million
Neue Privat Bank, $5.25 million
Amounts unknown: Union Bancaire Privee, Sen. Frank Lautenberg foundation, Wunderkinder Foundation (Steven Spielberg charity), former Philadelphia Eagles owner Norman Braman, New York Mets owner Fred Wilpon, GMAC chairman J. Ezra Merkin
