Robert Chew and Sarah Mandell of Montrose knew their money was invested in a highly unusual, secretive and profitable New York operation.
But a Ponzi scheme? Not this one.
The fund had produced annual returns of at least 15 percent for Mandell’s California relatives for decades. It was very restrictive about who could invest and how much money it would take — unlike any Ponzi scheme Chew or Mandell knew of.
Last Thursday, they learned the truth. Their life savings — $1.2 million — were lost with as much as $50 billion of investors’ money in a massive alleged fraud by Wall Street investor Bernard Madoff. Mandell’s extended family lost an estimated $30 million.
The scandal has rocked wealthy investors and major institutions across the globe. It also has reached relatively small investors like Chew and Mandell, who moved to Montrose from Los Angeles about two years ago.
Mandell received the news by phone from a family member.
“My reaction was, ‘This is a joke. You’ve got to be joking,’ ” she said. “I just couldn’t fathom that it could be true.”
Mandell’s mother in California lost her savings. She lived off the income and now will have to leave her assisted-living center, collect Medicaid and move to a nursing home.
Chew said he harbored doubts about the fund but had convinced himself the money was safe. It had been such a good investment for Mandell’s family for so long.
“I think that everyone knew deep down in the pit of their stomach that this was too good to be true,” he said. “In good times and bad times, it made steady, strong returns. It didn’t make sense.”
Chew and Mandell invested in the fund about five years ago after selling a house in Los Angeles. They liquidated other investments and put nearly everything they had into the fund.
They didn’t even know Madoff’s name but paid their money to a wealthy friend of the family who was connected to the fund. They often collected quarterly distributions.
The married couple plan to sell one of their two houses in Montrose and try to hold on to the other. Chew, 55, has a marketing, communications and public-relations business based in L.A. Mandell, 45, is a personal chef in Montrose and Telluride.
Unlike many of the victims, Chew chose to discuss the situation publicly. He wrote a first-person account on Time magazine’s website.
“I want to let people know this can happen to anyone,” he said. “Don’t give money to people you don’t know and you don’t know what they’re doing with it.”
Greg Griffin: 303-954-1241 or ggriffin@denverpost.com
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
