Denver appears to have had the highest concentration of Bernard Madoff clients outside of New York City, according to a list of names released last week.
But that doesn’t mean the city is filled with hundreds of investors duped in the alleged $50 billion Ponzi scheme, believed to be the largest ever.
The reason Denver addresses show up so frequently on the client list is that people and businesses nationwide were using NTC & Co. as a custodian for their self-directed IRA investments with Madoff. NTC is an entity Denver-based Fiserv Investment Support Services uses to register retirement accounts.
The names of 13,000 Madoff investors made public Thursday showed roughly 800 as being clients of NTC and therefore listed them as having a Denver address.
Fiserv didn’t respond Friday to an interview request.
Colorado had another 70 or so Madoff clients — many from the Aspen area — on the list that had not used NTC as a retirement-fund custodian.
Over the years, Denver has become a major hub for self-directed IRAs, which give investors greater flexibility in selecting investments but also leave them more vulnerable to scams.
Unlike traditional IRAs, which invest in mutual funds or stocks and bonds, self-directed IRAs can invest in such things as limited partnerships, real estate, mortgages and hedge funds.
They are popular among high-net-worth investors who want to diversify their retirement portfolios. But they are also a favorite vehicle of scammers, said Colorado Securities Commissioner Fred Joseph.
Joseph suspects many of the clients who went through NTC & Co. to invest in Madoff did so directly, although some may have had an adviser steering them in that direction.
Retirement-fund custodians like NTC have a fiduciary duty to watch their clients’ money, but they don’t pass judgment on people’s investments, said Al Woodward, owner of Woodward Wealth Management in Greenwood Village.
“Madoff was considered legitimate and above board by thousands of people,” he said.
Aspen resident Robert Magoon showed up on the list of Madoff clients both individually and as a client of NTC. Magoon said he made his Madoff investments with his retirement funds, which were held in an account with Fiserv.
“The connection (between NTC and Madoff) is because Madoff doesn’t deal with IRA accounts, so he had to have a custodian,” Magoon said.
Magoon said he had a Fiserv account before he invested with Madoff.
“He hurt a lot of people. Everything they had was taken away from them. He hurt a lot of the charities. He did a terrible, terrible thing,” Magoon said.
Joseph urged people to be cautious of anyone who asks them to cash in life insurance, take out home equity or roll over a traditional IRA into a self-directed account to take advantage of some urgent investment opportunity, especially ones promising high returns and low risks.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
