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New York Mets co-owner Fred Wilpon and the North Shore-Long Island Jewish Health System were among the victims of an alleged $50 billion investment scheme that federal prosecutors contend was run by eastern Queens native Bernard Madoff.
Madoff, 70, the former chairman of the NASDAQ stock exchange and the founder of Bernard L. Madoff Investment Securities in Manhattan, had an office in the Bulova Corporate Center in East Elmhurst and his wife, Ruth, resigned from the Queens College Foundation board in the aftermath of the massive financial scandal that is being felt in the borough.
He allegedly told an FBI agent earlier this month that “there is no innocent explanation” for how his billion-dollar securities firm lost its investors’ money, according to a criminal complaint filed by the U.S. attorney in Manhattan Dec. 11. He was arrested the same day and his firm was shuttered Friday.
Madoff’s clients included Sterling Equities — the firm run by Mets co-owner Fred Wilpon —; the North Shore-Long Island Jewish Health System; various hedge funds; and wealthy city residents who knew him through prestigious country clubs.
“Among our various investments, we have accounts managed by Madoff Securities,” Wilpon’s company said in a brief statement. “We are shocked by recent events and, like all investors, will continue to monitor the situation.”
North Shore-LIJ Chief Executive Officer Michael Dowling said the health system lost $5.7 million in the suspected Ponzi scheme from a donor who gave the hospital that amount with the stipulation that it be invested through Madoff.
“To protect its interests, the health system will take all appropriate measures to recoup as much of the $5.7 million as possible,” Dowling said. He said the donor, who was not named, would reimburse the hospital for the loss.
Madoff contributed $216,000 to the health system over the last 36 years, according to Dowling.
Another borough institution, Queens College, has also felt the aftermath of Madoff’s apparent rogue dealings.
Madoff’s wife, Ruth Madoff, was a member of the college foundation’s board of trustees and resigned from her post following her husband’s arrest, Queens College spokeswoman Phyllis Cohen Stevens said.
She said the college’s foundation did not have any funds invested with Madoff.
Daily News Publisher Morton Zuckerman was also a victim of the alleged scheme.
A January 2008 filing with the U.S. Securities and Exchange Commission showed Madoff Securities had between 11 and 25 clients with $17.1 billion in assets, according to the criminal complaint.
Madoff, who grew up in eastern Queens and graduated from Far Rockaway High School, used $5,000 he earned as a Rockaway lifeguard as seed money to start Madoff Securities. His wife graduated from the same high school.
He allegedly told the FBI agent he was “broke” and that he paid investors with “money that wasn’t there,” according to the criminal to the complaint.
Madoff’s firm has two offices in the city, including one on Astoria Boulevard in the Bulova Building in East Elmhurst near LaGuardia Airport. A visit to that office showed a modest with about four computers and a few phones. Nobody was inside.
The complaint alleged Madoff traded his clients’ funds and paid their returns by using money he received from new investors in an elaborate Ponzi scheme.
Madoff told the FBI agent that he estimated $50 billion was lost through the scheme, according to the complaint.
He was a fixture at country clubs throughout the city and gained investors through word-of-mouth after clients gushed to friends about the returns they were getting through Madoff.
Senior employees of Madoff’s firm said he told them earlier this month that the company had been insolvent for years and that he had only a few hundred million dollars left, which he said he would distribute to certain investors, family and friends, according to the complaint.
The Web site for Madoff Securities boasted that the company “ranks among the top 1 percent of U.S. securities firms” and said Madoff’s clients understand he “has a personal interest in maintaining an unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark,” according to the criminal complaint.
Following the charges, the site now only informs investors of the law firm appointed to receive Madoff’s assets and accounts.
Reach reporter Howard Koplowitz by e-mail at email@example.com or by phone at 718-229-0300, Ext. 173.
©2008 Community Newspaper Group
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