Madoff fraud scandal chills Florida wealthy
MIAMI, Dec 12 (Reuters) - Hedge fund managers and other Wall Street professionals are scrambling to tabulate losses from Bernard Madoff's alleged $50 billion fraud, but the financial pain for individual investors is already clear.
"I expect to get back zero," Susan Leavitt, an investor in Tampa Bay, Florida, said on Friday. "When he tells the Feds, he has $200 million to $300 million left out of billions, what can you expect."
Madoff was arrested in New York on Thursday and charged with orchestrating a large finance fraud through an investment-advisory arm of market-making firm Bernard L. Madoff Investment Securities LLC.
Madoff's advisory business had $17.1 billion of assets under management but many investors may have had indirect exposure by investing through the hedge funds and other of the firm's clients. Madoff, 70, has said losses were about $50 billion, according to government complaints.
Two hedge funds that invested with Madoff were the $7.3 billion Fairfield Sentry Ltd and the $2.8 billion Kingate Global Fund Ltd. Both reported positive returns during 2008.
Many clients of Madoff, a former chairman of the Nasdaq Stock Market, were recruited at New York and Florida country clubs, such as the Palm Beach Country Club, where Madoff has been a longtime member, according to news reports.
Leavitt, 46, said in an interview that she had recently added $500,000 to a Madoff fund in which she invested substantial amounts since the early 1990s.
A friend introduced Leavitt to the Madoff fund, which had been shut to new investors for many years and produced strong, reliable returns, she said.
"He had a closed fund, which is why people put more money into it, instead of diversifying," said Leavitt, a full-time mother and former newspaper writer. "You couldn't just come in off the street and plunk down a hundred thousand dollars."
In addition to personal investments, Leavitt said the Madoff fund also managed money for a family philanthropy she helped run.
"We had a foundation that we had a lot of money in, a charitable foundation," she said. "That is gone. We were very philanthropic, Those days are over."
Leavitt has never met Madoff, owner of a Palm Beach residence and a familiar figure on the Palm Beach society scene, but said, "He is a crook."
Norman Goldblum, a former town council member in Palm Beach, said he docks a boat near one owned by Madoff and knew him casually at the oceanside Palm Beach Country Club, located near the Kennedy family home.
"I used to say hello," Goldblum said on Friday. "But I never invested with him and I won't say who did. I don't like to spread rumors."
Other members of the Palm Beach club, founded in 1917, also declined on Friday to identify club members who had invested with Madoff. Continued...
