When a Ponzi scheme totals 50 billion dollars, there are bound to be a lot of shareholders involved. The shareholders in this particular Ponzi scheme range from the extremely wealthy, charities, hospitals to international clients. The scheme even targeted particular ethnicity, Jewish people. An affinity scheme targets a particular group who looks similar to the operator. While in Palm Springs, Bernard Madoff, who is also Jewish, targeted country clubs where he knew there would be potential affluent Jewish clients. He was introduced to most of his clients in Palm Springs. People have a natural association and ability to believe people who are of the same religion, profession, race or hobby. Aside from well-to-do Jewish people, Bernard Madoff also target wealthy people in general.
Internationally, The Bernard L Madoff Investment Securities was also being used. The Ponzi scheme has affected businesses and individuals from coast to coast. In Israel, Tokyo, France and all across the UK, people are shocked to find out they have become the victim of the largest Ponzi scheme. The Nomura Holdings Inc. in Tokyo stated that they had invested 27.5 billion yen or 302 million dollars with Madoff. A private swill bank in Switzerland said its clients who have invested money in the Reichmuth Matterhorn fund of hedge funds could lose a combined amount of $330 million because of Madoff's investment advisory business. Natixis, an investment bank in France, reported it will lose 450 million Euros or 605 million dollars. The Italian, Banco Popolare said its involvement with Bernard Madoff would decrease the banks portfolio by 8 million euros or $10.77 million. Banco Santander in Madrid is one of Spain's largest banks. A lawsuit filed against the bank states that the Banco Santander should have noticed that Madoff was running a Ponzi scheme. Banco Santander has offered a combined total of $1.7 billion in preferred securities to private customers to reimburse them for their initial investment. This Ponzi scheme was so large that people did not have to directly invest with Bernard Madoff Investment Securities in order to take a financial hit. BNP Paribas, a French bank did not directly invest money with Madoff. However, they have experienced exposure through trading and collateralized lending to hedge funds. BNP Paribas has lost over $400 million. Royal Bank of Scotland Group PLC, a British bank also experienced exposure through collateralized lending and trading. The British bank lost almost 400 million pounds or $500 million. BBVA, a Spanish bank, also experienced exposure and lost more than $300 million. UniCredit SpA, an Italian bank that was indirectly exposed through feeder funds, had an exposure of less than one million dollars. Their clients were not exposed to Madoff. Dexia, a financial firm in Blgium, has been hit hard by the Ponzi scheme. Not only will the firm lose $107 million but break-up plans began almost immediately after Madoff's confession. The break-up of Dexia will result in parts of the company to be merged with others, like France's Banque Postale. Banque Postale will take all of Dexia's French operations. Bernard Madoff Investment Securities involved the whole world. Domestically there were a few individuals who were financially hard.
Carl J. Shapiro was one of Madoffs oldest friends and biggest financial backer. Shapiro, a philanthropist, gave $250 million to Madoff in December 2008, just days before he admitted to the Ponzi scheme. Shapiro often described Bernard Madoff as his, "go to man." After being introduced to Madoff by his son in law in 1960 the two became friends instantly. Carl Shapiro was one of Bernard Madoff original investors. After being friends for more than 50 years, Carl Shapiro has invested at least $500 million with Madoff. The Carl and Ruth Shapiro Family Foundation lost $145 million dollars and the couple also lost an additional $400 million of their personal fortune. Bernard Madoff and Carl Shapiro agreed from the beginning of the friendship that Shapiro would not introduce potential clients to Madoff. Shapiro did not want to complicate their relationship if Madoff turned an investment down from a friend of his. In addition to friends, Bernard Madoff also schemed large investment firms.
The Fairfield Greenwich Group, an investment firm, also suffered huge losses. The group put billions of dollars, $7.3 billion, into Bernard L. Madoff Investment Securities. The Fairfield Greenwich Group charged its clients a 1 percent annual fee and a 20 percent fee on investment gains every year. The New York Times reports that the clients with an investment of $7 billion would pay the group $70 million and $140 million more in a year in which Mr. Madoff reported a 10 percent gain. Documents from the Fairfield Greenwich group report that the company earned $500 million in fees since 2003. Most of the fees collected were used to compensate the executives.
Fairfield would often state that they had documents and monitored Madoffs investments. This statement makes people question whether or not the group was involved with the ponzi scheme. The founders of the group had their assets temporarily frozen and was sued by the town of Fairfield. The lawsuit claims that The Fairfield Greenwich Group had always been aware of Madoff's illegal activity on some level. The group originally thought he was involved in insider trading not a ponzi scheme. Other complaints against the group include that fact that they expanded Madoffs reach with their clients and they made him appear more believable.
In addition to The Fairfield Greenwich Group, Bernard Madoff also schemed the Tremont Group Holdings. Tremont, an asset management firm owned by OppenheimerFunds and Massachusetts Mutual Life Insurance Co, had invested about $3.3 billion with Madoff. Tremont was also one of the many early investors; they started working with Madoff in 1997. Maxam Capital Management placed all of its $280 million in holdings with Bernard Madoff. Maxam filed a lawsuit on January 30th 2009 for professional negligence against their auditor for not noticing Bernard Madoff's illegal activity. Sandra Manzke started Maxam Capital Management after she left the Tremont Group Holdings. Sandra Manzke began investing almost exclusively with Madoff when she started Maxam. Thierry de la Villehuchet was a hedge fund advisor who worked for Access International Advisors. He invested $1.5 billion and $50 million of his own money with Bernard Madoff. The sixty-five year old French man had invested most of his money with Madoff. He committed suicide in his office just two weeks after Madoff confessed to running a Ponzi Scheme.
Another notable individual who was swindled by Madoff was 56 year old Alicia Koplowitz, one of Spain's richest women. Koplowitz inherited he father's business, the Spanish builder Fometo de Construcciones & Contratas SA, along with her sister. She later sold her portion of the business to her sister for $800 million. Koplowitz went on to invest her money in property and hotels in Spain, Italy, Portugal and the United States. She also invested in Banco Sabadell SA and Acerinox SA, a Spanish stainless steelmaker. Alicia Koplowitz asked Madoff for her money to be returned in September, just three months before Bernard Madoff's arrest. Her request was not granted in time and she lost $14 million. Her personal fortune totals $5.2 billion, which makes her number 198 on the list of the world's richest billionaires.
Other notable individuals who were deceived by Bernard Madoff were Norman Braman, former owner of the Philadelphia Eagles, Jeffery Katzenberg, DreamWorks Animation SKG founder, Kevin Bacon, Fred Wilpon, owner of the New York Mets and WunderKinder Foundation, which is run by Steven Spielberg. Most famous clients admitted to being scammed by Madoff , but did not disclose how much money they lost.
In addition to celebrities, charities have also lost funding. The Gift of Life Bone Marrow Foundation needed to make up for the $1.8 million lost in funding. The foundation planned for a budget of $7 million for the next year. The group started to receive phone calls after Madoff confessed to running a Ponzi scheme. Donors began to say they would not be able to donate due to the fact that they lost their money investing with Madoff.
The Gift of Life Bone Marrow Foundation has helped in facilitating 200 bone marrow transplants and they have registered 50,000 donors. Elie Wiesel, a Holocaust survivor, has lost everything due to his investments with Bernard Madoff. His charitable foundation, the Elie Wiesel Foundation for Humanity has been completely wiped out. The foundation lost $15.2 million in assets. Wiesel himself has also lost $37 million in personal investments. Wiesel states that he gave him everything, we thought he was God. A friend, who had known Madoff for at least fifty years, of Elie Wiesel introduced him to Madoff. Wiesel met Madoff, who introduced himself as a philanthropist, twice and the two of them discussed ethics and education over dinner. He says Bernard Madoff acted as if he was making an exception by letting him invest with him. His friends and other financial investors encouraged him to invest more with Madoff. He later stated that hundreds of people have begun to donate to his foundation through the internet and that he thought the Obama administration should bail out the charities just as they did for the banks and car companies.
Another charity, Congregation Kehilath Jeshurun, an Orthodox synagogue, also suffered setbacks due to investments with the Bernard Madoff Investments Securities. The synagogue, located in the Upper East Side in New York, has lost $3.5 million from capital funds and substantial investments. They said that the loss would financially set them back but normal operations would continue and would not be affected.
Whether Bernard Madoff acted alone or not, he did operate one the largest ponzi schemes in history. Madoff received $50 billion from unsuspecting clients and a few clients, who may have eventually suspected something was not quite right. Charities have gone bankrupted some have suspended or lessened their charitable donations. Banks both internationally and domestic have lost millions or billions of dollars of their clients money. People have lost their life savings, retirement funds and their lives. Madoff's actions have affected everyone. Clients were affected directly and the public indirectly. Madoff's Ponzi scheme has left foreign investors suspicious of investing in the United States because of the lack regulatory rules. This has also left Americans to wonder if their investments are safe anywhere.
