February 5, 2009

Madoff Client List Is Disclosed in Filing

The names of thousands of apparent customers of Bernard Madoff were made public Wednesday, including a legendary baseball player, famous actors, charities and pension funds -- as well as Mr. Madoff's own lawyer, who is defending him on charges that he ran a $50 billion Ponzi scheme.

The 162-page filing made in U.S. Bankruptcy Court in Manhattan doesn't list the amount each client invested.

Some notable names appear on the list, including Fred Wilpon, owner of the New York Mets baseball team. It isn't clear how many of the clients listed had money at the firm at the time of Mr. Madoff's arrest on Dec. 11.

Other high-profile names on the list include former Dodgers pitcher Sandy Koufax, actor John Malkovich, talk-show host Larry King and New Jersey Sen. Frank Lautenberg. A number of estates or entities associated with deceased people were listed, and those, too, had some famous names, including John Denver Concerts Inc. Charities, museums and pension funds also show up.

Mr. Madoff's laywer, Ira Sorkin, also is on the customer list. Mr. Sorkin previously denied investing and reiterated that fact Thursday morning. He said the "information is incorrect" but declined to elaborate.

The list includes numerous accounts held by the firm's outside auditors, Jerome Horowitz and David Friehling. Also among the names listed are Mr. Madoff's family members, including his sons, Mark and Andrew, and his brother, Peter, as well as the employees who ran the investment-advisory arm of the firm, where the alleged fraud took place. The employees included JoAnne "Jodi" Crupi, and a company owned by the family of Frank DiPascali, who was a key member of Mr. Madoff's investment business.

Also among those listed in the filing are Larry Silverstein, a New York developer who is currently working with partners to rebuild the World Trade Center, as well as a number of large financial institutions including HSBC Holdings PLC, UBS AG, J.P. Morgan Chase & Co., Bank of America Corp., BNP Paribas SA and Citigroup Inc.

A spokesman for Mr. Silverstein, Bud Perrone, said, "Losses incurred by Larry Silverstein and his family absolutely pale in comparison to those innocent investors who lost their life savings as a result of this scheme."

Other prominent New York real-estate names appeared on the list. Among them are two top officials of SL Green Realty, one of Manhattan's largest office building owners. Stephen L. Green, the chairman, and John S. Levy, a board member, are listed.

An SL Green spokesman said, "Steve Green prefers not to discuss his personal investments that have nothing to do with SL Green." He said, "SL Green as a company has had no exposure to investments with Madoff, and does not comment on the personal investments of its executives and board members."

Several members of the prominent Rechler family were on the list. A representative for several family members didn't immediately respond to a request for comment.

Scott Rechler, head of RXR Corp., a privately held property firm with holdings in the New York area who maintains a separate company from his relatives, said his investment with Mr. Madoff was "immaterial" and will have "no effect on anything."

The revelations come at a challenging time for New York property owners. Values have plunged in the face of dried up financing and the recession. It's virtually impossible to get loans for new construction.

The chief compliance officer of Resnick Investment Advisors LLC in Westport, Conn., which is on the list, said in an email that his firm isn't directly invested with Mr. Madoff but received client statements "for clients of ours who ... were Madoff clients."

Also listed as a customer is Blue Star Investors LLC, a fund started by leveraged buyout king Thomas H. Lee. A spokesman for Thomas H. Lee Capital Management, which is the investment manager for Blue Star, said Blue Star once had an account with Mr. Madoff but that it had long been closed. He declined to elaborate further.

David "Sandy" Gottesman, founder of First Manhattan Inc., a New York money management firm with roughly $10 billion in assets under management, is also on the list. Mr. Gottesman is a longtime friend of and investor with Warren Buffett. He owns roughly $1 billion of stock in Mr. Buffett's Berkshire Hathaway, and in 2003 joined Berkshire's board.

A spokesman for First Manhattan said Mr. Gottesman did not have an investment with Mr. Madoff, but a foundation established by him had money there and his wife, Ruth, once had an account but no longer has any exposure.

Each page of the list filed in court has more than 80 names, but many names are repeated, possibly because they had more than one type of account at the Madoff firm, which is in liquidation.

A list of creditors of Mr. Madoff's bankrupt firm was also filed with the court, as well as a list of employees. Prosecutors say Mr. Madoff confessed to his sons that he was part of a giant fraud that cost investors many billions of dollars. He hasn't been indicted but is being held in his Manhattan apartment under house arrest.

The list, which was put together for the Madoff firm's court-appointed trustee, includes names individuals and institutions that "appeared to have been a customer of [Bernard L. Madoff Investment Securities] with an open account" in the 12 months before Mr. Madoff's arrest, according to the court filing.

The firm that compiled the list, AlixPartners LLP, said it used records from Mr. Madoff's firm as well as information that alleged customers left in voicemails on the trustee's hotline or sent emails to the Securities Investor Protection Corp., an agency that is assisting with the firm's liquidation.

The trustee used the list to mail out claims forms that customers can fill out in the hopes of receiving up to $500,000 in cash advances from SIPC, which was set up by Congress to help customers of failed brokerages.

The list does not appear to include the thousands of customers who invested in the Madoff firm through so-called feeder funds run by Fairfield Greenwich Group and many other firms.

It is possible that some names on the list are trustees, executors and lawyers, who are not themselves clients of the Madoff firm but were on a mailing list to receive client statements because they dealt with tax issues for their own clients who had money invested with Mr. Madoff.

Source: The Wall Street Journal

No comments: